Comptroller Stringer Economic Update: City’s Unemployment Rate Drops to Record-Low in Second Quarter of 2018
August 13, 2018
City’s unemployment rate at 4.2%, a historic low
City’s economy steadily expands with 2.7% growth rate, boosted by expanding job market and modest wage growth
(New York, NY) — New York City’s economy continued to grow moderately during the spring of 2018, as gross city product grew 2.7% for the second consecutive quarter, according to an analysis of the City’s economic performance released today by New York City Comptroller Scott M. Stringer.
Unemployment in New York City hit a historic low of 4.2% in the second quarter as private-sector job growth accelerated, adding 13,800 new jobs in April, May, and June of 2018. Fewer than half of new private-sector jobs were in lower-wage industries, as high-wage industries added 6,000 new jobs – the biggest gain in the last two years.
“Strong economic growth and thousands of new jobs mean greater opportunity for New Yorkers across the five boroughs. We must take advantage of our City’s strong economy now, and set the foundation for long-term growth that lifts everyone up – that means linking local residents with good-paying local jobs, bold ideas to make housing more affordable, and thinking outside the box on issues from childcare to transportation,” said Comptroller Scott M. Stringer. “These numbers are good signs, but there are risks to the continued expansion. Between rising federal deficits and a possible trade war, it is more important than ever to prepare for the future.”
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 Second Quarter 2018 Update include:
NYC Economy Continues at Solid Pace
- New York City’s economy expanded 2.7 percent in the second quarter of 2018, roughly the same pace as in the first quarter.
U.S. Growth Hit Nearly Four-year High
- The U.S. economy, as measured by the change in real GDP, grew 4.1 percent (advance estimate).
- National economic growth was driven by a 4.0 percent increase in personal consumption and 9.3 percent growth in exports, spurred in part by the anticipation of damaging national trade policies in the future.
Unemployment Rate Falls to Historic Low
- The City’s unemployment rate, adjusted for seasonal variations, fell from 4.3 percent in Q1 2018 to 4.2 percent in Q2 2018, the lowest rate on record.
- All five boroughs experience their lowest second quarter levels on record, as the unemployment rate dropped to:
- 3.4 percent in Queens;
- 3.5 percent in Manhattan;
- 3.9 percent in Staten Island;
- 4.0 percent in Brooklyn; and
- 5.3 percent in the Bronx.
- The number of employed City residents increased by 2,400 in Q2 2018 to a record high of 4,049,200.
New York City Private-Sector Jobs Growth Accelerated
- Private-sector hiring grew at an annual rate of 1.4 percent in Q2 2018.
- Of the 13,800 private-sector jobs added in the second quarter, 6,300 were in low-wage industries; 1,600 were in medium-wage industries; and 6,000 were in high-wage industries.
- Private-sector job gains included 7,700 in health care and social assistance.
- Housing-related sectors, including construction and other real estate and property workers, lost 1,900 jobs in the second quarter, the biggest decline since the first quarter of 2010. Government employment fell by 1,200 jobs.
Average Hourly Earnings and Personal Income Tax Collections Continued to Rise
- Average hourly earnings (AHE) of all private NYC employees rose 2.5 percent in Q2 2018, compared to the same period last year, slightly lower than the U.S. growth rate of 2.7 percent.
- Personal income taxes withheld from paychecks, an indicator of income levels, rose 11.8 percent in Q2 2018 compared to the same time last year – reflecting wage growth as well as a potential bump in one-time bonuses.
- Estimated tax payments, which reflect trends in taxpayers’ non-wage income, including interest earned, rental income, and capital gains, grew 5.0 percent in Q2 2018.
Venture Capital Investment Slowed
- Total venture capital investment in the New York metro area fell 1.7 percent in Q2 2018 compared to the same period last year – to $2.8 billion, as total investment in the U.S. grew by 19.5 percent. However, the number of deals in the New York metro area rose to 193, from 186 in the same period last year.
New Commercial Leasing Surged, While Residential Market Weakened
- New commercial leasing activity in Manhattan increased 16.7 percent to 9.1 million square feet in the second quarter, the highest second-quarter level since 2011. Vacancy rates and average rents remained flat compared with a year ago.
- The residential housing market continued to soften. 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 fourth consecutive quarter after nine consecutive quarters of year-over-year growth. The number of Manhattan sales also declined for the third consecutive quarter, causing an increase in listing inventories.
- The number of home sales also fell in Brooklyn and Queens on a year-over-year basis. The average sales price in Brooklyn fell 1.4 percent to $984,047, while the average sales price in Queens rose 7.6 percent to $629,869.
MTA Ridership Continued Decline
- Average weekday ridership on MTA subways fell 1.7 percent and bus ridership fell 4.0 percent in April and May. During the same period, ridership on the Long Island Rail Road (LIRR) fell 0.6 percent, but rose by 0.1 percent on Metro North.
Leading Economic Indicators are Mostly Positive
- 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) fell to 58.6 percent in the second quarter, below 60.3 percent in the prior quarter. However, a reading greater than 50 percent indicates growth.
- Initial unemployment claims decreased 11.9 percent, on a year-over-year basis, the second consecutive quarter of decline. However, total building permits in the City fell 3.1 percent to 5,476 in the second quarter from a year ago. A decline in the number of building permits could indicate a fall in demand for construction and construction jobs.