The economic outlook among New Jersey employers has fallen to recession levels, and their plans for hiring more workers have fallen to the lowest level in 18 years, the New Jersey Business & Industry Association said when it released its 2009 Business Outlook Survey two days before Thanksgiving Day.
Whether evaluating actual conditions in 2008 or anticipating what 2009 will bring, the survey’s 1,450 respondents presented a mostly gloomy assessment of current and future economic conditions.
“Our survey indicates that New Jersey has been in the grip of a recession for much of 2008,” said NJBIA President Philip Kirschner. “Many businesses are struggling to survive, and they expect things to get worse in 2009.”
Employers reported a sharp drop in sales, profits, and employment over the past year, and 69 percent of companies said their industries were already in a recession or heading into one by September.
Only 17 percent of companies said they expect to expand employment in 2009. The net percentage expecting to hire more workers, at -3 percent, is at the second lowest level of the past 28 years.
Sixty percent of survey participants said that business conditions will get worse before they get better, a more negative view than was seen in the 2001 recession. The study found that only 12 percent of survey participants said New Jersey is a “good” place for expansion of their business facilities, the lowest level in 25 years. They identified the cost of health insurance as one of the most troublesome problems.
When this survey was conducted in September, 54 percent of survey participants reported that their industries were in a recession, with another 15 percent saying their industries were heading into a recession. A majority of respondents in every industry sector except healthcare said their industries were in a recession or heading into one.
But in a statement released the same day as the NJBIA survey, the New Jersey Hospital Association indicated that healthcare is not doing well either. The trade group said that the economy is jeopardizing the state’s hospitals, many of which were struggling well before the latest economic downturn. Nearly half of the New Jersey’s hospitals posted overall losses at the end of 2007, according to new audited financial data released on November 25 by the New Jersey Hospital Association.
The report shows that New Jersey’s hospitals, 47 percent of which are in the red, were struggling well before the country’s recent economic downturn.
According to the study, the average total margin, the ratio of total income to expenses, plunged to 0.9 percent last year from 3.1 percent in 2006.
Last year three acute-care hospitals in New Jersey closed and five filed for bankruptcy. “This data underscores the longstanding challenges New Jersey hospitals face in remaining financially sound in the face of insufficient reimbursement from Medicare, Medicaid, and the state charity-care program,” said NJHA President and CEO Betsy Ryan. “It’s truly troubling to think that this is the foundation from which our health-care facilities entered our new economic struggles. A serious situation is rapidly turning critical.”
Meanwhile, in New Jersey’s larger economy, the retail and housing construction sectors have been hardest hit, with 87 percent and 85 percent of respondents in these sectors reporting, respectively, that their industries were in a recession or heading into one.
The short-term outlook for individual industries has fallen to the lowest level since the 1992 survey. Forty percent expect conditions in their industry to deteriorate in the first six months of 2009, while only 22 percent expect conditions to improve.
Businesses are no more ready to spend than they are to hire. The outlook for business spending in 2009 is essentially flat, with 32 percent expecting to spend less on purchases in 2009, and 33 percent of businesses expecting to spend more. The rest expect to spend about the same amount. This is the weakest outlook for business spending in 18 years.
The outlook for sales and profits at individual companies has fallen dramatically from last year’s levels. Forty-one percent of companies said they expect their sales to increase over the next 12 months, down from 57 percent of companies having this expectation last year. And 29 percent expect their sales to decline over the next 12 months, compared with 21 percent who had this expectation last year.
The September, 2008, survey findings are based on the first 1,450 responses. Of this group, 83 percent were small companies with 1-49 employees. Responses came from New Jersey businesses in all 21 counties and every major industry.