TRENTON — New Jersey's unemployment rate reached record heights in July, climbing to 9.8 percent as the state shed 12,000 jobs, according to preliminary figures released today by the state Labor Department.

By hitting 9.8 percent, the state crossed into some of the roughest economic territory it has seen in decades. Experts said New Jersey businesses are still beset by uncertainty three years after a crippling U.S. recession, while government payrolls at the state and local levels continue to shrink.

Thew new jobless rate, rising from 9.6 percent in June, was slightly above the post-recession peak reached in early 2010, and state Democrats lunged at Gov. Chris Christie's economic record weeks before the governor is set to deliver his biggest economic speech yet at the Republican National Convention in Tampa, Fla.

The last time the rate was higher was 1977, according to data from the U.S. Labor Department. New Jersey now trails the U.S. average — 8.3 percent — by its widest margin in three decades.

“The national economy has been sluggish and, realistically, we can’t be exempt," said Charles Steindel, chief economist at the state Treasury Department. "Given the national softness and the strength of our job gains in May and June some fallback was likely.”

Christie administration officials stressed that the new figure was preliminary and could be revised downward next month. They pointed to January 2010, when the first reports showed the unemployment rate had surged to 10.1 percent but was later adjusted to 9.7 percent.

RELATED COVERAGE:



• Slow economy growth will likely keep U.S. unemployment high

• U.S. unemployment rate stays at 8.2 percent

• 26K N.J. residents will lose extended unemployment benefits this week

• Only 69,000 jobs added in May, unemployment rate rises for first time since June

During the first seven months of the year, New Jersey's employers have added 25,000 net jobs. But throughout that same stretch, the jobless rate has refused to go lower. July was the fourth straight month of rising unemployment in the Garden State, which has one of the highest rates in the nation.

Connecticut also recorded an increase in July, from 8.1 percent to 8.5 percent, but it added 5,100 jobs, its labor department said today. New York rose from 8.9 percent to 9.1 percent while losing 3,700 jobs.

From a year-over-year perspective, New Jersey last month had 40,000 more jobs than it did in July 2011, said Patrick O’Keefe, director of economic research at JH Cohn in Roseland. That marked a decrease from June, when the year-over-year gain was above 60,000.

"What businesspeople see is a blizzard of question marks,” O'Keefe said. “Where they can defer decisions, they are. Where they can’t, they are minimizing their commitment.”

Christie rang in the new year with unbridled optimism for New Jersey's economy, touting a "Jersey Comeback" in town halls across the state and making the case for a 10 percent tax cut that state Democrats are blocking until and if the state's recovery quickens.

A spokesman for the governor, Kevin Roberts, said the latest numbers showed New Jerseyans desperately need the tax break. Regardless of when it gets signed into law, the tax cut would not kick in until 2013, but Roberts said cementing it sooner rather than later would spark growth.

"Our small businesses and job creators cannot afford to invest and hire without knowing that taxes will be going down the next three years in New Jersey," he said, adding that Democrats are "putting the brakes on New Jersey's economic recovery" by waiting until the end of the year to make a decision.

At a time when voters across the country are focused on the slow economic recovery, Christie is set to give one of the most high-profile speeches this month at the Republican convention, where he plans to make the case for Mitt Romney as the best choice to lead an "American comeback" from the White House.

Christie told USA Today this week that he will focus on his experiences in New Jersey, making an "emphatic" argument for the GOP approach.

But state Democrats took aim at Christie's "Jersey Comeback" mantra today, saying the economic picture has worsened under the Republican governor.

"There is no way to interpret this other than bad," said Senate President Stephen Sweeney (D-Gloucester), the state's top Democrat. "I don't want to hear any spin. I don't want to hear anything remotely close to painting this as good news. I don't want a press conference touting these numbers as if it's a 'mission accomplished' moment.

nj.com-phone-app-pic3.jpg

STAY CONNECTED 24/7

Download our

free NJ.com mobile and tablet apps

to keep up with the latest New Jersey news, sports and entertainment.

"What I want to see is this administration admit it is failing in terms of getting people back to work. What I want to see is a solid plan from this administration on how we create jobs in New Jersey."

Assembly Majority Leader Lou Greenwald (D-Camden) called it "the highest unemployment rate since Jimmy Carter."

"The numbers speak for themselves," Greenwald said. "It's clear that Christie's 30-second slogans. like the 'Jersey Comeback', are not putting food on the table."

Assemblyman Gary Schaer (D-Passaic), vice chairman of the budget committee, said lawmakers remain open to cutting taxes next year, but he doubted that a cut, by itself, would be very effective in pushing down the jobless rate.

Criticism also came from the right. Steve Lonegan, the state director of Americans for Prosperity, blamed the state's high taxes and "government intervention in the marketplace."

"This is a crisis time and it requires drastic action and you can't do it by tweaking around the edges," Lonegan said, calling for a flat income tax and an end to economic subsidies.

For more than a year, New Jersey had been lowering its unemployment rate from its recent peak in early 2010, when the rate was 9.7 percent. But this spring, the rate began shooting upward again.

State officials, using data from the U.S. Labor Department, also adjusted the total number of jobs gained in June, from 9,900 to 7,300.

The labor department said both the private and public sectors saw their payrolls shrink in July, shedding 7,100 and 4,900 jobs, respectively. Job losses were led by the professional and business services sector, which shrank by 3,900 jobs, followed by the loss of 3,000 manufacturing jobs and 2,700 in construction. Gains were led by the transportation, trade and utilities sector, with 1,600 new workers.

“New Jersey’s labor force participation rate and the percentage of our population who are employed remain above the national averages," Steindel said. "Considering we have seen job growth in nine out of the past 11 months, we anticipate that job growth should resume and start to put some downward pressure on unemployment.”

Star-Ledger staff writers Ed Beeson and Jarrett Renshaw contributed to this report.

Follow @NJ_News