Private sector employment grew by 2,900 in March, a modest increase that follows February’s strong increase of 24,000 jobs. The Health Care and Social Assistance sector saw the greatest growth month-to-month, adding 3,600 jobs. Other sectors that grew include Administrative Services (+2,500) and Retail Trade (+1,500). Professional, Scientific, & Technical Services and Accommodation and Food Services both lost 2,100 jobs month-to-month.
The city’s unemployment rate held steady at a record low of 4.2%, down 0.4 percentage points from March 2017. The unemployment rate for the US was steady as well, at 4.1%. The city’s employment to population ratio remained at a record high of 58.3%. Both hourly earnings and weekly hours were up compared to March 2017, and average weekly earnings rose 2.0% year-over-year after adjusting for inflation.
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 financial services industry.
Financial Services is New York City’s fifth largest—and highest paying—industry. In March 2018, employment decreased by 300 from the month before, but it has increased by 3,700 since March 2017.
Employment in Financial Services has slowly rebounded since the 2008 recession. The industry lost over 35,000 jobs between 2007 and 2010—10% of all employment in the industry—but then rebounded by 7% between 2010 and 2016. Employment growth accelerated in 2014, and continued to gain in each of the last three years. Wages too were hit hard during the recession, dropping 18% from 2008 to 2009. Since then, wage growth occurred primarily through a 13% increase in 2010 and an 11% increase in 2014 bringing wages to an all-time nominal high. Though wages have since fallen slightly, Financial Services still has the highest wages in the city, with an average wage upward of $280,000 as of 2016.
Financial Services is broken into three key subsectors: Banking, Securities & Investment, and Insurance. While each felt the effects of the 2008 recession, Securities was hit hardest. The subsector—the largest of the three—lost 10% of its jobs in 2008 and is the only one still below 2007 levels as of 2016. Still, the subsector’s average salary was $375,000 in 2016, compared to $400,000 in 2007. Banking and Insurance don’t boast the same salaries as Securities, but they avoid the volatility. After losing 8% of jobs in 2009, employment in Banking has consistently risen, growing 13% since 2010. Meanwhile, Insurance took longer to recover from the recession—employment didn’t begin rising until 2013, but now stands 6% higher than in 2009.
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.
NYCEDC monitors financial activity in New York City, including venture capital financing, corporate finance, and the stock market, each of which is reported on a quarterly basis. This month we are reporting on venture capital financing.
2018 started off strong for New York City venture capital, with the highest level of capital investment of any Q1 this century. Over $2.7 billion was invested in New York City– headquartered companies over the quarter, doubling Q1 2017. Total investment lagged behind Q4 2017, though this was not unexpected as venture capital tends to peak at the end of the year. While total funding was up, however, the number of deals was lower than typical— the quarter’s 258 deals are the lowest since Q4 2016 and the second lowest since 2012.
Often a few deals with high capital invested is a sign of disproportionate investment by a single firm. In this quarter, however, investment was spread between many firms. Four companies: Oscar Health, UiPath, Lemonade, and Harry’s Personal Products all received over $100 million in VC funding. But the funding didn’t stop there—the median amount of capital received was $4 million—the highest of any quarter since 2000 and triple the median investment in Q1 2017.
Median rent was $2,764 in March 2018—a 0.8% increase from March 2017. This continues a trend since November 2016 of stagnation or slight growth in residential rents. Housing prices, meanwhile, increased 4.4% from last year, reaching $661,995 in March. Despite the strong year-over-year growth, housing prices decreased 0.2% from February 2018.
Residential construction slowed in March 2018 with 2,038 units under construction. Queens saw a 70.4% decline from the previous year’s monthly average, with 116 units starting construction. Construction in Manhattan, Brooklyn, and Staten Island also decreased 45%, 16.2%, and 5.3%, respectively, compared to the previous year’s average. The Bronx was the only borough that saw a surge of 143.5% in March, with 1,080 units starting construction.
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 office market. We also report monthly construction starts on non-residential buildings, which includes commercial and public-use buildings.
REAL ESTATE SNAPSHOT
The city’s office market sent mixed signals in Q1 2018. Net absorption, or change in occupied space, was up 560,039 square feet. Rents, meanwhile, declined 0.5% year-over-year, reaching $56.72 per square foot. The Manhattan market, taking up 83% of the total inventory, saw another strong quarter with net absorption up 963,603 square feet and rent stabilized around $61 per square foot. Boroughs outside of Manhattan, however, moved in the opposite direction with net absorption down 403,294 square feet and rent dropping 2.4% year-over-year, reaching $34.12 per square foot. Vacancy rates were 8.0% citywide. Twelve buildings delivered 877,395 square feet in the first quarter, with 64% in Manhattan. Over 20 million square feet of office space was under construction, with 72% in Manhattan and 88% as Class A space citywide.
Non-residential construction continued to drop in March 2018, down 29.6% from the previous year’s monthly average. The Manhattan market led the decline with an 83.1% decrease. The Bronx, Queens, and Staten Island also saw a decrease of 22.1%, 21.4%, and 14.9%, respectively. Brooklyn was the only market that bounced back from previous declines with a 79.5% increase from last year.
TRANSIT & TOURISM SNAPSHOT
New York City’s tourism sector continued to grow in February 2018. Airport passengers were up 3.7%, with increases in both domestic and international travel. Broadway revenue was up 10.6% from this time last year, making February the fourth consecutive month with a revenue increase.
Regional transit ridership fell again in February as subway and bus ridership fell 3.0% from February 2017. While commuter rail ridership was also slightly down—dropping 0.3% from last year—traffic on bridges and tunnels was up 4.2%.
TOURISM CHANGE COMPARED TO 2017
TRANSIT CHANGE COMPARED TO 2017