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Connecticut Private Sector Job Gains Above Average in Q4 2020

  • Connecticut private sector experiences net gain of 9,697 jobs in the fourth quarter of 2020, well above historic norms
  • Increase is driven by economic recovery from the COVID-19 pandemic, although it marks a significant slowdown from the third quarter of 2020
  • Business closings in Connecticut were outnumbering openings in the lead-up to the pandemic, and data is not yet available on the number of business losses caused by the pandemic recession

Summary by Dirk Langeveld

Private sector job gains in Connecticut in the fourth quarter of 2020 were well above average, according to data released by the Connecticut Department of Labor. This trend marked ongoing recovery from the initial impact of the COVID-19 pandemic, although job gains were down considerably from the previous quarter. The state is also still awaiting data on the severity of business losses caused by the pandemic.

The data shows that business contractions and closings fell sharply after spiking in the second quarter of 2020, with business openings and expansions increasing quickly in the third quarter. However, the fourth quarter marked a significant reversal, with closings and contractions increasing and openings and expansions falling.

Business Employment Dynamics data provided by the Bureau of Labor Statistics shows a net gain of 9,697 job gains in the Connecticut private sector between October and December 2020. This was down sharply from a net gain of 79,399 jobs in the third quarter of 2020, when the most stringent pandemic restrictions were lifted, but well above historic norms.

In the three years before the Great Recession, Connecticut’s private sector was adding a net total of 1,534 to 4,190 jobs a year. Private sector job losses related to the recession fell to a low of 15,445 net losses in 2009, with gains occurring between 2010 and 2018. However, the state lost a net total of 2,939 private sector jobs in 2019.

Gross job gains from new or expanding private sector businesses in Connecticut in the fourth quarter of 2020 totaled 87,068, a drop of 58,797 from the third quarter. The private sector lost 77,371 jobs due to businesses closing or contracting in the fourth quarter, up 10,905 from the previous quarter.

Gross job gains were net positive in seven of 10 industries measured by the data, with the strongest job increases in professional and business services, transportation and warehousing, and retail. The leisure and hospitality, manufacturing, and other services sectors experienced net job losses.

A total of 17,319 jobs were created through the establishment of new companies, with this figure dropping 8,723 from the previous quarter. Business expansions accounted for 69,749 new jobs, a quarterly drop of 50,074.

Contracting businesses resulted in 61,243 job losses in the fourth quarter of 2020, an increase of 10,813 from the third quarter but below the total in the fourth quarter of 2019. Closing businesses resulted in 16,128 job losses, an increase of just 92 from the previous quarter.

Business closings and contractions increased sharply at the start of the pandemic in the second quarter of 2020, but quickly fell back in the third quarter.

A total of 3,680 businesses were established between October and December, creating 9,469 new jobs – up 1,064 from the third quarter. Data on business closings is only available through the first quarter of 2020, prior to the pandemic; at that time, 2,574 businesses closed with the loss of 7,765 jobs.

Business closures consistently outnumbered openings in Connecticut between 2008 and 2010, averaging a net loss of 640 companies a quarter in those years. In the ensuing years, the change in business per quarter varied between a loss of 354 businesses to a gain of 903 businesses.

Connecticut experienced a significant decline in business in the lead-up to the pandemic, with a net loss of 2,011 establishments in the first quarter of 2019 and 539 in the second. While it had a net gain of 84 establishments in the third quarter of 2019, losses resumed with net reductions of 157 in the fourth quarter of 2019 and 257 in the first quarter of 2020.

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