Economic Research & Analysis

May 2017 Economic Snapshot

Highlights

Wages grew 4.8% from last year, the fastest rate in two years.
Economic expansion in New York City accelerated in the first quarter of 2017.
Residential construction projects in Manhattan surged in April 2017.
South Midtown office market continues to strengthen with rising rents and a growing supply of office buildings.
Despite sustained tourist visits, transit ridership continued to fall in March 2017.

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Audio Resources

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#85: Is Perception Everything? What Construction Trends Mean for the Economy

With residential construction on the rise, what do construction trends mean for the New York City economy? And how are women leading this once male-dominated industry? Listen to the podcast to find out!

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Employment

Private sector employment fell in April 2017. The decline of 5,100 jobs reversed last month’s equally sized gains. While many sectors saw employment declines, drops were largely concentrated in Education, Construction, and Retail, which accounted for about half of the month’s job losses. Nevertheless, several sectors saw employment growth. The Financial Activities, Health Care, and Arts and Entertainment sectors led job gains. Overall, private employment is 1.0% higher than last year, led by a growing Health Care sector.

Wages in April 2017 showed encouraging signs of growth despite employment reversals. Average weekly wages rose to $1,216 in April 2017, a 4.8% increase from the prior year. By comparison, average US weekly wages rose 1.9% to $914. Over the first four months of 2017, hourly wages in the City grew at an accelerating rate. Unemployment ticked up slightly from 4.0% in March 2017 to 4.1% in April. At this time last year, the City’s unemployment rate was 5.2%. This increase is due to job losses and more New Yorkers joining the labor force—in fact, the labor force participation rate rose to an all-time high of 61.3%. By comparison, unemployment was 4.3% in New York State and 4.4% in the US.

Monthly employment data are seasonally adjusted by OMB.

Sources: New York State Department of Labor; US Bureau of Labor Statistics

April 2017 Snapshot - Employment by IndustrySource: New York State Department of Labor

March 2017 Snapshot - Employment by Metro Region

Source: U.S. Bureau of Labor Statistics

Finance

After subdued economic growth in 2016, New York City saw accelerating economic expansion in the first quarter of 2017, according to an index of economic activity maintained by the New York Federal Reserve Bank (see note below). New York City’s rate of economic expansion has increased for three consecutive quarters and is currently at its fastest rate since the last quarter of 2015. For the US, however, economic growth appears to be slowing, with the first quarter showing the slowest rate of growth since the second quarter of 2015.

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 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.

Note: The CEI is used by the New York Federal Reserve to capture economic activity in a single number, and is constructed from four data series: payroll employment, unemployment rate, average weekly hours worked in manufacturing, and real (inflation-adjusted) earnings.
Source: Federal Reserve Bank of New York; Federal Reserve Bank of St. Louis

Construction

In April 2017, construction started on 312 projects worth $2.7 billion. These figures are 51.4% and 40.2% lower, respectively, than averages over the past twelve months. Nonetheless, April construction starts included 2,023 residential units—a 15.3% increase over the previous twelve-month average. This jump was largely driven by Manhattan, where construction projects accounted for more than one-third of all residential units. This is the largest number of new residential units in the borough since March 2016 and nearly double past twelve months averages. The number and units of construction projects in the other boroughs were subdued relative to recent months.

Manhattan commercial office rents were relatively steady in April 2017, rising 0.4% from last year. While rent prices fell in the majority of submarkets, continued strength in the Midtown South market pushed overall rents up. Rents in Midtown South rose 2.7% from last year while the Midtown and Downtown markets fell slightly. The office vacancy rate also rose slightly in Manhattan to 9.5% from 8.9% in April 2016. This increase is attributed to the lack of any new large leases this month, and to two buildings entering the market in Chelsea.

New York’s housing market, meanwhile, continued at pace. Rent prices remain relatively unchanged over the last year at $2,330. Sales prices continued to climb, reaching $657,900 in April 2017, 13.5% higher than April 2016.



Note: Based on latest available data
Sources: Cushman & Wakefield

Transit & Tourism

Transit ridership fell in all major categories for the second consecutive month. New York City Transit led declines, which continue to fall to multiyear lows. New York City Bus fell the furthest to 53.5 million riders in March 2017 compared to 58.7 million the previous year. The same appears to be true for automotive traffic with major bridge and tunnel crossings over both the Hudson River and East River recording year-over-year declines. These declines are present despite employment near record highs and a seemingly steady tourism sector. One indicator of local tourism, Broadway revenues, surged in March 2017, largely driven by higher ticket prices and static attendance. Airport passenger traffic, however, saw its first year-over-year drop since February 2014.

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

Transit Change Compared to 2016

May 2017 Snapshot - Transit

Tourism Change Compared to 2016

May 2017 Snapshot - Tourism