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State's unemployment rate jumps
Jobless spike makes experts jump
Wednesday, May 17, 2006
By BETH FITZGERALD
Newhouse News Service
A long winning streak for the New Jersey economy ended last month when the state's unemployment rate surged to 5.1 percent from 4.5 percent in March -- and climbed above the nation's 4.7 percent jobless rate for the first time in 35 months.
According to a survey of households for April, the Garden State labor force totaled 4.5 million, the number of employed people was 4.3 million, with 231,300 unemployed, up from 203,000 in March, the state Department of Labor and Workforce Development reported yesterday.
A combination of an increase in the labor force and a decrease in the number of jobs boosted the number of unemployed people and thus the April jobless rate.
New Jersey's unemployment rate was 6 percent in mid-2003 before trending down, reaching 5 percent in May 2004. The low point of the past three years was 4.2 percent in May 2005, according to the seasonally adjusted, revised and "benchmarked" figures from the state agency.
Since that low point, the state jobless rate has been trending higher, although at a moderate rate.
But economists were skeptical about how the unemployment rate could rise so dramatically in April, when a parallel survey of New Jersey employers showed they added 6,200 jobs, nearly double the 3,300 jobs gained in March. They said they need a few months to decide if they're looking at an ominous economic trend -- or just some kooky aberration in the data.
"This does not make any sense to me; the New Jersey economy has been doing pretty well. Sometimes you can get some really strange numbers," said Joel Naroff, chief economist for Commerce Bank.
"Whoa!" was the initial, surprised reaction from Rutgers University economist James Hughes. "It just does not seem plausible. But one month does not make a trend, and this may well be a blip given the strong growth in payrolls in April. We shouldn't put too much into this; we have to see what happens next month."
Acting State Labor Commissioner David Socolow said the 5.1 percent rate, "looks like an anomaly -- there is nothing going on in our economy that would indicate this kind of an extreme spike."
April's 6,200 payroll gain brought the state's nonfarm payroll to 4,074,900. The private sector added 5,300 jobs while government payrolls grew by 900. The private sector bounced back in April after losing 400 jobs during the first three months of 2006, and "this was a pretty good jump in private sector employment," Hughes said.
The professional and business services sector rose by 3,600 jobs to 598,700, and accounted for just more than two-thirds of the private-sector job gains. Financial sector jobs gained 1,100 to 284,100, while the information sector declined 1,300 to 95,500.
Leisure and hospitality grew by 900 to 344,900 while construction gained 600 jobs to reach 171,700. Education and health rose 300 to 569,200. Trade, transportation and utilities fell 100 to 879,900 and manufacturing fell 200 to 231,200.
While the unemployment rate and the payroll jobs figures appear to be close relatives -- both describe the same labor market during the same time period -- they are gathered using different methods, and hence may be more like cousins than siblings.
Each month, employers tell the government how many people they hired or let go, and that's where the 6,200 increase in the state's April payroll came from.
To calculate the unemployment rate, the government also conducts a telephone survey each month of about 1,500 New Jersey households. The survey asks adults if they are working, unemployed or looking for work.
To be counted among the unemployed, one must both be out of work and looking for a job. Those who ceased looking for a job may have voluntarily dropped out of the labor market or they may be "discouraged workers" who want a job but have given up hope of finding work. Either way, they aren't counted among the unemployed.
The unemployment rate can be a volatile statistic, said Rae Rosen, senior economist of the Federal Reserve Bank of New York.
"The numbers can have a sharp spike, and then a year later the government revises the numbers and the spike ceases to exist," Rosen said. "Without another month or two of confirmation, this is not something that is really indicative of a worsening trend."
Labor Commissioner Socolow illustrated how the federal government's year-end revision of monthly unemployment rates can dramatically iron out the ups and downs of the data. The initial jobless rates for last September, October and November were 4.4, 3.9, 4.6 percent, respectively; after the year-end revision, called "benchmarking," the numbers became 4.4, 4.4 and 4.5 percent.
© 2006 The Times of Trenton
© 2006 NJ.com All Rights Reserved.
State's unemployment rate jumps
Jobless spike makes experts jump
Wednesday, May 17, 2006
By BETH FITZGERALD
Newhouse News Service
A long winning streak for the New Jersey economy ended last month when the state's unemployment rate surged to 5.1 percent from 4.5 percent in March -- and climbed above the nation's 4.7 percent jobless rate for the first time in 35 months.
According to a survey of households for April, the Garden State labor force totaled 4.5 million, the number of employed people was 4.3 million, with 231,300 unemployed, up from 203,000 in March, the state Department of Labor and Workforce Development reported yesterday.
A combination of an increase in the labor force and a decrease in the number of jobs boosted the number of unemployed people and thus the April jobless rate.
New Jersey's unemployment rate was 6 percent in mid-2003 before trending down, reaching 5 percent in May 2004. The low point of the past three years was 4.2 percent in May 2005, according to the seasonally adjusted, revised and "benchmarked" figures from the state agency.
Since that low point, the state jobless rate has been trending higher, although at a moderate rate.
But economists were skeptical about how the unemployment rate could rise so dramatically in April, when a parallel survey of New Jersey employers showed they added 6,200 jobs, nearly double the 3,300 jobs gained in March. They said they need a few months to decide if they're looking at an ominous economic trend -- or just some kooky aberration in the data.
"This does not make any sense to me; the New Jersey economy has been doing pretty well. Sometimes you can get some really strange numbers," said Joel Naroff, chief economist for Commerce Bank.
"Whoa!" was the initial, surprised reaction from Rutgers University economist James Hughes. "It just does not seem plausible. But one month does not make a trend, and this may well be a blip given the strong growth in payrolls in April. We shouldn't put too much into this; we have to see what happens next month."
Acting State Labor Commissioner David Socolow said the 5.1 percent rate, "looks like an anomaly -- there is nothing going on in our economy that would indicate this kind of an extreme spike."
April's 6,200 payroll gain brought the state's nonfarm payroll to 4,074,900. The private sector added 5,300 jobs while government payrolls grew by 900. The private sector bounced back in April after losing 400 jobs during the first three months of 2006, and "this was a pretty good jump in private sector employment," Hughes said.
The professional and business services sector rose by 3,600 jobs to 598,700, and accounted for just more than two-thirds of the private-sector job gains. Financial sector jobs gained 1,100 to 284,100, while the information sector declined 1,300 to 95,500.
Leisure and hospitality grew by 900 to 344,900 while construction gained 600 jobs to reach 171,700. Education and health rose 300 to 569,200. Trade, transportation and utilities fell 100 to 879,900 and manufacturing fell 200 to 231,200.
While the unemployment rate and the payroll jobs figures appear to be close relatives -- both describe the same labor market during the same time period -- they are gathered using different methods, and hence may be more like cousins than siblings.
Each month, employers tell the government how many people they hired or let go, and that's where the 6,200 increase in the state's April payroll came from.
To calculate the unemployment rate, the government also conducts a telephone survey each month of about 1,500 New Jersey households. The survey asks adults if they are working, unemployed or looking for work.
To be counted among the unemployed, one must both be out of work and looking for a job. Those who ceased looking for a job may have voluntarily dropped out of the labor market or they may be "discouraged workers" who want a job but have given up hope of finding work. Either way, they aren't counted among the unemployed.
The unemployment rate can be a volatile statistic, said Rae Rosen, senior economist of the Federal Reserve Bank of New York.
"The numbers can have a sharp spike, and then a year later the government revises the numbers and the spike ceases to exist," Rosen said. "Without another month or two of confirmation, this is not something that is really indicative of a worsening trend."
Labor Commissioner Socolow illustrated how the federal government's year-end revision of monthly unemployment rates can dramatically iron out the ups and downs of the data. The initial jobless rates for last September, October and November were 4.4, 3.9, 4.6 percent, respectively; after the year-end revision, called "benchmarking," the numbers became 4.4, 4.4 and 4.5 percent.
© 2006 The Times of Trenton
© 2006 NJ.com All Rights Reserved.
posted by Jones Lang LaSalle NJ News Blog at 2:59 PM
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