NJ unemployment rate up? But job growth is strong? Making sense of 2024 New Jersey economy

New Jersey's economy added 12,200 jobs in December, but its unemployment rate ticked up to 4.8% from 4.7%, the state Department of Labor and Workforce Development said Thursday in a report showing the labor market in 2023 slowed down from its frenzied pace.

The jobless rate, higher than the U.S. rate of 3.7%, was a sign that rising interest rates and corporate downsizing took a toll on the New Jersey economy. But business owners said they are hopeful that lower inflation and falling interest rates will help them regain their footing this year.

"With interest rates dropping, (business) will spike," said Steven Del Prete, owner of Nomad RVs, a Toms River company that equips vans with custom living spaces. He wants to hire one or two carpenters to join his three-person team.

The monthly jobs report is made up of a survey of employers to measure the number of jobs and a survey of households to measure the unemployment rate. The two sets of data don't always move in the same direction.

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The year-end report sheds light on a New Jersey economy that has been on something of a roller coaster ride since the pandemic began nearly four years ago, ushering in sweeping changes such as a surge in the housing market, a transition to remote work, a build-out of warehouses, and development of new vaccines to fight COVID.

The era also included the highest inflation rate in 40 years, prompting the Federal Reserve Board to increase interest rates 11 times to try to slow the economy down. By the end of 2023, with inflation moderating, forecasters predicted the Fed would begin to cut rates again.

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Job growth remains strong

The strong job growth in December helped New Jersey end 2023 with a net gain of 69,600 jobs. By comparison, the state lost 303,600 jobs in 2020; added 265,600 jobs in 2021; and added 129,700 jobs in 2022; Rutgers University economist James W. Hughes said.

Despite the slowdown, Hughes said, job growth last year was twice as fast as it was during the decade of the 2010s. (The job figures will be revised in March to provide a more accurate estimate).

Among the companies hiring: ShopRite will host job fairs at nearly all of its supermarkets from 11 a.m. to 2 p.m. on Jan. 20, offering full- and part-time positions.

Employers that are expanding say they have taken advantage of the region's diverse economy. Christian Giordano, president and co-owner of Mancini Duffy, a New York-based architecture firm with offices in Red Bank and Millburn, once focused on financial services offices, only to get hit hard when the industry went into a tailspin during the Great Recession in 2008.

His firm now works with a wide range of industries, including restaurants, retail, aviation and warehouses. The company was awarded a contract to design the first phase of Netflix's production studio at Fort Monmouth. And Giordano is hiring four people to add to his New Jersey staff of 35 employees.

"I don't know if we're an anomaly, but we have two offices in New Jersey, one in Millburn and one in Red Bank, and both those offices are booming," Giordano said.

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The unemployment rate spiked

The job gains were largely concentrated in three sectors: Health and education added 42,600 jobs; the public sector added 17,200 jobs; and leisure and hospitality added 13,900 jobs, Hughes said.

White-collar workers didn't fare as well. Professional and business services, a category that includes scientific, technical and office workers, lost 8,500 jobs; and financial activities, which includes finance, insurance and real estate, was flat.

The number of New Jerseyans who reported they were unemployed climbed from 157,200 in December 2022 to 231,800 last month. The unemployment rate followed suit. It rose from 3.3% in December 2022 to 4.8% last month, state figures showed.

Some of New Jersey's corporate giants cut jobs last year. Bed Bath and Beyond, headquartered in Union, filed for bankruptcy, closed stores and laid off more than 1,300 workers statewide. Prudential Financial laid off 46 workers in Newark. Nestlé closed its Freehold coffee manufacturing plant and laid off 210 workers. Health care companies like Bristol Myers Squibb, Novartis and Becton Dickinson and Co. laid off dozens more, according to filings with the state Labor Department.

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The economy is looking up

New Jersey employers remain largely optimistic about their prospects in 2024, noting the Fed's bid to raise interest rates without tipping the economy into a recession appears to be in reach.

A survey by the New Jersey Business and Industry Association, a business lobbying group, found 28% of employers predicted more hiring in 2024, 7% predicted less hiring, and 66% predicted they would stay the same.

By comparison, 23% increased hiring, while 18% decreased hiring in 2023, the survey found.

Christopher Maher, chairman and chief executive officer of OceanFirst Financial Corp. based in Toms River, said in an interview last month that he expected the bank would increase its lending in 2024 as interest rates continue to fall.

"We're looking forward to 2024, and we think you're going to see a resilient economy," Maher said.

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Michael L. Diamond is a business reporter who has been writing about the New Jersey economy and health care industry for more than 20 years. He can be reached at mdiamond@gannettnj.com.

This article originally appeared on Asbury Park Press: NJ unemployment rate rises despite strong job growth. A look at 2024