How Strong is NYC's Job Market?

Economic Pulse
August 30, 2016

Heidi Learner

Heidi Learner

Chief Economist

Yes, Greg David’s headline is accurate, but just how strong has job growth been in the office-using sector?

The answer: not very.

While New York City has continued to add jobs on a year-over-year basis every month since March 2010, the pace of increase has slowed dramatically. Total job growth in the 12 months through July 2016 was a respectable 98k, however, this gain is smaller than the increases observed over the prior 3 years (+106k jobs in the 12 months through July 2013, +132k jobs through July 2014, and +128k through 2015.)

More important is the dramatic slowdown in the addition of office-using jobs: just 19k office-using jobs were added between July 2015 and July 2016, a fraction of the 49k jobs added in the 12 months ending July 2015 and the 46k jobs added in the 12 months ending July 2014. As a result, the year-on-year rate of growth in NYC office-using employment is just 1.4%--a fraction of the 3%+ growth rates seen throughout 2014 and 2015.

What does this mean for office space? It’s hard to see a catalyst for a robust increase in rents 1) without a meaningful increase in job growth and 2) with a meaningful increase in new space.

Note that greater pressure on revenue is just one additional reason for companies to look at other ways of reining in costs. Of 521 publicly-traded companies domiciled in New York City (almost all of whom have operations outside the city as well), just 127 had annual revenue (and not earnings) growth of 5% or more—less than ¼ of the companies. Without a measurable increase in top-line sales, it’s going to be hard to envision a dramatic increase in firm headcount at this point in the cycle.

Note: Updated figures for Q1 2016 trends in Manhattan will be released after Labor Day; the more recent data encompass the NY Metro Division (which includes all 5 boroughs, as well as Westchester, Rockland, Hudson and several other NY and NJ counties.)

Question: What is contained under “Professional/Technical Services?”

Answer: This sector includes legal, architectural and accounting services, consulting, advertising and the all-important “computer systems design and programming” category.

Heidi Learner

Heidi Learner

Ms. Learner analyzes the macroeconomic and legislative environment affecting commercial real estate markets on a national and regional basis and develops real-time measures of supply and demand for commercial space.