GSI Analysis: August ’23 Jobs Report – New Jersey’s Unemployment Rate Moves Above 4% as Employment Drops

• Unemployment rate climbs 0.3% to 4.2% versus 3.8% U.S. average
• Increase in unemployment rate driven by large decrease in employment
• Strong increase in jobs in August follows a large downward revision to July. Recent job gains have been concentrated in the public sector

On September 14th, New Jersey’s Department of Labor and Workforce Development issued the monthly jobs report  for August 2023. Dr. Charles Steindel, former Chief Economist of the State of New Jersey, analyzed the report for the Garden State Initiative:

New Jersey’s unemployment numbers are concerning. The uptrend in the state’s unemployment rate continued in August, with it rising to 4.2% from July’s 3.9%. This time, the increase was almost entirely due to a marked decline of 11,500 in employment of New Jersey residents; the labor force was up only 1,700 (the estimates of jobs in the state and employment of residents are based on different surveys and can diverge sharply in any month). Over the past year, New Jersey’s unemployment rate has moved from well below the nation to somewhat higher.

The U.S. Bureau of Labor Statistics will issue its monthly “State Employment and Unemployment” report on Tuesday, September 19th, which offers a comparison of how New Jersey is faring relative to other states. In last month’s release, covering the month of July, New Jersey’s unemployment rate ranked 44^th in the nation, with 43 states reporting lower rates.

The headline August number for job gains in New Jersey was higher than any month since January, however, there was a pronounced 5,200 downward revision to the July numbers, which now show a 4,200 loss. The downward revision was primarily in the government sector, which had initially been reported to have had an extraordinary increase of 8,300. That number has been trimmed to 4,000 which is still quite large.

The sectoral increases in August were widespread, with the only declines reported to have been in construction (down 400) and trade, transportation, and utilities (also down 400). Once again, the public sector led the way, with a 5,600 increase. So, the numbers tell us that public sector employment has grown by 9,600 over the last two months which may be viewed with some skepticism. Before seasonal adjustment, the estimate actually is that public sector employment in August was roughly 35,000 less than in June. What happens in the summer months, of course, is that public sector employees are laid off at the end of the school year and then brought back on payroll when schools reopen. The precise timing is hard to predict and could be very different than what is assumed in the seasonal adjustment process. It seems safe now to assume that either the August gain will be revised down, or September will see a marked drop in public sector employment.