Comptroller Stringer Economic Update: NYC Experiencing Solid Job Growth and Near Record Low Unemployment Rate

(New York, NY) — New York City’s economic growth outpaced the nation in the Second Quarter (Q2) of 2019 as Gross City Product (GCP) grew 3.4 percent compared to U.S. Gross Domestic Product (GDP), which grew 2.1 percent, 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 the city experienced solid job and earnings growth, notably a growth in average hourly wages of 4.4 percent. Other indicators included a strong commercial real estate sector and continued weakness in the residential housing market. The city’s leading economic indicators project continued growth over the next two quarters.

“Our latest economic update reveals that New York City is on a strong economic footing. This is reflected in higher wages, a near record low unemployment rate, strong job growth, and continued strength in most other sectors,” said New York City Comptroller Scott M. Stringer. “Despite the expansion, many New Yorkers are still feeling the squeeze of soaring costs on everything from rent to child care as a majority of the job growth continues to be in lower-paying industries. We have a lot more work to do to mitigate our affordability crisis, create access to good-paying jobs, provide affordable housing, and expand quality child care to ensure this city works for everyone. Today’s economic news is welcome – but the work of building a more equitable economy continues.”

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 Q2 2019 update include:

NYC Economy Continues Growth

New York City’s economy expanded 3.4 percent in Q2 2019, exceeding the city’s Q1 2019 economic expansion of 3.1 percent, and far outpacing the national GDP growth of 2.1 percent.

Unemployment Rate Remains Low

The city’s unemployment rate increased slightly from 4.2 percent in Q1 2019 to 4.3 percent in Q2 2019 — close to the record low level of 4.0 percent.

Private Sector Hiring Surged, But Growth Largely in Low-Wage Jobs

The city’s private sector hiring grew at an annualized rate of 2.6 percent in Q2 2019. Of the 26,200 private sector jobs added in the second quarter, 17,300 (65.8 percent) were in low-wage industries (paying less than $62,000 per year); 3,500 (13.4 percent) were in medium-wage industries ($62,000 to $124,000), and 5,500 (20.8 percent) were in high-wage industries (paying over $124,000).

The greatest increases in private sector jobs were in the health care and social assistance sectors, at 12,300 new jobs, of which nearly half — 5,800 jobs — were in home healthcare services.

Personal Income Tax Collections Increased as Average Hourly Earnings Rose

Personal income tax (PIT) revenues surged 25.3 percent or $852.6 million to more than $4.2 billion in Q2 2019. The unusual increase was driven by a 44.3 percent or $567 million jump in estimated tax payments compared to a year ago, largely attributable to high-end taxpayer response to changes in federal tax law enacted in 2017. Withholding tax revenues – a better proxy for income growth – rose by a healthy 7.9 percent in the second quarter, albeit down from the 11.8 percent increase in Q2 2018.

Average hourly earnings (AHE) of all private NYC employees rose 4.4 percent on a year-over-year basis to $37.52 in Q2 2019, the largest second-quarter increase since 4.7 percent growth in Q2 2017.

New Commercial Leasing Strong but Vacancies Rise

New commercial leasing activity in Manhattan increased by more than 10 million square feet in Q2 2019, which was an increase of 21.5 percent compared to Q1 2019.

Despite the increase in new commercial leasing, Manhattan’s overall commercial vacancy rate increased to 10.5 percent in Q2 2019 from 9.2 percent in the same quarter last year, while average rental rates increased to $74.15 per square foot.

Venture Capital Investment Reached Record Second-Quarter High

Total venture capital investment in the New York metro area hit a record second-quarter high of $4.11 billion in 2019. Venture capital investment was $4.48 billion in Q1 2019.

MTA Ridership on Both Subways and Buses Continued to Fall; Growth on LIRR and MetroNorth

Average weekday ridership on MTA NYC Transit buses and subways fell a further 1.2 percent in April-May of 2019 from a year ago. During the same period, ridership rose 2.6 percent on the Long Island Rail Road (LIRR) and 0.7 percent on Metro North.

Leading Economic Indicators Point to Sustained Growth in the Next Six Months

Leading economic indicators for the city’s economy 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, declined for the third consecutive quarter to 58.6 percent in Q2 2019, down from the record high of 74.7 percent in Q3 2018. The ISM six-month outlook rose to 61.7 percent in Q2 2019. Both these indices are well above a reading of 50 percent indicating projected growth across a majority of industry experts.

Initial unemployment claims decreased for the sixth consecutive quarter — -1.2 percent — to its lowest second quarter level on record at 27,278.

To view Comptroller Stringer’s full economic report, click here.

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