Nonagricultural employment declined 1.3 percent in New York State and 0.6 percent in New Jersey during the 12-month period ending June 2002. Manufacturing declined significantly in both New York and New Jersey—5 and 6 percent, respectively. The Finance, Insurance, and Real Estate (FIRE) sector declined 3.1 percent in New York State and increased 1.6 percent in New Jersey during the 12- month period. Some of New Jersey’s gain was the result of relocations from New York City to the New Jersey suburbs. Unemployment in both States was up substantially over the past 12 months. New York State’s unemployment rate was 6.1 percent in June 2002, up from 4.7 percent in June 2001; and New Jersey’s unemployment rate was 5.6 percent in June 2002, up from 4.7 percent in June 2001.

New York City, until recently, was the key in New York State’s economic expansion. However, between June 2001 and June 2002, 98,100 jobs were lost in New York City. Although much of the loss is attributable to the effects of the World Trade Center attack, the economy and the business services sector in particular had been heading downward before September 11. Job losses in the FIRE sector totaled 32,100, approximately half of which were in the securities and commodity brokerage sectors. More than 21,000 jobs were lost in business services. Employment in airline transportation declined more than 19 percent in the 12-month period. As a result, New York City’s unemployment rate in June 2002 was 8.0 percent, compared to 5.7 percent a year earlier.

There are encouraging signs that a recovery may be slowly under way. The second quarter of 2002 was the first in the past six quarters to show positive employment growth, with improvements in the tourism, construction, and retail sectors. Although layoffs have increased in financial and business services, some companies are taking advantage of Federal, State, and city incentives and are returning to Lower Manhattan. A prominent example is American Express, which recently announced that 4,000 of its employees will be returning to the World Financial Center. Most of these employees were transferred to Jersey City after the World Trade Center tragedy.

Upstate New York also has seen some recent, positive economic changes. Sematech, a consortium of the world’s largest computer-chip makers, including IBM, Intel, Motorola, Hewlett Packard, and Texas Instruments, plans to construct a $400 million research and development center at the State University of New York in Albany. New York State will provide $210 million to cover the costs. Sematech has played a major role in developing the materials and tools needed to produce computer chips and test products.

According to the New York State Association of REALTORS^®, there were 37,998 existing housing sales in New York State during the first 6 months of 2002. Despite the economic slowdown, sales of existing single-family homes in New York State remained brisk through the second quarter of 2002. Second-quarter 2002 housing sales levels in New York State were essentially unchanged from the level recorded during the second quarter of 2001. Existing housing sales in Long Island were particularly strong. However, in the Corning-Elmira area, which has been hard hit by layoffs at Corning Inc., the market for homes selling above $200,000 has been somewhat weak. For the first half of 2002, there were 294,700 existing single-family home sales in New Jersey, an increase of 11.3 percent from the sales volume of the first half of 2001, according to the New Jersey Association of REALTORS^®.

Multifamily building permit activity in the New York/New Jersey region totaled 15,031 units in the first 6 months of 2002, a 15-percent increase over the same period in 2001. In the New York City metropolitan area, multifamily permit activity increased 17 percent to approximately 8,900 units for the period. Significant increases in activity were also recorded in the Albany-Schenectady-Troy, Dutchess County, and Newark metropolitan areas.

Manhattan’s cooperative/condominium market is very strong: the Real Estate Board of New York reported record median prices. Prices have risen over the past year for all unit sizes except the largest. The strongest demand has been for three-bedroom units.