Strong gains in private-sector payroll jobs helped New York City’s economy grow by an estimated 3.4 percent during the first quarter of 2016, significantly faster than the national economy according to a Quarterly Economic Update released by New York City Comptroller Scott M. Stringer.
However, signs of a cooling economy emerged as average hourly earnings in the private sector were flat and venture capital fell for the first time since 2012.
“The City’s job market was a bright spot in the first few months of 2016 as more New Yorkers joined the workforce, but there are signs of a slowdown on the horizon,” said Stringer.
“More City residents than ever before are now employed, but too many of the jobs we’re gaining are in low-wage industries. When New Yorkers work full time and still can’t afford a decent living, it undermines our entire economy.”
The city’s economy, as estimated by Gross City Product (GCP), grew at a 3.4 percent annual rate in the first quarter of 2016, outpacing U.S. GDP growth of 0.5 percent.
New York City resident employment grew by 21,200 in the first quarter, reaching a record level of more than four million.
Of the total 41,700 private-sector payroll jobs added in the first quarter, nearly half (19,100) were in low-wage industries and 36 percent were in mid-wage industries. All major sectors expanded except for the high-paid financial activities sector.
The continued dominance of low-wage job creation contributed to disappointing wage gains. Average hourly earnings for private-sector payroll workers grew only 0.1 percent year-over-year.
Between the end of the Great Recession and 2014, average pay in low-wage industries has fallen 3.2 percent after adjusting for inflation. Real wages for mid-wage industries have grown 4.1 percent, while high-wage industries experienced 10.3 percent real wage growth in those five years.
Venture capital investment in New York also area fell 6.2 percent to about $1.4 billion in the first quarter of 2016, the first year-over-year decline since 2012.
Quarterly City personal income tax revenues fell 0.3 percent on a year-over-year basis, driven by a 28 percent increase in tax refunds.
A decrease in financial sector bonus payments contributed to relatively weak first quarter personal income tax collections. Wall Street bonuses are estimated to have been $23 billion in the 2015 bonus season, 15.9 percent lower than $27.5 billion in 2014, and the lowest level since 2011.
New commercial leasing activity in Manhattan, however, fell 6.0 percent to 6.5 million square feet. The highest-leasing sector was
TAMI (technology, advertising, media and information services), accounting for nearly 37 percent of new leases 10,000 square feet and larger.
The volume of residential home sales increased 8.1 percent in Manhattan and 26.9 percent in Brooklyn.
“A strong City economy and job gains are always welcome news, but stagnant wages, a potential cool off in the commercial real estate market, and slowing venture capital investment are causes for concern. We’ll be keeping an eye on these economic indicators and continuing to focus on enacting policies that ensure every New Yorker has a fair chance to share in our City’s growth,” Stringer said.