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Contact: Mark Vitner
(704) 383-5635

Media Contact: Elizabeth Hodges
(704) 383-5188

December 27, 1999
High Tech Services & an Improving Factory Sector will Drive New Jersey's Economy in 2000

New Jersey is beginning the New Year with solid momentum. First Union's measure of New Jersey's real Gross State Product grew 3.6% in 1999, as nearly 70,000 jobs were added across the state. Unemployment continued to fall, while homebuilding and commercial construction both strengthened.

The coming year will see similar gains. Real GSP is expected to increase 3.2%, as hiring in New Jersey's high tech sector remains strong and the state's industrial sector begins to revive. Homebuilding and commercial construction, however, should moderate.

Growth in high tech is being driven primarily by the communications industry. The state's employment numbers show no net gain in jobs but activity has clearly increased. The Internet sector is booming, especially in Northern New Jersey, where several firms are setting up data centers to handle the surge in Internet traffic. Other areas of the high tech sector are also booming. Hiring in data processing and computer programming rose 6.8% last year and jobs at research labs grew 5%. High tech services now employ close to 300,000 workers across the state. The coming year will see additional gains, with high tech firms creating more than 10,000 new jobs.

Hiring in financial services should also remain strong. Securities firms and investment banks have hired 8,000 workers this past year and employment appears set to rise even faster in the coming year. The driving force behind much of this growth is the outflow of jobs from New York City to the Jersey City area, which is fueling the building boom in the area. On the downside, mortgage banks will likely trim their payrolls.

While high tech and high finance are getting the headlines, the revival in New Jersey's basic manufacturing sector is expected to be the biggest swing factor in the outlook. Manufacturers eliminated 10,600 jobs last year and more than 22,000 jobs have been lost since Asia's economies began to weaken back in late 1997. More recently, New Jersey manufacturers have reported that orders and output have been rising.

Producers of consumer and industrial products are beginning to win back customers from imports and many are also beginning to see exports increase. Manufacturing payrolls will not be a huge source of growth but they will likely increase this year.

The increase in factory output is also driving growth in distribution. Activity at the State's ports has picked up and rail and truck traffic has increased. Airline traffic is also booming, with both passenger and freight traffic up solidly.

While activity in the factory sector is heating up, the construction sector will likely cool off a bit. Higher mortgage rates are already cutting into home sales and new construction is also slowing. Permits for new single-family homes are expected to drop 10% in the coming year, while apartment construction will likely dip 20%.

Commercial construction should fare a little better. Demand for office, industrial and retail space remains strong across much of the state and vacancy rates have fallen. Still new construction appears set to decline about 5% statewide.

New Jersey's important tourist sector continues to expand. Tourist-related related industries accounted for 9.5% of the state's economic growth in 1999. Most of that gain was at restaurants, retailers and tourist attractions. More modest gains are expected this year, with the tourist sector expected to add about 8,000 jobs.

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