New Jersey’s promising spurt of job growth in April and May ended abruptly in June with a loss of 600 jobs in the private sector, leaving the state with a net gain of only 11,300 private-sector jobs in the first half of the year, according to data provided by the NJ Department of Labor (NJDOL).

At the current rate of job growth, New Jersey would end the year with a net gain of less than 25,000 private sector jobs.  This would make 2006 one of the weakest non-recession years for employment growth since the early 1990s. (See Chart)

New Jersey’s private-sector employers added 12,300 jobs in April and May, the best two-month performance in a year.  This was a promising change for a State economy that had been caught in a pattern of job losses or weak and inconsistent growth for more than six years.  Business leaders had hoped the gains would be a turning point, but their hopes proved short lived.

“The April-May gain brought a promise of renewed employment strength.  With the loss of 600 jobs in June, we will need a few more months of data to see where the state economy is really headed,” said NJBIA President Philip Kirschner.

New Jersey’s unemployment rate, meanwhile, fell to 4.9 percent in June from 5.0 percent in May.  The US jobless rate was 4.6 percent in June.  (The State jobless rate has ranged from 4.5 percent to 5.1 percent so far this year.)

Most of the State’s private-sector employment gains in the first half of 2006 came in the service sector, including education and health services, which added 5,900 jobs through June; leisure and hospitality (up 4,500); and professional and business services (up 3,600).  Overall, the service sector (excluding government) has gained 13,600 jobs so far this year, the manufacturing sector has lost 3,200 jobs, and construction has added 900 jobs. (See Table 1)

With the loss of 600 jobs in June, private-sector employment in New Jersey now totals 3,433,400, down slightly from the expansion high set in May.

One way to gauge the magnitude of private-sector job growth in New Jersey is to compare current employment levels to the peak reached in December 2000, just before the onset of the last recession.

By this measure, employment growth in the current expansion has been sluggish.  Total private sector employment, at its current level of 3,433,400, is now just 3,400 jobs above the peak of 3.43 million reached in December 2000. Thus, it has taken six and a half years for private-sector employment in New Jersey to reach and surpass the previous expansion peak.

The current employment expansion is also producing many fewer jobs than the two previous expansions.  Since it got underway in April 2003, the current expansion has produced an average of less 27,000 private sector jobs a year (on an annualized basis).  This is far less than the average of more than 70,000 jobs new jobs produced annually in the expansions of the 1980s and 1990s.

The rate of job creation also has been slower in New Jersey than in the nation as a whole. New Jersey was 41st in the nation in its rate of private-sector job growth in 2004.  And in 2005, private-sector employment grew by 1.3 percent in New Jersey, below the national job-growth rate of 1.6 percent.

Most of the job growth in the current expansion has come in the construction trades and in certain service industries, particularly in education and health, as well as in leisure and hospitality.  (See Table 2)

Since December 2000, construction employment has grown by 20,500 jobs for a gain of 13.5 percent. Education and health services have added 66,700 jobs for a gain of 13.2 percent, and companies in the leisure and hospitality industries have added 40,400 jobs, an increase of 13.3 percent.

But the professional and business services sub-sector, an important engine of job growth in the 1990s, has lagged. Modest gains over the last three and a half years have failed to offset sharp recession losses, leaving that sector still about 2,000 jobs short of its pre-recession high of 602,300 jobs.

Manufacturing employment has declined steadily throughout the period although losses have moderated over the last two years.  The State’s manufacturers now employ 320,000 people, 102,000 fewer than they employed six and a half years ago.

Even as employment growth in the private sector has slowed over the last six and a half years, employment in the public sector (particularly at the state and local levels) has soared.  Since December 2000, public-sector employment in New Jersey has expanded by a net 54,800 jobs, a 9 percent increase.  This has brought total employment at all levels of government to 648,800 (as of June 2006). Virtually all of that increase has been in state and local government; federal government employment has remained largely stable.

As mentioned earlier, net private sector employment in this same six-and-a-half-year period expanded by only 3,400 jobs or one tenth of one percent.

	Return to News Center