Third Quarter Economic Update Shows More New Yorkers Working Than Ever Before

(New York, NY) — New York City’s economy experienced moderate growth as unemployment continued to fall to record-low levels in the third quarter of 2018, according to an economic update released today by New York City Comptroller Scott M. Stringer.

“The numbers here show that New York City’s economy continues to be strong yet we still have improvements to make. While more New Yorkers are working than ever before, new jobs are concentrated in low-wage industries, preventing them from achieving economic security,” said Comptroller Scott M. Stringer. “We have to ensure that economic growth lifts New Yorkers up – and to do that we must increase access to jobs with better wages as well as affordable childcare, housing, and educational and job training opportunities.”

Released every three months, the Comptroller’s Quarterly Economic Update tracks New York City’s economic health and analyzes the City’s economy in a national context. Findings in the Third Quarter 2018 Update include:

NYC Economy Expands at Steady Pace

  • New York City’s economy expanded 2.8 percent in the third quarter of 2018, roughly the same pace as in the first and second quarters.
  • In comparison, the U.S. economy, as measured by the change in real GDP, grew 3.5 percent (advance estimate).

Unemployment Rate at Historic Low

  • The City’s unemployment rate, adjusted for seasonal variations, fell from 4.2 percent in Q2 2018 to 4.1 percent in Q3 2018, the lowest rate on record.
  • The U.S. unemployment rate fell to 3.8 percent in Q3 2018, the lowest rate since 3.6 percent in Q4 1969.
  • More New Yorkers are working than ever before. The number of employed City residents increased by 6,200 in Q3 2018 to a record high of 4,055,300.

Private-Sector Jobs Growth Accelerated, Largely in Low-Wage Industries

  • Private-sector hiring grew at an annual rate of 1.5 percent in Q3 2018.
  • However, of the 15,100 private-sector jobs added in the third quarter, 11,700 (77.4 percent) were in low-wage industries.
  • The largest private-sector job gains were 10,100 new jobs in health care and social assistance, 3,600 jobs in leisure and hospitality, and 3,000 new jobs in professional and business services.
  • Housing-related sectors added just 200 jobs in Q3 2018 after losing 2,600 in the second quarter.

Earnings Measures Continued to Rise

  • Average hourly earnings (AHE) of all private NYC employees rose 4.1 percent to $36.38 in Q3 2018, compared to the same period last year. U.S. average hourly earnings grew 3.0 percent to $27.12 in Q3 2018.
  • NYC personal income tax (PIT) revenues, a proxy for personal income, rose 6.5 percent or $158.2 million on a year-over-year basis to about $2.6 billion in Q3 2018. The increase was driven by a 4.4 percent rise in withholding taxes and 13.6 percent increase in estimated taxes, the two main components of PIT revenues.
  • Estimated tax payments, which reflect trends in taxpayers’ non-wage income, including interest earned, rental income, and capital gains, grew 13.6 percent in Q3 2018 on a year-over-year basis.

Commercial and Economic Indicators Strong

  • Venture capital (VC) investment in the New York metro area surged by 31 percent to $5.86 billion in Q3 2018 compared to a year ago. However, the number of deals in the New York metro area fell to 159 in Q3 2018 from 213 in the year before, following a similar trend nationwide.
  • New commercial leasing stayed strong, rising 18.0 percent from the year before to about 9.6 million square feet in Q3 2018. Commercial rents remained stable and vacancy rates fell slightly citywide.
  • The residential housing market weakened in part due to federal changes to SALT deductibility, rising mortgage interest rates, a lower limit on mortgage interest deductibility, and a stronger dollar overall.
    • Home prices in Manhattan, as measured by the average sales price and average price per square foot, fell on a year-over-year basis for the fifth consecutive quarter after nine consecutive quarters of year-over-year growth. The number of Manhattan sales also declined for the fourth consecutive quarter, causing an increase in listing inventories.
    • Unlike in Manhattan, housing prices increased in Brooklyn and Queens. The average sales price in Brooklyn rose 7.2 percent to $1,051,999, while the average sales price in Queens rose 3.4 percent to $635,281. However, the number of sales decreased, increasing listing inventories.
  • Average weekday ridership on MTA NYC Transit fell 3.1 percent in Q3 2018 from a year ago as subway ridership fell 2.6 percent and bus ridership fell 4.7 percent. Ridership on the Long Island Rail Road rose 0.8 percent, but remained unchanged on Metro North.
  • 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) rose to a record high of 74.7 percent in Q3 2018, from 58.6 percent in Q2 2018. Any number above 50 percent indicates continued expansion.
  • Initial unemployment claims, which shows the number of applicants for unemployment insurance, declined for the third consecutive quarter.

To view the full report and interactive webpage, click here.