Economic Research & Analysis

November 2017 Economic Snapshot


Unemployment decreased, wages increased
A major deal led record venture capital financings in Q3
Residential rents fell while home prices rose
Retail vacancy increased amid rising rents
Travel into the city continued its upward trend


Audio Resources


#90: Affordability in NYC

This month, Josh and Andrew talk affordability in NYC and explore the relationship between our "basic needs" and income bracket.



Nov 2017 economic snapshotEMPLOYMENT SNAPSHOT
Private sector employment in New York City fell by 4,100 jobs in October 2017 from a month prior. These losses are moderate compared to last month’s losses of 26,000 jobs. For the second straight month, losses were driven by Educational Services, having lost 6,000 jobs in October after losing 17,000 in September.1 Other job losses were concentrated in Arts, Entertainment, and Recreation (-2,100) and Professional, Scientific, and Technical Services, which fell by 1,700 jobs (see Industry Snapshot for further analysis). Sectors with employment gains were led by Health Care & Social Assistance, which rose by 4,200 jobs; Finance & Insurance, which rose by 2,000; and Real Estate, Rental, and Leasing, which rose by 1,700. Despite the decrease in jobs over the previous month, private sector jobs have grown 1.7% since October 2016, rising by 66,300 jobs and outpacing nationwide growth of 1.6%. In October 2017, unemployment fell to 5.0%, down from 5.1% a month prior. This decrease was the first since March 2017. This time last year, the rate was 5.2%. Labor force participation ticked up 0.1 percentage points to 61.6%; just below June 2017’s record high of 61.7%. Wages provided positive news last month, with real hourly earning increasing 1.2% from October 2016. Average hours worked also rose by 0.3% from last year to $34.5, resulting in real average weekly earnings rising to $1,234, up 1.5% from last year.

 1 The Educational Services industry experiences high volatility and is typically subject to revisions after annual benchmarking. Monthly employment data are seasonally adjusted by OMB. Sources: New York State Department of Labor; US Bureau of Labor Statistics

Nov 2017 by industry

Source: New York State Department of Labor

professional services

Professional, Scientific, and Technical Services is one of New York City’s largest sectors, employing 426,300 workers in October 2017—11.0% of all private sector employment. Employment in the sector has grown like clockwork, reliably adding at least 10,000 jobs every year since 2012. After growing by 3.0% in 2016, employment jumped in the spring of 2017, gaining over 5,000 jobs in both May and June before incremental drops in employment in three of the four months since. Analysis of longer-term trends by subsectors provides insight to the cause of this long-term growth. Consulting, the fastest growing subsector, has grown at least 6% annually since 2012, reaching 52,600 jobs in 2016. Computer Systems Design has also had consistent annual growth. Only one subsector, Legal Services, has lost jobs since 2012. Having only lost 246 jobs since 2012, however, the subsector has remained relatively stagnant and is notable for being the industry’s largest subsector with 79,500 jobs in 2016. While the industry has grown across the board, the relative size of subsectors is shifting gradually. The traditional, professional subsectors such as Accounting and Advertising are growing slowly. Meanwhile the technical and scientific subsectors such as Computer Services and Scientific Research have been growing at faster rates and employed 72,000 and 16,900 in 2016, respectively, making up a larger portion of the industry than ever before.

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

Employment map

Source: US Bureau of Labor Statistics


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 on venture capital financing. Our source for venture capital, Pitchbook, uses a distinct methodology in reporting, classifying, and mapping deals from our previous sources. These numbers should not be directly compared to previous snapshots.

Nov 2017 finance dataFINANCE SNAPSHOT
The quarterly value of venture capital financings for firms headquartered in the New York City metropolitan area easily passed its all-time high water mark in the third quarter of 2017.2 Reaching $5.5 billion, quarterly funding of venture capital-backed firms far surpassed the previous high of $3.52 billion, from the second quarter of 2015. As the number of deals remained stagnant, the cause for the growth in value can be attributed to the largest venture capital financing deal in New York’s history—a $3 billion series G deal for WeWork, a co-working space company. The deal is over four times the value of the next largest deal, which was also for WeWork in Q4, 2016. In fact, WeWork has been behind four of the eight largest completed deals ever in New York City. Via, a carpooling company, also raised $250 million in the quarter. Driven by this major deal, the rate of increase in total funding exceeded that of the San Francisco and Silicon Valley area, although that area saw $8.7 billion in total funding this quarter.3

2 Data is since 2000 3 Source: Pitchbook

Gallup Analytics interviews 1,000 U.S. adults each day, 350 days per year, including measures to track questions about personal finance. Through this economic data collection platform, Gallup asked a portion of its respondents “Do you have enough money to buy but the things you need, or not?” while others were asked “Would you be able right now to make a major purchase…if you needed to?” These questions give an indication of the financial stability of New Yorkers across income classes as well as the affordability of New York City. Results for this metric are based on telephone interviews conducted nightly in 2016, with a minimum sample of 1,200 individuals per question, aged 18 and older, living in New York City. The standard error is 6.6%.

Nov 2017 affordability

GallupGallup delivers analytics and advice to help leaders and organizations solve their most pressing problems. Combining more than 80 years of experience with its global reach, Gallup knows more about the attitudes and behaviors of employees, customers, students and citizens than any other organization in the world. We thank Gallup for providing NYCEDC access to this invaluable behavioral economic data on NYC residents. 

The share of New Yorkers who felt that they would be able to make a major purchase if they needed to rose consistently with household income. While the same trend is generally true when respondents are asked if they can afford their needs, there is an exception. While only 42% of households making $36,000 to $47,999 say that they can afford a major purchase if necessary, 81% say they can afford their needs; a higher percentage than the two income brackets directly above. This suggests that people with different incomes define “needs” differently. Households between $36,000 and $47,999 can afford groceries and utilities with relative ease, but in the $48,000 to $89,999 brackets, “needs” may additionally include transportation, healthcare or some savings. The data suggest that households only above $90,000 are consistently comfortable affording these needs. This helps identify an income at which New Yorkers are able to achieve financial stability.


nov 2017 housing

In the metro area, median residential rents fell 5.3% from last year, reaching $2,300 in October 2017. This is the lowest level since February 2017. Home values, meanwhile, continued to rise. Median asking price climbed to $525,000 in October, which is a 7.4% increase from last year. The pace of residential construction continued rising in October 2017. The number of housing units contained in new construction projects totaled 2,223, up 15% from the prior year’s monthly average. Reversing last month’s trends, however, construction lagged in the Bronx and Brooklyn. Queens and Manhattan led new housing construction, seeing the highest number of new units starting construction in nine and 19 months, respectively.

Sources: Trulia; Dodge Data & Analytics

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 retail market. 

commercial real estateREAL ESTATE SNAPSHOT
The city’s retail market showed a mixed signal in the third quarter of 2017. Net absorption—the change in occupied space—fell 78,783 square feet in Manhattan, with the vacancy rate slightly increasing to 3.9%, continuing its upward trend since third quarter 2016. Meanwhile, direct rent also went up, reaching $98.86 per square foot in Manhattan, a 15.1% increase from last year. The market outside of Manhattan followed a similar trend: net absorption was down 177,047 square feet; vacancy rate increased to 3.4%; direct rent also went up 6.1% reaching $45.05 per square foot. Eight buildings delivered 97,906 square feet citywide in the third quarter. Citywide non-residential construction starts rose from prioryear monthly averages, despite falling in every borough except Staten Island. The start of construction of a 2.3 million-squarefoot warehousing and distribution facility on Staten Island gave the borough its highest monthly construction totals on record and buoyed overall construction figures.

Sources: CoStar Property; Dodge Data & Analytics

Transit & Tourism

New York City’s tourism sector continued its expansion in September 2017. Driven by rising ticket prices, Broadway revenues were up 14.6% from last year, reaching $1.25 million. Hotel room rates fell 1.2% compared to the previous year due to increasing room inventory (which expanded 3% from 2016 to 2017). Trips into the city through airports and bridges and tunnels continued rising for the third consecutive month, at 2.3% and 1.6% respectively, while commuter rail trips were down 2.8%. New York City subways and buses continued losing ridership, down 4.9% from last year, to 193 million. This is the eighth month in a row that subway and bus ridership was down from the previous year.

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


Nov 2017 transit


november 2017 tourism

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