New Jersey Employment Losses Extend into October

The sharp retrenchment in national labor markets continues to take its toll in New Jersey. The state lost 6,000 payroll jobs in October, bringing total job losses to 27,200 this year. Private-sector employment in New Jersey over the same period has fallen by 25,000 jobs. The state’s unemployment rate increased to 6 percent from 5.8 percent a month ago — a level not reached since July 2003, when labor markets were still declining from the recession of 2001. The separate household survey indicated the number of unemployed in New Jersey increased by 9,200 in October, and by 85,300 for year. Also, the broad-based nature of the job declines last month indicate that the recession has spread beyond the original sectors of weakness (construction, manufacturing and finance) to affect nearly all areas of the economy.

The largest job losses in October occurred in the trade, transportation and utilities sector (down 2,500 jobs), with most of the losses occurring in retail trade. This is due to the precipitous decline in consumer spending in the last two months. The leisure and hospitality sector, also heavily reliant on consumer spending, was also affected significantly, with a loss of 1,600 jobs. Manufacturing jobs continued to plummet with a further loss of 2,000 jobs in October, bringing the decline for the year to 11,800 jobs. This represents a drop of 3.8 percent, the highest rate of decrease of any business sector. Employment also fell in finance (down 700 jobs) as the ongoing restructuring of the financial sector continues to hurt New Jersey. Construction employment continued to decline, by 200 jobs, as did other services (down 300 jobs), and information services (down 200 jobs).

Only two private business sectors gained jobs in October. Business and professional services added 200 jobs in October, the same gain as in September. However, prior to September, employment in the sector had increased by 2,700 jobs. The small increase over the last two months indicates that there has been a sharp deceleration in job growth in this large sector. A likely factor behind this is a decline in temporary employment, often one of the first labor market casualties in a recession. The other private business sector that gained employment was education and health, which increased by 1,200 jobs. Public sector employment edged up by 100 jobs.

One important caveat to the October report is that given the accelerating and steep changes that are occurring in labor markets, significant revisions to the state employment data are likely at the end of the year.

Nevertheless, both the payroll survey and the household survey are clearly indicating that the national recession is echoing loudly in New Jersey.