New Jersey counties and municipalities may now order an 8:00 p.m. curfew on nonessential businesses to spot the spread of COVID-19.
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New restrictions also take effect on Thursday that limits hours for indoor service at bars and restaurants.
The positivity rate has hit 12% and more than 1,800 people are now in the hospital, the highest since early June.
"Our approach to this second wave is to act surgically within hot spots and that means giving local officials the ability to take actions to prevent localized hotspots from becoming COVID wildfires," he said.
Starting Thursday night, restaurants in the state must close indoor dining at 10 p.m.
No bar seating is allowed, but Governor Murphy says outdoor "seating bubbles" are allowed.
Murphy continues to urge people to practice social distancing and wear a mask.
"You know what's really uncomfortable and annoying? When you die. That's my answer, and this is not a forever and for always," he said.
Murphy warns of tighter restrictions if COVID surge continues
Murphy said there are no plans to return to all-virtual schools across the state, but also wanted the state may tighten limits on indoor gatherings even further.
The governor is banning all interstate indoor sports under the college level.
Meantime in Newark, the mayor is sounding the alarm.
At a news conference Thursday, Newark Mayor Ras Baraka said recent data shows the percentage of positive cases in Newark has risen from around 6 percent to more than 19 percent in the last month, with some neighborhoods far above that level.
"The data is reminiscent of April and May, and we cannot afford to go back there," he said. "As a matter of fact, it's better to say we are back where we were in April and May. It's difficult for everybody, and it's going to take all of us to make sacrifices for this thing to go away. We're not a city of individuals, we're a city of neighborhoods, of communities, and we have to take care of each other."
Newark has recorded more than 13,000 cases and 680 deaths since the start of the pandemic, Baraka said.
Newark's new restrictions go beyond statewide measures. Residents in some parts of New Jersey's largest city are facing a 9 p.m. curfew for at least the rest of the month as officials seek to stop the surge.
The curfew will be 10 p.m. on weekends for parts of three zip codes where virus cases have spiked recently.
Indoor and outdoor gatherings are limited to 10 people, and all sports in the city are suspended for at least two weeks. The city also is banning visitation at long-term health care facilities for the same duration.
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