NEW YORK—The Federal Reserve Bank of New York today presented new analysis on current trends in regional employment, noting an improving employment picture across much of the Second District.1 In New York State and New York City, as well as in Fairfield County, Connecticut, employment growth has roughly matched that of the nation, while in New Jersey it has been more modest. Looking ahead, growth in regional service-sector jobs is expected to strengthen and to lead the employment recovery; while weakness in other sectors, including manufacturing, construction and, especially, state and local government are likely to continue hampering job growth, according to New York Fed regional economists.
“We expect employment in New York and New Jersey to continue to recover, led by growth in private services jobs, though there are downside risks to the region from state and local government fiscal restraint,” said William Dudley, president and chief executive officer of the New York Fed.
Over the past year, the tri-state region has added more than 100,000 private-sector jobs. Businesses in a variety of service sectors across the region contributed to the job growth, including professional and business services, education and health, leisure and hospitality, and finance. While New York and southwestern Connecticut have been gaining jobs for more than a year, only in the past few months has New Jersey begun to expand employment. And in Puerto Rico, job growth has yet to be firmly established.
Consistent with the national trend, unemployment rates across much of the region have retreated from their cyclical peaks. However, March’s unemployment rate of 8.0 percent in New York and 9.3 percent in New Jersey are still elevated in comparison with levels before the recent down turn. Puerto Rico, meanwhile, has experience little improvement, with an unemployment rate of 16.1 percent.
Throughout the recent downturn, job losses in both New York State and New York City were less severe than in the nation and also less severe than in the prior two regional downturns. In New Jersey, job losses were comparable to the nation and to the most recent severe recession. Of note, job counts in state and local government held steady for much of the recession in New York and New Jersey but began to decline as the recovery got underway. Over 40,000 jobs have been lost in the sector to date.
New York State (except New York City):
A recovery of employment is underway across much of upstate New York and on Long Island, dominated by an expansion of education and health services, and professional and business services jobs. Employment growth in Albany has been hampered by declining government employment, while other parts of upstate New York have seen growth weighed down by continued declines in manufacturing employment.
New York City:
Employment in New York City has been on a steady recovery, pushed by robust job growth from a variety of private service sectors. Unlike previous recoveries, the employment upturn in the city started on Main Street, with the professional and business services sector and the leisure and hospitality sector providing solid gains. This is an unusual development, as New York City has normally relied on Wall Street to lead job growth following economic downturns. Financial sector employment, while initially lagging behind other sectors, has gained momentum in the last year, augmenting the expansion of non-financial sector employment.
The employment recovery in New Jersey has been muted compared to the region and nation, mainly due to the state and local government sector, where employment is down over 6 percent since mid-2009. Private-sector job growth has recently strengthened leading to overall employment gains for the past two months.
Employment in Puerto Rico appears to have stabilized since mid-2010, potentially signaling an end to the island’s protracted downturn that began roughly two years before the U.S. recession. Still, the unemployment rate in Puerto Rico remains elevated. Job losses in construction, government and manufacturing, which had been especially acute in 2009 and 2010, appear to have subsided, and the island has recently seen a relatively strong expansion of professional and business services employment.
About the New York Fed’s Quarterly Regional Economic Press Briefing Series
Media who cover the Federal Reserve’s Second District are invited each quarter to attend a briefing by New York Fed regional research economists on a variety of subjects relevant to the regional economy. The New York Fed’s Quarterly Regional Economic Press Briefing Series, which began in April 2010, intends to highlight relevant regional economic issues, such as employment trends, manufacturing, housing, and household debt and credit, on an annual basis. The next briefing is expected to take place in the third quarter of 2011.
1The Second Federal Reserve District includes New York State, northern New Jersey, southwestern Connecticut, Puerto Rico, and the U.S. Virgin Islands; this study focuses on the whole District except for the Virgin Islands.