Economic Research & Analysis

Economic Snapshot - Volume 1, 2018

Highlights

Unemployment fell for the third straight month
Venture capital investment closed 2017 with a near-record-breaking quarter
New housing construction slowed in December 2017
The Manhattan office market ended 2017 on a high
Airport travel rose in November 2017, driven by international flights

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#92: A Look Back at New York City's Economy in 2017

This month, we take a look back at the New York City economy in 2017. But first, we explain a name change for our "monthly" snapshots.

Video

Employment

EmploymentEMPLOYMENT SNAPSHOT 

Private sector employment rose by 2,000 jobs in December 2017, after November’s gain of 2,700.1 Gains were fairly evenly distributed across industries, with administrative services and health care and social assistance leading with 3,200 and 3,000 jobs, respectively. Job losses were similarly broad-based. Information, arts and entertainment, and education lost the most jobs in December, with decreases between 1,500 and 2,100 jobs. 

Unemployment fell for the third consecutive month, reaching 4.3% in December 2017, down from November’s rate of 4.7%. New York State stood at 4.6% in December 2017 and the US as a whole was at 4.1%. The December 2016 rate for New York City was 4.9%. Real average hourly earnings rose 3.0% from December 2016, to $35.55. Average hours worked fell slightly from 34.3 to 34.1, resulting in a 2.4% increase in average weekly earnings from last year. This is the highest wage growth since July 2017.

Monthly employment data are seasonally adjusted by OMB. Source: New York State Department of Labor; US Bureau of Labor Statistics 
1 Private sector employment estimates were revised down from + 4,000 in November 2017

Employment details Jan 2018

Note: Numbers may not add to totals due to rounding.

Each month, we draw on state and federal data to take a closer look at employment trends in one sector of the city’s economy. This month, we’re diving into the accommodation and food services industry.

Industry spotlightINDUSTRY SNAPSHOT 

Accommodation and food services is New York City’s third largest industry with 362,500 employees as of December 2017. Employment in the industry grew at a brisk annual average rate of 5.9% between 2012 and 2015, before softening to 2.5% growth in 2016. The sector gained 12,800 private sector jobs between December 2016 and December 2017, growing 3.6%—the second-largest year-over-year percentage gain of any sector. 

All of the industry’s major subsectors experienced employment growth over the last five years. However, growth was not even, with lower-wage food service subsectors outpacing better-paying accommodation subsectors. Restaurants and other eating places constitute the industry’s largest subsector with 259,400 employees as of 2016. Employment grew between 5.8% and 7.0% annually between 2012 and 2015, but slowed to 2.4% growth in 2016. While real earnings are now rising, growing more than 3% in each of the past two years, employees in the subsector face among the lowest wages in New York City, with average annual earnings at only $27,900. 

Mobile food services—consisting mainly of street vendors—is growing the fastest of any subsector, with 66% employment growth in the past five years. Nevertheless, mobile vendors remain among the smallest subsectors in the industry with fewer than 500 jobs in 2016. Drinking laces, which employ 12,300, have also seen rapid and consistent employment growth—48% over five years—and annual growth never falling below 4%. 

The accommodation sector, which employs 51,300, has seen the least growth, with employment gains of under 2% in three of the past four years. Wages in accommodation are higher than in the food services subsectors, with average earnings of $61,800 in 2016. Like employment, however, wages have also seen modest gains, with real wages rising less than 1% each of the past two years.

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

Each month, to give local employment data a national perspective, we compare employment in the New York City Metropolitan Area to other major metro areas around the US. We use metro areas, rather than cities, as they provide a more consistent basis for regional economic comparison.

Employment map

Source: US Bureau of Labor Statistics 

Finance

NYCEDC monitors financial activity in New York City, including venture capital financing, corporate finance, and stock prices, each of which is reported on a quarterly basis. This month we are reporting on venture capital financing. 

FINANCE SNAPSHOT 

Venture capital in New York City had a happy holiday quarter, with the fourth quarter of 2017 experiencing the second highest level of venture capital investment since the start of the data series in 2000. Firms headquartered in the city brought in nearly $3.3 billion. Only the prior quarter—the third quarter of 2017—experienced more venture capital invested in the city, with $5.2 billion in investments. Despite the high level of investment, the quarter’s 260 reported deals are among the lowest since 2012, indicating larger deals on average. 

In Q4 2017, six companies received over $100 million in venture capital financing. The largest of these deals went to Compass, a real estate company, which has received a combined $600 million in two deals. Via, a ride sharing app, received $250 million, while Intersection, an urban technology firm, received $150 million. 

Source: Pitchbook 

Housing

HOUSING SNAPSHOT 

Median residential rent reached $2,745 in December 2017, a 0.1% increase from last year. Home values meanwhile continued to rise. Median sale price climbed to $661,700 in December, up 5.3% from last year. 

Residential construction slowed again in December, with the city seeing 27.2% fewer housing units beginning construction than the monthly average for the prior year. The Bronx was the only borough to see an upward trend in housing, with 378 units starting construction. However, large drops in Manhattan and Brooklyn drove down citywide numbers. The 1,497 new units citywide were the lowest monthly total since February 2017. 2 

Source: StreetEasy; Dodge Data & Analytics 
2Note that these figures report median rent and prices, and are therefore not comparable with last month, which reported asking rents and prices. 

Commercial Real Estate

Commercial real estate data is reported for office, retail, and industrial markets on a rotating, quarterly basis. This month, we explore New York City’s industrial market. We also report monthly construction starts on non-residential buildings, which includes commercial and public-use buildings. 

REAL ESTATE SNAPSHOT 

New York City’s office market showed mixed signals in the fourth quarter of 2017. Net absorption—the change in occupied space—was down 711,128 square feet across the city, with the vacancy rate rising 0.1 percentage points to 7.9%. The negative trends were driven by markets outside of Manhattan, with net absorption at -800,653 and the vacancy rate jumping from 6.3% to 7.2% from the previous quarter. Meanwhile, rent in the city rose to $60.88, a 6.5% increase from last year and the largest increase since the end of 2016. The Manhattan market led this increase with rent going up 7.4% from last year. Five buildings delivered 282,891 square feet in the fourth quarter, with 63% of this square footage in Manhattan. Among the 21 million square feet in 70 buildings that were being constructed, 74% were located in Manhattan. 

After an unusually slow November, non-residential construction picked up in December, despite being 14.9% below the prior-year monthly average. While only five non-residential projects began construction in Staten Island, the fewest of any borough, the construction of a 450,000-square-foot warehouse drove the borough’s city-leading growth. Manhattan’s construction starts on 40 buildings containing a total of 56,000 square feet constituted the least amount of space started in any borough.

Sources: CoStar Property; Dodge Data & Analytics 

Transit & Tourism

TRANSIT & TOURISM SNAPSHOT 

International tourism picked up steam in November 2017, with Broadway revenues rising 11.8%, to $130 million, after sliding the prior month. Airport passenger traffic rose, driven by international flights. Ridership on local public transit networks fell in November 2017 from the prior year. This was led by bus ridership, with fell 5.0%.

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

TRANSIT CHANGE COMPARED TO 2016

Transit numbers

TOURISM CHANGE COMPARED TO 2016

Tourism numbers