Economic Research & Analysis

August 2017 Economic Snapshot

Highlights

The private sector saw dramatic job growth for the third consecutive month.
Venture capital funding increased sharply in the second quarter of 2017.
A residential building boom in the Bronx led citywide construction activity.
Home values continued to rise with signs of a steadying housing market.
Public transit ridership continued to decline while tourism thrived.

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Employment

Private sector employment continued to surge for the third consecutive month. The private sector added 15,300 jobs in July 2017, following gains of 33,000 from the previous month. The number of private sector jobs has grown 2.8% from last year, the highest rate of growth since April 2016. Educational Services—a highly volatile employment sector—led job growth for the second month in a row by adding 14,700 jobs. Transportation and Utilities was the second strongest employment sector, rebounding from five hundred job losses in June to adding 3,800 new jobs in July.

While total employment has grown in recent months, the unemployment rate has also increased at a moderate pace, largely due to quick rises in the city’s labor force participation, which remains at a record high 61.7% for the second month in a row. Unemployment increased by 0.3 percentage points to 4.7% from June to July 2017, marking the fourth consecutive month of increases. Unemployment is lower than at the same time last year when the rate was 5.4% and the labor participation rate was 60.1%.

Average weekly wages continued their upward trend in July by rising 3.1% from last year to $1,217. As was the case in June 2017, this increase was driven by rising hourly wages while hours worked were virtually unchanged from last year. Hourly wages are now averaging $35.37, nearing record highs.

Note: Monthly employment data are seasonally adjusted by OMB
Sources: New York State Department of Labor; US Bureau of Labor Statistics

Source: New York State Department of Labor

Source: U.S. Bureau of Labor Statistics

Finance

NYCEDC monitors New York City’s gross city product, venture capital financing, and data from the New York Federal Reserve Bank, each of which is reported on a quarterly basis. This month we are reporting on venture capital financing.

The value of venture capital financings in the New York City metropolitan area increased significantly in the second quarter of 2017. Reaching $2.78 billion, quarterly funding of venture capital-backed firms was at its highest level in two years. At the same time, the number of financing deals fell to near-record lows, reflecting the above-average number of major deals. The largest second-quarter financing was Group Nine Media, a digital media company, which raised $485 million. Peloton, a fitness firm, and Casper, a mattress maker, also raised more than $150 million. The rate of increase in total funding for the metropolitan area exceeded that of other top venture capital regions, including San Francisco and Silicon Valley, which saw $4.14 billion and $3.61 billion, respectively. The upswing also outpaced the US as a whole, which saw the value of venture capital investments rise 27% between the first and second quarters of 2017. 

Source: CB Insights


Construction

New construction activity showed mixed signals in July 2017. The number of new construction projects fell 35.8%, and the value of new projects fell 24.2% from the twelve-month average ending in June 2017. These drops indicate the slowest rate of decline in new construction activity since January 2017, signifying a possible leveling-off of this year’s construction slowdown. Residential construction saw the most activity since January 2017, representing a change in direction for the first time in three months. The number of residential units starting construction in July 2017 (2,358) was 28.0% higher than prior-year monthly averages. This was largely led by the Bronx, where the number of new units more than doubled prior-year averages. Brooklyn and Queens also saw growth in residential units. The Bronx is the only borough that has seen an accelerating pace new housing unit starts over the last year.

Source: Dodge Data & Analytics

Real Estate

Residential rents in New York City were flat in July, continuing 2017’s relatively slow rental market. Median monthly rents were virtually unchanged from July 2016 at $2,340; however, rents were up 0.3% from the June 2017. In line with previous months, home prices and rents are moving in opposite directions. Home sales continue to rise quickly with the median value hitting $686,400 in July 2017. While 15.1% higher than the previous year, the rate of growth is lower than last month’s year-over-year change. This is the first month since January 2017 that the rate of home price inflation has not grown from the prior month. The Manhattan office market had a stronger-than-average month in July 2017. Average rents for Class A commercial space were $82.76, up 1.7% from the same time last year.

The Manhattan office market had a stronger-than-average month in July 2017. Average rents for Class A commercial space were $82.76, up 1.7% from the same time last year.


 Sources: Zillow; Cushman & Wakefield

Transit & Tourism

Public transit ridership resumed its yearlong decline after leveling-off in July 2017. New York City Transit, which operates the city’s subways and buses, saw the fastest drop from last year. This drop was led by declining bus ridership, which fell 5.6% from June 2016. Subway ridership also fell 1.1% from last year. Lower ridership on the Long Island Rail Road pushed commuter rail ridership lower than last year.

The tourism sector continued to grow in July with Broadway revenues experiencing dramatic growth for the third consecutive month. While attendance is also up, these increases are largely driven by higher ticket prices. Airport traffic and hotel prices also rose modestly, signifying a healthy pace of tourist visits.

Transit Change Compared to 2016

 Tourism Change Compared to 2016

*Note: Airport and Broadway data are reported for June 2017. Hotel data is reported for April 2017.