New Analysis Shows New York City’s Economy Continues to Produce
May 11, 2017
NYC’s economy grew at 2.3% in the first quarter of 2017, outpacing the national economy
Unemployment reached a record low, but nearly half of job growth came from low-wage industries
Comptroller’s Office Includes New Set of Leading Economic Indicators which indicate if the economy will grow over the next 6 to 12 months
(New York, NY) — New York City’s economy continued to grow in the first three months of 2017 while unemployment reached a record low, according to a new Quarterly Economic Update released today by New York City Comptroller Scott M. Stringer. The new economic analysis showed the City’s economy expanded 2.3 percent in the first quarter of 2017 and highlighted strong job creation, which brought the City’s unemployment rate to 4.3 percent – a record low, and below the national rate of 4.7%.
While New York’s economy is robust, the report highlighted data that could indicate long-term challenges. Although unemployment fell to the lowest rate on record, concerns remain about the type of jobs created. Continuing a years-long trend, roughly 48 percent of the jobs added in the first quarter of 2017 were in low-wage industries, which pay an average of just $42,000 per year. In addition, venture capital investment in New York City fell almost 45 percent year-over-year, reaching just $1.5 billion – the fourth consecutive quarterly decline.
“After a few quarters of bumpy growth, our economy has gotten onto more solid footing. We’re growing jobs, but too many are in low-wage areas. The real estate market is heating up, but unevenly. And we’re seeing national trends pull venture capital investment in the City down.” New York City Comptroller Scott M. Stringer said. “With more and more uncertainty coming out of Washington every day, we need to prepare now, while our economy is strong, for whatever comes next.”
For the first time, the Comptroller’s report includes a new set of leading economic indicators for New York City, which tend to indicate where the economy will be in the next six months to a year. The indicators point to continued growth this year. Released every three months, the Comptroller’s Quarterly Economic Update tracks economic indicators for our City and reports on the health of New York City’s economy in the national context. The report includes data on economic growth, unemployment, average wages, business activity, and real estate indicators.
New York City’s economy grew at the beginning of 2017
- The City’s economy grew 2.3 percent in the first quarter of 2017, up from 1.8 percent at the end of 2016.
- The City’s economy outpaced the nation, clocking in expansion 1.5 percentage points higher than the national economy.
Unemployment drops, but low-wage jobs are on the rise
- In the first quarter, the City added 32,300 private sector jobs — the largest increase since the third quarter of 2014.
- This increase brought the City’s unemployment rate to 4.3 percent — the lowest on record — and 0.4 percent below the nation’s unemployment rate.
- Most of these new jobs, however, were low-wage industries, which have average salaries of just $42,000. Low-wage industries accounted for 47.8 percent of job creation, followed by medium-wage (35.7 percent) and high-wage (16.5 percent). This continues a years-long trend of dominant low-wage job creation.
- In addition, the City’s employment-to-population ratio rose to a record-high of 57.7 percent, up from 56.4 percent in the last quarter of 2016
Wages jumped, while income from other sources fell
- Personal income taxes withheld from paychecks, which are used as a proxy for wages, grew 7.2 percent year-over-year to about $2.7 billion.
- Average hourly earnings, another proxy for personal income, increased by 3.4 percent year-over-year to $35.05 in the first quarter of 2017.
- In contrast, estimated tax payments — which reflect trends in non-wage income, including interest, rental income, and capital gains — fell 18.9 percent year-over-year to just $656 million.
Venture capital investment continued to drop
- Venture capital investment in the New York Metro Area dropped 44.9 percent in the first quarter of 2017 to just $1.5 billion. This represents the fourth consecutive quarter of falling venture capital investment in New York.
- In addition, the New York Metro Area fell to fourth place in overall venture capital investment, being surpassed by the New England region.
- The number of venture capital deals in New York fell to 154 from 178 a year ago, and the New York Metro Area’s share of venture capital investment fell from 17.2 percent to 10.7 percent year-over-year.
New York’s housing market showed mixed signs
- New commercial leasing activity in Manhattan exceeded 7.6 million square feet, 16 percent higher than the first quarter of 2016.
- Despite this increase, Manhattan’s overall office vacancy increased to 9.4 percent.
- Residential real estate in Manhattan improved, with average sales prices, average price per square foot, and the number of sales increasing compared to the first quarter of 2016. The listing inventory, however, increased 6.6 percent and the absorption rate grew to 6.1 months.
- Housing market conditions tightened in Brooklyn and Queens. Both boroughs saw prices increase, sales expand, and inventories drop.
Leading economic indicators point to growth
- Business conditions in the New York City Metro Area improved between the end of 2016 and the beginning of 2017.
- The ISM six-month outlook rose to 71 percent in the first quarter of 2017, the highest level of optimism since mid-2015.
- Initial unemployment claims in New York City fell for the tenth consecutive quarter, decreasing 3.5 percent year-over-year.
- Total building permits in New York City almost tripled year-over-year, signaling a demand in construction and an increase in construction jobs. This increase coincided with the agreement on a program to replace the expired 421-a tax abatement.