Unemployment Rate Rise Linked To “Discouraged Workers” Re-Entering Job Market

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TRENTON – New Jersey’s February unemployment rate edged up by 0.1 percentage point to 9.2 percent, even as the state added 7,500 jobs during the month.

This slight rise is mainly attributable to the re-entry of “discouraged workers” into the state’s labor force, according to the New Jersey Department of Labor. As potential workers who had stopped looking for jobs sensed that employment opportunities have improved, they re-entered the labor force and resumed their job search. The re-entry of prospective workers can temporarily cause the unemployment rate to rise even as employment is increasing during the early stages of an economic recovery.

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In February, significant job gains were recorded in the professional and business services (+3,300), construction (+3,000), and leisure and hospitality (+1,700) industry sectors. The gain in professional and business services was due to hiring in two key industry components, professional, scientific and technical services which added 2,200 jobs and administrative support/waste management and remediation which increased by 1,300. The increase in construction represents the largest monthly job gain for the sector in over five years.

Industries that recorded job loss included trade, transportation and utilities (-1,200), educational and health services (-800) and financial activities (-700). Contraction in the retail trade segment (-1,200) was responsible for the loss in trade, transportation and utilities while the loss in educational and health services was due to a drop in the health care and social services (-2,500) component.

Public sector employment in February was higher by 700 as gains in local (+2,700) and federal employment (+200) outpaced a 2,200 drop in state employment.

New Jersey personal incomes are on an upswing.  According to the U.S. Bureau of Economic Analysis, the state’s aggregate personal income—an estimate of income earned by all residents—was $450.7 billion (at an annual rate) for the fourth quarter of 2010. This is a new record high and is 2.9% above the value for the fourth quarter of 2009.

“The income gain is one of the most encouraging signs yet that New Jersey’s economy is emerging from the recession,” said Charles Steindel, chief economist for the New Jersey Department of the Treasury.

One bit of bad news – based on more complete reporting from employers, previously released January estimates show a revised over-the-month (December – January) loss of 15,800 jobs. Preliminary estimates had indicated an over-the-month loss of 13,000 jobs.


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