Comptroller Stringer Economic Update: NYC Growth Sustained in Fourth Quarter; Strong Growth in Wages and Earnings as Unemployment Rate Remained Near Record Low
Stringer report finds the City’s economy grew 2.4 percent in Q4 2019, sustaining growth from the third quarter
Labor force participation rate declined slightly, but remains near record peak in third quarter
Job growth accelerated in Q4 2019, with private sector job growing 2.3 percent particularly in healthcare and social assistance
(New York, NY) — New York City’s economic growth again outpaced the nation in the fourth quarter (Q4) of 2019 as real Gross City Product (GCP) grew 2.4 percent on an annual basis, compared to U.S. Gross Domestic Product (GDP) growth of 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 revealed that the city experienced an uptick in job growth as earnings continued to rise, with average hourly earnings (AHE) of private sector employees up 4.0 percent in Q4 2019. The unemployment rate declined to 4.0 percent down from 4.2 percent in Q3 2019 as both commercial and residential real estate markets posted mixed results, and leading economic indicators reflected short-term anxiety by businesses.
“Our latest economic update continues to demonstrate New York City’s economic strength, as unemployment remains historically low and hiring continues to rise,” said New York City Comptroller Scott M. Stringer. “Despite these positive signs, most of the jobs created are in very low wage jobs. We need to build a true five borough economy that lifts up all New Yorkers, with good-paying jobs, upward mobility, and relief from our mounting affordability crisis.”
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 Q4 2019 update include:
NYC Economic Growth Accelerates
New York City’s economy expanded at a 2.4 percent annual rate in Q4 2019, outpacing the national GDP growth of 2.1 percent on an annual basis.
Unemployment Rate Remains at Record Lows
The city’s unemployment rate declined from 4.2 percent in Q3 2019 to 4.0 percent in Q3 2019 — a level that remains at the record low of 4.0 percent set in Q4 2018. Unemployment rates in all five boroughs continued at historic lows in the fourth quarter.
Private Sector Hiring Accelerates
The city’s private sector hiring accelerated to an annual rate of 2.3 percent in Q4 2019, amounting to a net gain of 23,100 jobs, the largest gain since Q4 2018. Of all the private sector jobs added in the fourth quarter, 12,600 jobs were in healthcare and social assistance. Professional and businesses services experienced an additional 8,600 jobs, while scientific and technical services added 3,800 jobs.
The biggest increase in private sector jobs was in the health care and social assistance sectors, at 12,600 new jobs, of which more than half — 7,200 jobs — were in home healthcare services. Major declines in employment occurred in construction — down 3,500 jobs — and financial activities, which lost more than 3,400 jobs – the most significant decline in the sector since Q3 2009.
Personal Income Tax Collections Rise as Average Hourly Earnings Increase
Personal income tax (PIT) revenues rose 5.4 percent or $153.1 million to almost $3.0 billion in Q4 2019 due to withholding tax revenues. Estimated tax payments including extension payments declined 13.7 percent or $12.4 million in Q4 2019 over a year ago.
Average hourly earnings (AHE) of all private NYC employees rose 4.0 percent on a year-over-year basis to $38.23 in Q4 2019.
Vacancy Rates Rise as New Commercial Spaces Available Increase
New commercial leasing activity in Manhattan was healthy in Q4 2019, with 9.1 million square feet of new commercial leasing in the borough — 24.7 percent higher than in Q3 2019. Manhattan’s overall commercial vacancy rate increased to 11.1 percent in Q4 2019 from 9.2 percent in the same quarter in 2018.
Residential Real Estate Sales Are Mixed
Residential sales and rental markets slowed, with sales and average prices falling and inventory increasing in Manhattan and Brooklyn.
Solid Venture Capital Investment in the New York Region
Total venture capital investment in the New York metro area declined from $4.9 billion in Q3 2019 to $3.03 billion in Q4, but was a significant increase from Q4 2018 which saw $2.43 billion in investment. Although this was down substantially from the record high of $6.0 billion in Q3 2018, VC investment remains robust in the NYC area.
MTA Ridership on Subways and Buses Increases Slightly as LIRR and Metro North Ridership Declines
Average weekday ridership on MTA NYC Transit subways and buses rose 0.2 percent in Q4 2019 from a year ago. Average ridership on the subways rose 0.9 percent, but fell 2.1 percent on buses. Ridership declined 1.0 percent on the Long Island Rail Road (LIRR) and 1.3 percent on Metro North.
Leading Economic Indicators Mixed
The city’s leading economic indicators are mixed with short-term anxiety from businesses, though the general economic outlook remains positive. 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, rose slight from the third quarter to 45.7 percent in Q4 2019, down from the record high of 74.7 percent in Q3 2018. The ISM six-month outlook increased slightly to 60.2 percent in Q4 2019, and remains above the 50 percent level, indicating projected growth across a majority of industry experts.
Unemployment claims rose 5.2 percent to 27,306 in Q4 2019 despite the large increase in employment overall across the city.
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