Economic Research & Analysis

December 2017 Economic Snapshot

Published Thursday, Jan 04, 2018

Highlights

Private sector employment rose after a three-month slump
Economic expansion slowed in the third quarter
Housing prices continued to fall in November 2017
The industrial real estate market softened through the third quarter
Public transit ridership rose for the first month since January 2017

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#91: A Close Look at the Construction Sector in New York City

This month, a look at the city's construction sector through an employment lens; and we touch on some recent positive trends, including a dip in overall unemployment and gains in private sector employment.

Video

Employment

Dec 2017 employmentEMPLOYMENT SNAPSHOT

Private sector employment in New York City rebounded in November 2017, adding 4,000 jobs, following three months of job losses. Professional, Scientific and Technical Services saw the most gains, adding 2,800 jobs from last month. Health Care and Social Assistance added 1,800 jobs, while Education added 1,100 after two months of heavy losses. Losses in November were concentrated in Finance, Insurance, and Real Estate, which lost 2,700 jobs—a reverse of strong gains last month—and in Administrative Support, which fell by 1,600. 

The unemployment rate fell to 4.7% in November 2017, building on its slight dip in October. The rate had risen slowly for the six months prior. November’s 4.7% unemployment rate is on par with this time last year, while the US rate currently stands at 4.1%. Labor force participation ticked down 0.2 percentage points to 61.4%, but it remains near historic highs. In April 2017, the rate passed 61% for the first time since at least 1976, when the data series began. While average weekly hours worked remained steady, both hourly and weekly earnings rose by 1.8% since November 2016. 

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

Employment by industry Dec 2017Source: New York State Department of Labor

Dec 2017 Construction snapshot 

INDUSTRY SNAPSHOT

In November 2017, the construction industry added 1,400 jobs—its fourth consecutive month of job growth. Construction employs 156,700 workers citywide, comprising 4.0% of private sector employment, and the sector has grown each year over the past five years. Since 2011, construction employment has risen at least 6% annually—more than twice the private sector average. In the first eleven months of 2017, the industry added 9,300 jobs, a 6.3% gain. 

The fastest growth has come from the Construction of Buildings subsector, which accounts for 30% of industry employment. Employment in this sector is broken down into construction of residential and non-residential buildings. Residential building construction grew an average of 10% annually from 2012 to 2015 but stagnated in 2016. Conversely, non-residential building construction saw moderate growth through 2014, but grew by 32% from 2014 to 2016. 

Employing 58,000 workers in 2016, Building Equipment Contractors is the largest construction subsector, making up 41% of all workers in the industry. Like the industry as a whole, the subsector is marked by moderate, consistent growth. Building Equipment Contractors grew between 3% and 9% annually from 2012 to 2016. 

Heavy and Civil Engineering Construction has been stagnant for the past five years and tends to run counter to overall construction trends. From 2008 to 2010, while employment in Construction of Buildings and Specialty Trade Contractors each fell by 18%, employment in Heavy and Civil Engineering jumped 22%. 

Source: New York State Department of Labor; US Census Bureau Quarterly Workforce Indicators

US metro area employmentSource: US Bureau of Labor Statistics 

Finance

Finance numbers december 2017NYCEDC 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 the New York Federal Reserve Bank’s Index of Coincident Economic Indicators. The Index of Coincident Economic Indicators is used by the New York Federal Reserve to capture economic activity in a single index, and is constructed from four data series: payroll employment, unemployment rate, average weekly hours worked in manufacturing, and inflation-adjusted earnings. 

FINANCE SNAPSHOT

Economic activity in New York City appeared to decelerate in the third quarter of 2017, according to an index maintained by the New York Federal Reserve Bank (see note above). While still positive, New York City’s rate of economic expansion dropped 1.4 percentage points to 2.4%. The rate has slowed continuously through 2017, and is now at its lowest rate since the end of 2009. Last year, this rate was 3.6%. Economic growth also slowed last quarter for the US as a whole, down 0.1 percentage points to 2.7%. 

Source: Federal Reserve Bank of New York; Federal Reserve Bank of St. Louis 

Housing

December Housing dataHOUSING SNAPSHOT

In November 2017, median rent in New York City fell 3.6% from the year prior, to $2,700. This is the 14th consecutive month that year-over-year rents have fallen, and it’s the steepest drop since July 2017. Median sales prices fell in November 2017, down 3.8% from the prior year to $1.15 million. 

Residential construction slowed for the first time in five months, with the City seeing 1.9% fewer housing units beginning construction than the monthly average for the twelve months ending in November 2017. While Brooklyn housing construction continues its overall upward trend, a drop in new Manhattan housing pulled down citywide numbers. Manhattan’s 386 new units were the lowest monthly total since February 2017. 

Source: StreetEasy; Dodge Data & Analytics 

Commercial Real Estate

December 2017 Commercial real estate dataCommercial real estate data is reported for office, retail, and industrial markets on a rotating, quarterly basis. This month, we explore New York City’s retail market. 

REAL ESTATE SNAPSHOT

The industrial real estate markets in boroughs outside Manhattan continued their downward trend in the third quarter of 2017. Net absorption, which had been negative since the first quarter of 2016, was down 529,574 square feet, with vacancy increasing from 3.8% to 4.7% during the same period. Direct rent rose to $19.83 per square foot, a 2% increase from the prior year. The industrial market is largely shaped by the warehouse market, which shows similar vacancy (4.4%) and rent rates ($19.11). The flex space market also drove down the market average, with a vacancy rate of 10.2% and a 6% year-over-year rent decline. Staten Island was the most affordable submarket, with rents at $14.80 per-square-foot, followed by the Bronx’s $16.50 and Queens’ $18.95. Brooklyn was the most expensive, at $21.97. One building delivered 6,400 square feet to the market in the third quarter 2017, with 646,791 square feet still under construction. 

New non-residential construction experienced an unusually slow month in November 2017. The number and size of new construction projects for non-residential buildings fell sharply in every borough. While individual boroughs regularly experience comparably slow months, it is uncommon for all five boroughs to fall off simultaneously. This follows three months of rising non-residential construction starts. 

Note: The Economic Snapshot typically reports real estate market trends for all five of New York’s boroughs. However, because of the small size of Manhattan’s industrial market, data is only available for the other four boroughs.

Sources: CoStar Property; Dodge Data & Analytics

Transit & Tourism 

TRANSIT & TOURISM SNAPSHOT

New York City’s tourism sector showed mixed signals in October 2017. The number of passengers flying through the region’s airports rose 3.5% from last year, led by international travelers. Broadway revenues fell 5.8% after four consecutive months of growth. Meanwhile, regional transit saw growth across the board. Subway and bus ridership rose 1.1% after an eight-month decline. The increase was driven by rising subway ridership; bus ridership continued to fall. Commuter rail ridership was also up 3.7% and trips into the city through bridges and tunnels continued to rise, by 3.4%.

 

Sources: Port Authority of New York and New Jersey; Metropolitan Transportation Authority; Broadway League; CBRE 

TRANSIT CHANGE COMPARED TO 2016

Transit data December 2017 

TOURISM CHANGE COMPARED TO 2016

December 2017 tourism data 

*Note: Airport and Hotels data are reported for August 2017.