Comptroller Stringer Releases Third Quarter Economic Update

(New York, NY) — New York City’s economic growth again outpaced the nation in the third quarter (Q3) 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 1.9 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 a slowdown in job growth, but earnings continued to rise, with average hourly earnings (AHE) of private sector employees up 3.4 percent in Q3 2019. The unemployment rate remains at a near record low, but both commercial and residential real estate markets posted mixed results, and leading economic indicators reflected a degree of caution by businesses.

“Our latest economic update reveals New York City continues to be the nation’s economic engine, despite a challenging economic climate across the country. Wages continue to rise in the city and unemployment remains at near historic lows, but job growth is slowing and businesses are confronting uncertainties over U.S. trade policy,” said New York City Comptroller Scott M. Stringer. “It’s clear President Trump takes the welfare of Americans so lightly that he is willing to risk the economy for his grudge match with China and our trading partners. And instead of building an economy that lifts all Americans, he’s passed tax cuts for the wealthy and big corporations. In New York, we have to remain focused on creating good-paying jobs, expanding economic opportunities, and building an economy that works for everyone. Right now, too many New Yorkers are still feeling the squeeze of an affordability crisis that sees no end in sight. It remains too expensive to rent or afford child care, and that means we have to continue the fight to give all working families real relief.”

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 Q3 2019 update include:

NYC Economy Continues Growth

New York City’s economy expanded at a 2.4 percent annual rate in Q3 2019, moderating the city’s Q2 2019 growth rate of 3.4 percent, but outpacing the national GDP growth of 1.9 percent on an annual basis.

Unemployment Rate Falls

The city’s unemployment rate declined slightly from 4.3 percent in Q2 2019 to 4.2 percent in Q3 2019 — a level that remains near the record low of 4.0 percent in Q4 2018. Unemployment rates in all five boroughs continued at historic lows in the third quarter.

Private Sector Hiring Moderates, Growth Largely in Low- and High-Wage Industries

The city’s private sector hiring moderated to an annual rate of 0.4 percent in Q3 2019, amounting to a net gain of 3,700 jobs, the lowest net increase since Q4 2009. Of all the private sector jobs added in the third quarter, 9,400 were in low-wage industries and 2,100 were in high-wage industries. Medium-wage industries such as education services, construction, and arts and entertainment lost a significant number of jobs in Q3 2019 — 7,700 — on top of the decline of 2,500 in the second quarter.

The biggest increase in private sector jobs was in the health care and social assistance sectors, at 12,900 new jobs, of which nearly two-thirds — 8,500 jobs — were in home healthcare services.  Major declines in employment occurred in construction (down 3,300 jobs) and education (down 5,700 jobs).

Personal Income Tax Collections Rise as Average Hourly Earnings Increase

Personal income tax (PIT) revenues rose 6.0 percent or $156.2 million to more than $2.7 billion in Q3 2019 due to a 7.6 percent increase in withholding tax revenues. Estimated tax payments increased only 0.2 percent or $0.8 million in Q3 2019 compared to a year ago.

Average hourly earnings (AHE) of all private NYC employees rose 3.4 percent on a year-over-year basis to $37.61 in Q3 2019.

Commercial Vacancies Rise as Leasing Cools; Residential Real Estate Markets Mixed

New commercial leasing activity in Manhattan slowed in Q3 2019, with 7.3 million square feet of new commercial leasing in the borough — 27.3 percent less than in the previous quarter. Manhattan’s overall commercial vacancy rate increased to 10.6 percent in Q3 2019 from 9.5 percent in the same quarter last year. Average rental rates were up 1.7 percent compared to Q3 2018.

Residential sales and rental markets also continued to show some softness, with sales falling and inventory increasing while average sales prices fell in Manhattan and Brooklyn. Average rental prices rose in Manhattan and Brooklyn while listing inventories fell, and more than a third of new leases included rent concessions.

Venture Capital Investment Continues to Come to NYC

Total venture capital (VC) investment in the New York metro area rose slightly compared to the  second quarter, to $4.27 billion in Q3 2019. 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 LIRR Increases as Bus and Metro North Ridership Slightly Falls

Average weekday ridership on MTA NYC Transit subways rose 1.6 percent in Q3 2019 from a year ago. During the same period, bus ridership fell by 0.48 percent. Ridership rose 1.0 percent on the Long Island Rail Road (LIRR) but fell 0.2 percent on Metro North.

Leading Economic Indicators Still Positive But Reflect Concerns About Direction of the Economy

The city’s leading economic indicators, while mostly still positive, signaled businesses’ concerns with the implications of trade conflicts and Federal Reserve policy for the direction of the national economy. 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 fourth consecutive quarter to 45.5 percent in Q3 2019, down from the record high of 74.7 percent in Q3 2018. The ISM six-month outlook decreased slightly to 59.9 percent in Q3 2019, but remains above the 50 percent level, indicating projected growth across a majority of industry experts.

On a positive note, unemployment claims decreased for the seventh consecutive quarter — 4.6 percent — to its lowest third quarter level on record to 27,787 in Q3 2019.

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

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