American Express is abandoning Jersey City and moving its employees back to its building in Lower Manhattan to consolidate operations that were scattered across the New York region after the World Trade Center attack.

The decision, described by American Express executives in a memorandum to employees yesterday, reverses an early decision to significantly reduce the number of workers in Lower Manhattan by shifting some of them to Jersey City.

But American Express officials said that after making a round of layoffs late last year, there would be enough space in Lower Manhattan to accommodate all of its local employees. American Express owns the building it will be reoccupying, 3 World Financial Center, in a partnership with Lehman Brothers, which has not committed to returning.

"American Express today is so far the biggest win for the city and the state," said M. Myers Mermel, the president of Tenantwise.com, a commercial real estate broker on Wall Street.

The decision to return 3,500 employees to the World Financial Center is considered a much-needed boost for New York as it struggles to recover from the Sept. 11 attack. Those workers returning to the city include about 560 technology and finance workers who had been in Jersey City since 1999.

"They made the pledge to come back to Lower Manhattan, but they went beyond that by taking 500 additional jobs from Jersey City and into Lower Manhattan," said Charles E. Gargano, chairman of the Empire State Development Corporation. "I am hoping that this could be a reversal of the trend of these jobs moving out of the city."

The move was a blow to economic development officials in Jersey City who had still hoped to retain some companies that had relocated after the attacks. "We are sorry to see them go, but we are glad to see New York is rebounding," said Stan H. Eason, a spokesman for Mayor Glenn D. Cunningham.

The Sept. 11 attack displaced 4,500 American Express workers based in 3 World Financial Center, 40 Wall Street and 7 World Trade Center. The workers were sent to the Jersey City office and other space that the company quickly leased in Stamford, Conn., and Short Hills and Parsippany, N.J.

Molly Faust, an American Express spokeswoman, said the decision to close the Jersey City office and move everything back to Lower Manhattan was made primarily for financial reasons.

Ms. Faust said the total number of employees back in Manhattan — about 4,000 — will be lower than the company's pre-Sept. 11 head count because of a round of layoffs at the company.

"Work force reductions mean that we have more space in the World Financial Center and now we have the space to bring the people back to the city," she said, adding that American Express plans to sublease its office space in Jersey City and three other locations.

Jersey City became the home to several companies displaced in the attack, including Lehman Brothers, Merrill Lynch and Morgan Stanley Dean Witter.

Mr. Gargano said American Express received no tax breaks or other financial incentives to return to New York.

In November, American Express executives said they planned to return some workers to the World Financial Center but would keep a significant contingent in Jersey City. But officials involved in the process said that with the layoffs, officials realized they could save more money by consolidating operations..

In the months after the attacks, many companies said they were going to spread their operations over the region for security reasons. But many analysts said the costs of making such moves in tough economic times might be too high.

Copyright 2002 The New York Times Company