Employment Outlook in New Jersey’s Labor Areas
In 2005, nonfarm employment in the nine-county Northern New Jersey Region was virtually unchanged from 2004. Based on nine-month averages, employment in the region totaled 1,957,9001 in 2005, down 700 from a year ago. While the over-the year change may have been marginal, there were significant changes within the labor areas contained in the region. There were losses in the Newark Labor Area (-6,500) that were offset by gains in the Bergen-Hudson-Passaic Labor Area (+5,300) and in Warren County (+300). In contrast to the region, statewide employment posted a gain of 1.4 percent over the same period.
In the region, job losses in manufacturing (-7,400), professional and business services (-5,800), and information (-2,200) surpassed gains in government (+4,000), educational and health services (+3,900), and financial activities (+3,200). Until the impact from the recent hurricanes and the rising energy costs are known, the 2006 outlook for the Northern Region’s economy is hard to gauge, but employment is anticipated to grow at a modest rate. However, the region’s rate of growth is still expected to lag behind that of the state. The areas of the job market that are expected to see the most growth are health and social services, local government and retail trade. Construction payrolls should remain relatively steady, helped by school construction, particularly in the special-needs (Abbott) districts, and by commercial construction. However, residential construction could slow if rising mortgage rates and other living costs cool demand.
Even though manufacturing job losses slowed in 2005, stiff competition, improved technology, and rising operating costs are expected to continue to put downward pressure on payrolls in manufacturing in 2006.
Bergen-Hudson-Passaic Labor Area
Review of 2005 and Outlook for 2006
Bergen, Hudson and Passaic Counties
By Walter Nyakanga, Bureau of Labor Market Information
Total nonfarm wage and salary employment in the three-county Bergen-Hudson-Passaic Labor Area rebounded back from last year’s job loss to post an increase in 2005. Based on nine-month averages, total nonfarm employment expanded by 5,300 (+0.6%) from 2004 to average 903,000 in 2005. This job growth, however, lagged that of the state (+1.4%) over the same period.
In the labor area, employment increases were focused in service-providing industries, which grew 1.1 percent from 2004 and have shown steady expansion since 2002. These gains were concentrated in educational and health services, which grew by 2,600 (+2.1%) to an average of 125,200 in 2005. Most of the new jobs were in health care and social assistance (+3,300), which includes home health care, nursing and personal care facilities.
Employment in financial activities turned around from losses experienced a year ago and posted an increase of 2,700 in 2005. Job growth was most evident in finance and insurance (+2,000), which includes securities and commodity contracts brokers (+1,500). Also, the expansion of local banks and several investment banks continued in the labor area. For example, Commerce, one of the fastest growing commercial banks in the area, Valley National, Provident, Washington Mutual, North Fork, and Columbia Savings banks all opened several branches in recent months, creating employment opportunities.
Government employment also moved higher over the period, mainly due to increases at the local level (+2,700). The additional jobs were needed in order to provide more services to local communities that had increases in population and to serve the public better, especially, in Bergen and Passaic counties.
In leisure and hospitality, employment growth reflected a positive five-year trend in the area. Job gains were noted in accommodation and food services (+1,600), which includes hotels, full-service restaurants and limited-service eating places. The demand for these services has expanded due to a busy life style in general. A number of national chain restaurants opened, including Chili’s, Red Lobster and Panera Bread.
Holding back overall employment growth during this nine-month period were losses in manufacturing, professional and business services and information. Manufacturing employment fell 4.9 percent (-4,100 jobs) and the rate of job loss was much higher than the statewide loss (-2.6%). In the labor area, the non-durable goods sector lost the most jobs (- 3,400), a trend that has continued over the past five years. Some notable closings or reductions included BAE Systems in Wayne (electronic equipment), PF Laboratories in Totowa (pharmaceuticals), Saint-Gobain Containers of Carteret (glass bottles) and Rivera Trading of Secaucus (eyeglasses), which resulted in about 1,000 workers losing their jobs.
Adding to the labor area’s employment loss was professional and business services, which was affected by restructurings and closures for the second consecutive year. Employment in the sector fell by 900 (-0.7%), mainly in employment services (-1,300). Several small firms that provided administrative and support services and temporary employment services were forced to close or downsize as their services were less in demand due to the uneven local economy.
The Bergen-Hudson-Passaic Labor Area’s unemployment rate averaged 4.5 percent for the first nine months of 2005, an improvement of 1.0 percentage point from the same period a year ago. The number of unemployed residents declined by 10,000 to settle at 44,600. The three-county labor area’s unemployment rate was 0.2 of a percentage point higher than the statewide nine-month average rate of 4.3 percent.
Despite some signs of economic expansion, job growth has been slow in the Bergen- Hudson-Passaic Labor Area. Although there were increases in 2005, the pace of job growth in the labor area is expected to remain sluggish in the short-term and to lag the rest of the state.
In construction, the employment outlook will remain positive. Construction projects currently underway include several residential projects, the Xanadu project and the Giants Stadium at the Meadowlands, the EnCap project in Rutherford, the Metro Stars Stadium in Harrison, school construction, the Liberty Science Museum project, and various other public projects. These projects promise a steady increase and a bright future for the construction industry for 2006. Also, the construction of a $630-million residential and golf course project on 177 acres of waterfront property next to Liberty State Park is continuing.
Employment in trade, transportation and utilities should remain steady, as new openings will maintain jobholding, despite some setbacks from the transportation and warehousing, utilities sector. In the coming year, most jobs will come from the opening of chain stores and small-to mid-sized establishments in retail trade. Some of the stores scheduled to open next year are Lowe’s Improvement Center in East Rutherford and Home Depot in Paterson.
The employment outlook in educational and health services appears favorable. Job growth will be concentrated in health care and social assistance in order to meet the needs of a growing senior population. More medical offices are opening, continuing the trend of utilizing outpatient facilities instead of hospitals for some medical procedures.
In financial activities, the employment outlook appears to be favorable as it was during the first nine months of this year. More financial institutions are relocating or opening back offices in the labor area and local banks have been expanding. As the state and national economies strengthen, there appears to be more confidence among companies and individuals to invest.
The unemployment rate in the three-county labor area in the coming year is expected to improve mirroring changes in the state unemployment rate.
For more information on the Bergen-Hudson-Passaic Labor Area, please contact Walter
Nyakanga by e-mail at walter.nyakanga@dol.state.nj.us or call (973) 648-3188.
Newark-Union Labor Area
Review of 2005 and Outlook for 2006
Essex, Hunterdon, Morris, Sussex and Union Counties
By James McGarry, Bureau of Labor Market Information
For the second year in a row, total nonfarm employment was down in the Newark Labor Area. Based on nine-month averages, employment decreased by 6,500 or 0.6 percent from 1,024,900 in 2004 to 1,018,400 in 2005. In comparison, statewide employment rose 1.4 percent over the same period.
In the five-county labor area, the largest nine-month average job losses occurred in professional and business services (-5,100), manufacturing (-3,400), information (-1,700), and trade, transportation and utilities (-800). Losses in professional and business services were mainly in administrative and support and waste management remediation (-3,700), which includes employment services (-3,400). Apparently, some companies in the labor area are cutting back on the use of outside administrative and support services. The employment contraction in manufacturing was in both the durable goods (-1,900) and non-durable goods (-1,500) sectors and was the result of layoffs and closings. In June, the Sharp Corporation consolidated its West Caldwell operations and moved 150 jobs to Allentown, PA, while Serta Mattress/National Bedding eliminated the second shift and 200 jobs at its Linden facility. Tuscan/Lehigh Dairies is currently in the process of moving its Union Township operations to Burlington County, upstate New York and Massachusetts. Production work ended in September with the loss of 225 jobs. The plant will close later this year with an additional job loss of 105.
Job losses in information were mostly in telecommunications, as that industry continues to undergo restructuring. Verizon Wireless moved 50 financial group jobs and over 200 customer service jobs from Morristown to South Carolina and Maryland earlier this year. The losses in trade, transportation and utilities were a result of losses in wholesale trade (- 1,000) and transportation, warehousing and utilities (-1,100). Offsetting some of this loss was a 1,300 job gain in retail trade. Retail trade benefited from the recent opening of eleven stores at the Shoppes @ Rockaway and at the Marketplace @ Rockaway, both in Rockaway Township. These openings created over 350 jobs.
The Newark Labor Area experienced employment gains in educational and health services (+1,200), government (+800), construction (+700), financial activities (+600), and leisure and hospitality (+600). Gains in educational and health services came mostly from hiring in the health care and social assistance sector (+700). Additional hiring at local agencies was the primary reason for the increase in government. Employment growth in construction was aided by a number of ongoing projects in the City of Newark. In financial activities, employment grew because of hiring in the real estate and rental/leasing sector. The increase in leisure and hospitality was mostly due to hiring in accommodation and food services (+1,100), which includes hotels and restaurants.
The Newark Labor Area unemployment rate for the first nine months of 2005 averaged 4.3 percent, 0.7 of a percentage point lower than 2004. Over the same period, the state’s average unemployment rate was also 4.3 percent, down from 5.1 percent in 2004.
Although employment was down in 2005, the outlook for the Newark Labor Area is for a modest upturn in employment for 2006. Economic growth in the labor area, however, could be affected by higher energy costs this winter. Any increase in employment next year will probably be centered in educational and health services, government, financial activities and construction.
Educational and health services and local government should continue to see an increase in employment as the population continues to grow. Financial activities employment has grown over the past several years and this trend should continue in 2006 if insurance companies, stock brokerage firms, banks, and real estate companies keep expanding their operations in the five-county labor area.
The forecast for construction jobholding is positive. Work continues on the Newark City Subway Extension, a $208-million light rail project. The rail link will connect Newark Penn Station (Northeast Corridor and other rail lines) to the New Jersey Performing Arts Center and to the Newark Broad Street Station (the Morris and Essex lines). This project should be completed by the end of 2006.
Currently under construction in downtown Newark is the new home of the New Jersey Devils of the National Hockey League. The $310-million Newark Arena, which is the first phase of the Newark Downtown Core Redevelopment District Project, will include several retail stores and restaurants. Completion is expected in time for the Devils’ home opener in October 2007. This facility should generate several hundred jobs and will be within walking distance of Newark’s Penn Station.
Also in the city, the Matrix Development Group has announced plans to erect a 400,000- square foot office tower adjacent to the new FBI building along the Passaic River. The $400- million project, Riverfront Center, would be the largest private development in Newark in more than a decade. McCarter & English, a long-time city employer with hundreds of lawyers and support staff, will relocate for space reasons from a nearby building. The law firm will be the principal tenant in the office tower.
The unemployment rate in the Newark Labor Area should remain in the range of 4.0 percent to 5.0 percent in 2006.
For more information on the Newark Labor Area, please contact James McGarry by e-mail at james.mcgarry@dol.state.nj.us or call (973) 648-3866 or Ganga Sivakumar by e-mail at ganga.sivakumar@dol.state.nj.us or call 973-6877-1430.
Warren Labor Area
Review of 2005 and Outlook for 2006
Warren County
By James McGarry, Bureau of Labor Market Information
Warren County experienced an increase in employment in 2005. Based on nine-month averages, total nonfarm employment expanded by 300 or 0.8 percent from 36,300 in 2004 to 36,600 in 2005. In comparison, statewide jobholding grew 1.4 percent over the same period.
Over the first nine months in Warren County, average employment increased by 100 each in manufacturing, professional and business services, educational and health services, and government and decreased by 100 in financial activities.
Giving a boost to manufacturing employment was the redevelopment of the former Ingersoll Rand complex into the Phillipsburg Commerce Park in Phillipsburg. The 750,000-square foot park has been sub-divided with 200,000 square feet of space already leased to several small industrial tenants. Companies that have moved in during this period include Truarc, a retaining ring manufacturer from Millburn in Essex County with 35 jobs (with another 35 jobs next year); Eupen Cable, a maker of equipment for the telecommunications industry, from Clearwater, FL with 25 jobs; and Stateline Fabricators, a steel fabricator, from Upper Bethel, PA, with 12 jobs.
The Warren County unemployment rate for the first nine months of 2005 averaged 3.7 percent, 0.7 of a percentage point lower than in 2004. Over the same period, the state’s average unemployment rate was 4.3 percent in 2005, down from 5.1 percent in 2004.
The modest rate of economic growth experienced in Warren County in 2005 should continue in 2006. The sectors that should see some employment growth are retail trade, educational and health services, and government. In retail trade, Tractor Supply, a Tennessee- based farm supply store, expects to open its first New Jersey retail outlet in December 2005 in the former Ames store in Washington Township, creating 25 jobs. The company plans to open eight more stores over the next two years in New Jersey. The additional resources needed to support population growth in the county should spur further hiring in both educational and health services and local government.
Information employment will benefit when Infinitt North America, a supplier of imaging and information-management solutions to hospitals, imaging centers, and outpatient clinics, moves its operations and 25 jobs from Irvington in Essex County to the Hillcrest Mall in Phillipsburg in November.
The unemployment rate in Warren County should remain in the 3.5 percent to 4.5 percent range in 2006.
For more information on Warren County, please contact James McGarry by e-mail at jmcgarry@dol.state.nj.us or call (973) 648-3866.