SEPTEMBER 2017 EMPLOYMENT HOUSING REAL ESTATE TRANSIT & TOURISM

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1 EMPLOYMENT FINANCE HOUSING COMMERCIAL REAL ESTATE TRANSIT & TOURISM

2 HIGHLIGHTS The private sector experienced job losses after three record-setting months of growth Economic expansion accelerated to the fastest rate in nearly two years For the first time in nearly a year, average rents appear to be rising Office markets softened across New York City Tourism grew at a brisk pace, led by arrivals from abroad

3 EMPLOYMENT Private Sector Employment -3.9k DOWN from July 2017 Private Sector Employment +2.4 % UP from August 2016 Unemployment Rate 4.9 % UP from July 2017 EMPLOYMENT SNAPSHOT Private sector employment in New York City fell moderately in August 2017 after three months of above-average growth. A 3,900-job decline follows last month s gain of 8,800 jobs, which was revised down from 15,500. Over the last twelve months, the number of private sector jobs has grown by 89,900, up 2.4% from last year. Accommodation and Food Services and Arts, Entertainment, and Recreation led job growth, each adding 1,300 jobs. Losses were concentrated in the Retail, Health Care and Social Assistance, and Real Estate sectors, each losing more than 2,000 jobs. Private sector educational services also saw job losses, and will be discussed in depth on the Industry Snapshot. The unemployment rate continues its steady uptick, reaching 4.9% in August 2017, from 4.7% in July. The US unemployment rate was 4.4%. The New York City unemployment rate remains below the level of this time last year, when it was 5.4%. Labor force participation rate fell 0.2 percentage points, to 61.4%, between July and August The rate remains near record highs; July s rate was the highest figure recorded since the series began in For the first time since November 2016, average hourly wages dropped from prioryear levels. Hourly wages hit $34.67 in August 2017, down 0.8% from last year. Average hours worked also fell, reaching 34.2 hours per week, from 34.4 last year. As a result, average weekly earnings fell 1.4% from August This dip comes after consistent wage gains throughout Monthly employment data are seasonally adjusted by OMB. Sources: New York State Department of Labor; US Bureau of Labor Statistics

4 EMPLOYMENT NEW YORK CITY EMPLOYMENT BY INDUSTRY INDUSTRY EMPLOYMENT (in thousands) August 2017 July 2017 Previous Month Change Year-Over-Year Change FIRE % 0.9% Finance & Insurance % 0.6% Securities % 0.7% Banking % 1.3% Other % -0.8% Real Estate/Rental/Leasing % 1.8% SERVICES 2,573 2, % 3.5% Information % -2.5% Professional/Business Services % 3.7% Professional/Scientific/Technical Services % 3.4% Management of Companies & Enterprises % 1.7% Administrative Services % 4.8% Educational Services % 8.6% Health Care/Social Assistance % 3.5% Arts/Entertainment/Recreation % 5.0% Accommodation/Food % 3.8% Other % 1.9% TRADE % -2.0% Retail Trade % -1.4% Wholesale % -3.4% MANUFACTURING % -1.3% TRANSPORTATION AND UTILITIES % 3.8% CONSTRUCTION % 3.4% PRIVATE 3,894 3, % 2.4% GOVERNMENT % 0.1% TOTAL 4,447 4, % 2.1% Source: New York State Department of Labor

5 EMPLOYMENT EDUCATION SUBSECTORS % % +9.3 % +6.4 % -5.0 % % % Employment Change, OTHER OTHER SCHOOLS & INSTRUCTION COLLEGES & UNIVERSITIES TECHNICAL & TRADE SCHOOLS BUSINESS SCHOOLS & COMPUTER MANAGEMENT TRAINING ELEMENTARY & SECONDARY SCHOOLS EDUCATIONAL SUPPORT SERVICES JUNIOR COLLEGES INDUSTRY SNAPSHOT Educational Services, a sector encompassing public and private education from kindergarten through professional certifications, is in a major expansion. Between August 2016 and August 2017, private employment in the sector grew 8.6% by far the fastest rate of growth of New York City s major industrial sectors. 1 While the sector dipped slightly last month (down 1,300 to 269,200), much of this growth has come in the last several months, with employment rising by 23,100 jobs, or 9.4%, since April Over the last five years, growth in the sector has been led by private employers. Employment at these institutions grew 14.8% between 2012 and 2016, while public educational employers added 1.4% more workers. Major shifts are taking place within this growing sector, with increasing employment concentration in advanced education. Between 2012 and 2016, job growth was led by Other Schools and Instruction, which employs 23,000 workers in schools of fine arts, sports and recreation, language, and other specialized instruction, and by Colleges and Universities, which employs 98,500 workers. Jobs losses were overwhelmingly concentrated in two relatively small subsectors, Junior Colleges, which includes community colleges and employs 4,000 people, and Educational Support Services, which includes educational-related consulting and counseling and employs 8,600. Meanwhile, Elementary and Secondary Schools, the largest subsector, with 202,600 workers, has seen employment fall over the last five years. This decline occurred primarily between 2014 and 2015, when the subsector s employment fell 7.2%. 1 Public education jobs are not included under Education in EDC monthly data releases. Employment in public schools is recorded as Government employment in monthly jobs releases published by EDC and the Department of Labor. 2 Note that summer employment estimates in education tend to be volatile and subject to major revisions. Following annual benchmarking, June-October 2016 data were revised down by an average 3,300 from original estimates. Source: New York State Dept. of Labor US Census Bureau QCEW

6 EMPLOYMENT SAN FRANCISCO OAKLAND HAYWARD 2, % SEATTLE TACOMA BELLEVUE 2, % LOS ANGELES LONG BEACH ANAHEIM 5, % NEW YORK CITY METROPOLITAN AREA EMPLOYMENT COMPARED TO OTHER MAJOR METROPOLITAN AREAS Total Employment (in thousands) in July 2017 % Change from July 2016 DALLAS FORT WORTH ARLINGTON 3, % CHICAGO NAPERVILLE ELGIN 4, % DETROIT WARREN DEARBORN 2, % WASHINGTON ARLINGTON ALEXANDRIA 3, % NEW YORK NEWARK JERSEY CITY 9, % BOSTON CAMBRIDGE NASHUA 2, % PHILADELPHIA CAMDEN WILMINGTON 2, % MIAMI FT LAUDERDALE WEST PALM BEACH 2, % Source: US Bureau of Labor Statistics

7 FINANCE NYCEDC monitors New York City s gross city product, venture capital financing, and data from the New York Federal Reserve Bank, each of which is reported on a quarterly basis. This month, we are reporting the New York Federal Reserve Bank s Index of Coincident Economic Indicators. The Index of Coincident Economic Indicators is used by the New York Federal Reserve to capture economic activity in a single index, and is constructed from four data series: payroll employment, unemployment rate, average weekly hours worked in manufacturing, and inflation-adjusted earnings. Quarterly Activity (Q2 2017, Annual Rate) +4.8 % New York City Year-on-Year Activity (Q2 2017) Quarterly Activity (Q2 2017, Annual Rate) United States +4.1 % +2.8 % FINANCE SNAPSHOT Economic activity continued to accelerate in New York City in the second quarter of 2017, according to an index maintained by the New York Federal Reserve Bank (see note above). This marks the fourth consecutive quarter in which New York City s rate of economic expansion has increased from the prior quarter, and the fastest rate since the fourth quarter of Economic growth also rose for the US as a whole, rising 0.4 percentage points to 2.8%. Unlike New York, however, this rate is below 2016 averages. Source: Federal Reserve Bank of New York; Federal Reserve Bank of St. Louis New York City

8 HOUSING HOUSING SNAPSHOT Average rent prices in New York City rose 0.8% from the same time last year, to $2,350. This is the City s first year-over-year rent increase since October The preceding nine months had seen modest rent drops from the prior year. August s rent rise remains well below 2016 s average increase of 3.0%. While home values continue rising sharply, the rate of increase has leveled off. Average home values rose 15.5% between August 2016 and August 2017; last month that rate was 15.8%. The number of residential units starting construction in August 2017 rose slightly from the twelve-month average ending in July This increase was led by Brooklyn, where work began on 82 residential construction projects containing a collective 997 units, the most units since January Source: Dodge Data & Analytics; Zillow Residential Rents +0.8 % UP from August 2016 Home Values % UP from August 2016 UNITS STARTING CONSTRUCTION (Aug 2017) From prior-year monthly average BRONX -71% BROOKLYN +52% QUEENS -43% MANHATTAN +39% STATEN ISLAND +40% TOTAL +8%

9 COMMERCIAL REAL ESTATE Office Net Absorption -629k square feet Q Office Direct Rents -0.6 % Q REAL ESTATE SNAPSHOT The New York City office market softened in the second quarter of In Manhattan, net absorption the change in occupied space over the quarter was negative 628,900 square feet, while vacancy rose 0.1 percentage point from last quarter, to 8.2%. Two buildings adding just under 250,000 square feet were added to Manhattan s office supply over this time. Average rents fell to $59.93 per square foot, down 8.4% from the first quarter of Vacancy and rent decreases were led by Class A buildings the top tier of office space. Similar trends were apparent in boroughs outside Manhattan, where net absorption was negative 308,900, and vacancy rose from 6.6% to 7.3% between the first and second quarters of Average rents fell 7.7% from last quarter, to $32.37 per square foot. NON-RESIDENTIAL BUILDINGS STARTING CONSTRUCTION (sq. ft., Aug 2017) From prior-year monthly average BRONX -40% BROOKLYN +31% QUEENS -76% MANHATTAN +135% STATEN ISLAND -84% TOTAL +24% Non-residential buildings starting construction in August 2017 saw a boost compared with averages over the preceding twelve months. This increase was almost entirely due to a surge of construction in Manhattan. The borough saw construction start on 45 non-residential projects totaling 1.6 million square feet. Half of that square footage is attributable to the Moynihan Train Hall, a key part of the revamped Penn Station. Sources: Dodge Data & Analytics; CoStar

10 TRANSIT & TOURISM TRANSIT & TOURISM SNAPSHOT The New York City tourism sector expanded at a brisk pace in July Led by international travel, airport passenger traffic grew 5.2% from the prior year, the fastest pace since January Broadway revenue also continued rising sharply from last year, attributable largely to higher ticket prices. Hotel room rates and occupancy fell slightly from last year. This is largely the result of a fast-rising supply of new hotel rooms; the number of hotel room nights sold in May 2017 rose by 86,000 to 3.1 million. Public transit ridership, meanwhile, continued declining. Ridership on New York City Transit was 2.6% lower in July 2017 than the prior year, which is an average rate of decline for the last twelve months. Commuter rail ridership also aligned with trends over the last twelve months, remaining essentially unchanged from July Only automotive traffic showed an increasing rate of change from last year. Sources: Port Authority or New York and New Jersey; Metropolitan Transportation Authority; Broadway League; CBRE TRANSIT CHANGE COMPARED TO 2016 COMMUTER RAIL SUBWAY + BUS BRIDGE & TUNNEL RIDERSHIP TRAFFIC 0.0 % 0.9 % (NO CHANGE) TOURISM CHANGE COMPARED TO 2016 AIRPORT PASSENGERS RIDERSHIP 2.6 % REVENUE HOTEL* AVAILABLE ROOM 5.2 % 17.0 % 3.4 % BROADWAY REVENUE PER *Note: Airport and Broadway data are reported for July Hotel data is reported for May 2017.