Comptroller Stringer Economic Update: NYC Continues Decade-Long Expansion

(New York, NY) — New York City’s economy continued its strong growth in the fourth quarter of 2018 (Q4 2018), as gross city product grew 3.9 percent, the highest rate this year, according to an analysis of the City’s economic performance released today by New York City Comptroller Scott M. Stringer.

Comptroller Stringer’s economic update shows that employment in the City grew at its fastest quarterly rate in the last four years, as the city’s private sector added 34,000 jobs. However, over half of the new private-sector jobs created were in low-wage industries – a trend consistent with past quarters. For the full year of 2018, total private-sector jobs were up by 74,200 or 1.9 percent – making this the ninth consecutive year of job creation and the longest sequence of job gains on record.

“In this past year, New York City’s economy has continued its solid performance, and New Yorkers have enjoyed a decade of solid economic growth,” said Comptroller Stringer. “But too few of our neighbors are sharing the fruits of this expansion.  With looming risks to continued growth, insufficient gains in good-paying jobs, and a continued affordable housing crunch, we need to set the foundations for fair, equitable growth that lifts all New Yorkers up.”

Released every three months, the Comptroller’s Quarterly Economic Update (QEU) tracks New York City’s economic health and analyzes the City’s economy in a national context.

Findings in the Fourth Quarter 2018 Update include:

NYC Economy Continues Growth

• New York City’s economy expanded 3.9 percent in the Q4 2018. The U.S. GDP for the fourth quarter was not available because of the partial federal government shutdown.

Unemployment Rate Falls

• The City’s unemployment rate, adjusted for seasonal variations, fell from 4.1 percent in Q3 2018 to 4.0 percent in Q4 2018 (the lowest quarter on record) – averaging 4.1 percent of the full year of 2018, also the lowest on record.
• The number of employed City residents rose by 6,700 in Q4 2018 to a record high of almost 4.1 million. The total increase in employed City residents over 2018 was 21,700 or 0.5 percent.

Private-Sector Hiring Soared, But Growth is Unevenly Distributed

• Private-sector hiring grew at an annual rate of 3.5 percent in Q4 2018.
• Of the 34,000 private-sector jobs added in the fourth quarter, 21,100 were in low-wage industries; 10,100 were in medium-wage industries; and 2,800 were in high-wage industries.
• The greatest private-sector job gains were in health care and social assistance sectors, at 11,000 new jobs.

Personal Income Tax Collections Declined but Average Hourly Earnings Rose

• Personal income tax (PIT) revenues, a proxy for personal income, fell 10.3 percent or $331.0 million on a year-over-year basis to about $2.9 billion in Q4 2018 due to an 85.5 percent decline in estimated taxes. However, PIT revenues rose 10.9 percent for the year as a whole in 2018, the highest growth rate since 17.7 percent in 2013.
• Average hourly earnings (AHE) of all private NYC employees rose 3.4 percent on a year-over-year basis to $36.69 in Q4 2018. For the year 2018, AHE rose 3.1 percent in New York City.

Venture Capital Investment Reached Record High in 2018

• Total venture capital investment in the New York metro area rose to a record high of $13.33 billion in 2018, 8.7 percent higher than in 2017, despite a decline in the fourth quarter.

New Commercial Leasing Strong but Vacancy Rises

• New commercial leasing activity in Manhattan increased 45.1 percent to over 10.2 million square feet in the fourth quarter, the biggest fourth quarter increase on record.
• Despite the increase in new commercial leasing, Manhattan’s overall commercial vacancy rate increased to 9.2 percent in Q4 2018 due largely to increase supply.

MTA Ridership Continued to Fall

• Average weekday ridership on MTA NYC Transit fell 3.3 percent in October-November of 2018 from a year ago. During the same period, ridership on the Long Island Rail Road (LIRR) rose 1.2 percent, but fell 0.6 percent on Metro North

Leading Economic Indicators Point to Growth

• The City’s leading economic indicators signaled continued expansion. The current business condition index provided by ISM-New York, Inc. (which measures the current state of the economy from the perspective of business procurement professionals) was 67.7 percent in Q4 2018, lower than the record high of 74.7 percent in Q3 2018. A reading greater than 50 percent indicates growth.
• Initial unemployment claims decreased 5.8 percent, on a year-over-year basis to 25,966, the lowest level on record.

To view the full report, visit Comptroller Stringer’s interactive webpage at https://comptroller.nyc.gov/EconomicData.

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