On the economic front, New Jersey ended 2007 with neither a whimper nor a bang.

With an assist from the month of December, which saw the addition of 3,500 private-sector jobs, the best showing since July, New Jersey ended 2007 with a modest gain for the year of 23,600 private-sector jobs, an increase of 1 percent.

The gain, based on preliminary state Labor Department data that will be revised in February, closely matched the average of 23,300 private-sector jobs New Jersey has added in each year since 2003. 

In December, the State’s unemployment rate moved up to 4.5 percent from 4.2 percent the month before.  This still left it below the national rate of 5 percent. 

Business and professional services (+13,000) and education and health services (+12,500) were New Jersey’s job-growth leaders in 2007.  Among the industry sectors losing jobs were manufacturing (-4,800), construction (-1,400), and financial services (-1,700). (See Table)

While private-sector employment ended the year on an up note in New Jersey, problems have been brewing in other areas of the economy.

Most troubling in January 2008 was mounting evidence that the nation was falling into a recession—or was already there.  Manufacturing activity and retail sales retreated in December as the US unemployment rate rose sharply to 5 percent, indicating that the housing recession and related credit crunch had spread to other sectors of the economy.  New Jersey would not escape the wrath of a national recession, regional economists say.

On January 17, the Federal Reserve Bank of Philadelphia reported that its mid-Atlantic manufacturing index had fallen sharply to the lowest level since the 2001 recession.

“New orders disappeared, order books thinned, employment dropped and hours worked declined precipitously.  In other words, this was a rout,” said Commerce Bank Chief Economist Joel Naroff, commenting on the bank’s report. “Looking forward, pessimism seems to reign as the (business) expectations index hit its lowest point since 2001.”

Despite the addition of 3,500 jobs in December, a close look at New Jersey’s current employment expansion shows that it has been unusually weak when compared with the nation as a whole or the State’s own employment-growth record. 

Since the start of the current expansion in March 2003, 57 months ago, New Jersey has added an average of about 23,300 new private-sector jobs on an annualized basis.  This remains well below the annual average of 70,000 private-sector jobs added in the expansions of the 1980s and 1990s.  (See Chart)

New Jersey has also done less well than the nation.  As of December, New Jersey had eclipsed its previous private-sector employment record, set in December 2000, by only 27,300 jobs, a gain of less than 1 percent.(*1)  Over that same seven-year period, the nation added 4.43 million jobs, a gain of 4 percent.
 
Regional economists and business groups, including NJBIA, say there is much evidence, supported by national and in-State business-opinion surveys, that New Jersey’s high cost of doing business has put a damper on business expansion and job growth.

Another concern is the State’s uneven employment growth, with some sectors of the economy faring well and others poorly over the last seven years.  The bulk of state’s job growth since December 2000 has occurred in the lower paying education/health and leisure/hospitality sectors, while most of the losses have come in information services (including telecommunications), manufacturing, and transportation/warehousing. (See Table)

Private-sector employment in New Jersey totaled 3,457,300 in December 2007, a net gain of 27,300 jobs over the pre-recession employment record of 3,430,000 set in December 2000.  New Jersey lost 83,400 private-sector jobs in its 2001-2003 employment recession, but added back 110,700 jobs between March 2003 and December 2007.

If you have any questions about NJ Employment Watch, please call at 609-393-7707, ext. 227.

(*1) Private-sector employment in New Jersey totaled 3,457,300 in December 2007, a net gain of 27,300 jobs over the pre-recession employment record of 3,430,000 set in December 2000.  New Jersey lost 83,400 private-sector jobs in its 2001-2003 employment recession, but added back 110,700 jobs between March 2003 and December 2007.

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