Economic Research & Analysis

June 2016 Economic Snapshot

Highlights

Private employment in New York City fell 6,700 between April and May 2016.
The unemployment rate fell to 5.1%, down from 5.7% this time last year.
Tourists from abroad are visiting New York City at an increasing rate.
10.7 million passengers flew into and out of the region’s airports in March 2016, a 7.9% increase from March 2015.
Attendance at Broadway shows reached 1.4 million for May 2016, up 5.2% from the prior year.

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#74 International Tourism

New York City is a top tourism destination in the United States. This month we break down how tourism affects the City's economy.

Employment

  • Private sector jobs in New York City fell by 6,700 in May 2016, following a gain of 4,400 jobs in April 2016.
  • Government jobs in the City increased by 600, resulting in a net overall decrease of 6,100 jobs between May and April 2016.
  • Employment losses were led by the Information industry, which lost 3,500 jobs in large part due to the Verizon strike.
  • The Wholesale and Retail industries experienced job losses—2,700 and 2,400, respectively—as did Financial Activities, which lost 2,500 jobs.
  • Private sector employment has risen by 80,900 jobs since May 2015, an increase of 2.2%, in comparison to the national growth rate of 1.9%.
  • New York City’s unemployment rate fell to 5.1% in May 2016 from 5.4% in April 2016, due in part to falling labor force participation.

International Tourism

  • Tourism is a major pillar of New York City’s economy. Visitations from abroad represent a growing segment of the City’s tourism industry, and a record number of visitors are expected this year. In fact, New York City was the most popular destination for tourists visiting the US from abroad by a wide margin in 2014. The City’s 9.7 million overseas visitors—not including Canada and Mexico—more than doubled the number of visitors to Miami, the next most popular city. In total, New York City hosted 28.3% of the nation’s overseas visitors (see figure 1).

Figure 1. Overseas Tourism to US Cities (2014 Market Share)

  • An increasing portion of total tourism to the city is by international visitors, making up 21.2% of all tourism in 2014—an all-time high—up 5 percentage points from 2005. International tourism is projected to continue as the fastest-growing tourism segment over the coming years, outpacing domestic visitors, though at a slower rate than previous years. Although domestic tourists are arriving in higher numbers, international tourists account for 50% of total tourism spending, as they tend to stay in the City for longer periods of time.1
  • International tourism was concentrated in the third quarter of 2014. China was the fourth largest source of tourists to New York City, and Chinese tourists were a key driver of summertime visitation with 42% of visitors arriving in July, August, and September (see figure 2). This pattern of increasing tourism from abroad over the summer differs from domestic tourism, when the fourth quarter—October, November, and December—is more popular.2

Figure 2. Seasonal Trends in Overseas Tourism 19% 19% 25% 21% 20% 19% 27% 27% 24% 18% 30% 25% 30% 29% 25% 42% 27% 25% 25% 25% 26% 19% 24% 32% AllInternationalAustraliaBrazilChina (PRC)FranceUKQ1 Q2 Q3

  • The currency exchange rate is one of the defining factors for where an international tourist will travel, and the exchange rates affect the visitors’ spending habits once abroad. As the US dollar grows stronger against the euro, for example, EU residents may be less inclined to visit the US, or may be hesitant to spend once here. In order to determine the impact that exchange rates have on international travel to New York City, we took the percentage change of annual tourism from the top 15 countries that sent the most visitors to New York City in 2015 and compared them to the the exchange rates between the US dollar and the tourists’ respective national currency from 2007 to 2015.3 What we saw hints at major differences between these countries. Italy exhibits the strongest relationship between exchange rate and tourism to New York City, with more than half of the variation in Italian visitor levels attributable to exchange rate changes. This is not the case for other countries using the euro, however, as Spanish tourists tend to be the least responsive to exchange rates. At the other end of the spectrum, Japanese tourism to New York City appears to change wholly independently of currency fluctuations.

Figure 3. Relationship between exchange rates and tourism (1 = perfect correlation)

1 NYC & Company, New York City Travel + Tourism Trend Report, September 2015.
2 NYC & Company
3 Exchange rate data from the Federal Reserve Bank of St. Louis’ Federal Reserve Economic Data.

Real Estate & Construction

Manhattan Office Market

  • In May 2016, the Manhattan Class A direct lease commercial real estate market remained stable, with vacancy rates staying at 8.8% and average rents rising less than $1 to $81 per square foot.
  • The sublease market tightened modestly, with the vacancy rate falling 0.1 percentage points to 1.1% and rents rising from $55 to $57 per square foot.
  • Class A vacancy rates have remained steady when compared to May 2015, while direct rental rates have risen 3.3% over the last year, driven by a growing Midtown South office market.

Construction

For the twelve months ending April 2016:

  • The number of building projects that began construction, including new, additions, and alterations, rose by 20.8%. Non-building infrastructure project starts were down 18.9% from the prior 12 months.
  • The total value of construction projects grew by 6.5%, reaching
    $36 billion, with a corresponding growth in square footage
    by 40.4%. Residential buildings saw a 54% increase, the strongest growth in square footage since April 2015; and
  • Of the 7,800 building projects that began construction, 3,863 were residential, representing a 28.9% increase from the 12 months ending April 2015. These starts contained 48,164 units, up 61.6% from the previous 12 months.

Source: McGraw-Hill Construction
Note: Based on latest available data.

Transit, Travel, and Tourism

Transit Ridership

  • Total ridership on MTA subways, trains, and buses in April 2016 was 201.5 million, a 2.4% decrease from April 2015.
  • MTA Bridges and Tunnels was the only division to see increased revenue passengers from last year, expanding 2.6% to 25.5 million.

Source: Metropolitan Transportation Authority

Travel and Tourism

Air Traffic

  • 10.7 million passengers flew into and out of the region’s airports in March 2016, a 7.9% increase from March 2015.
  • Airports hosted 126.4 million passengers over the 12 months ending in March 2016, and 66.9% of this traffic was from domestic flights.
  • The region’s airports transported a total of 174,935 tons of freight in March 2016, down 2.5% from the prior year, however 64.3% of freight was from international flights.

Source: Port Authority of New York and New Jersey

Broadway Ticket Sales

  • Total Broadway attendance was 1,430,790 over the five weeks ending May 29, 2016, up 5.2% from the same time in 2015.
  • Over these five weeks, ticket sale revenues rose 1.9% in comparison to the same time last year, reaching $139.7 million.
  • Average tickets prices fell to $97.66 from $100.79 in May 2015.

Source: The Broadway League
Note: Gross revenue and attendance figures may not include all shows.

Hotel Occupancy

  • The average daily hotel room rate was $254 in March 2016, a 1.1% increase from March 2015.
  • Hotel occupancy was 87.9% in March 2016, on par with March 2015.
  • On average, hotels charging between $375 and $500 per night increased their daily rental rates the most of any hotel class.

Source: PKF Consulting
Note: Based on latest available data