The New York City Economy Tracker: February 1, 2023

Welcome to the second edition of the New York City Economy Tracker, where we take a deep dive into the sectors and industries driving New York City’s economy, and the indicators gauging the city’s economic outlook. New York City’s economic tracker is a joint project between Investopedia and NY1.

Earnings Growth Rebounded in Late 2022

Let’s begin this week’s economy tracker with some good news. This week, we’re tracking wage gains among New York’s City’s workers.

Earnings growth ticked higher in the last few months of 2022, after stagnating during the summer. In December, average hourly earnings for NYC employees were up 2.7% year-over-year, to $41.89. Average hours worked, which declined throughout most of 2022, were roughly flat from a year earlier at 33.5 hours.

The city’s labor force participation rate, which tracks the percentage of the labor force either employed or looking for a job, climbed to 61% in December of 2022—a higher rate than in any month of 2019. While below the national average of 62.3%, participation continues to improve and is steadily closing the gap with the national rate.

A Mixed Outlook: Business Leaders’ Economic Prospects

Local business leaders’ outlook on the economy and overall business climate fell in January, according to the New York Fed’s latest Business Leaders Survey tracking New York state, northern New Jersey, and Fairfield County in Connecticut.

Thirty-five percent of executives expect business activity to decline over the next six months, compared with 32.8% who expect it to improve. A significant 44.8% of executives expect the overall business climate to get worse, versus just 17.5% who forecast an improvement.

Despite the worsening sentiment, local business leaders are more optimistic about near-term job growth and wage gains. Thirty-six percent of executives expect higher employment at their firms six months from now, compared to just 15.5% who expect a decrease. A hefty 54.1% of respondents expect higher wages at their company six months ahead, versus only 4.4% expecting wage declines.

Unemployment Remains High in New York City

Despite a tight labor market nationwide, unemployment in New York City remains at an elevated 5.9%, far above the U.S. average of 3.5%. The seasonally-unadjusted rate of 5.2% is also the highest among major U.S. cities. It’s more than double the 2.5% rate recorded in San Jose, California, which as of December had the lowest unemployment rate among the nation’s 10 largest metros.

By borough, the lowest unemployment rate was recorded in Manhattan, at a seasonally-unadjusted 4.3% as of December. By contrast, the Bronx recorded the highest unemployment rate of the five boroughs, at 7.5%. The unemployment rate in Brooklyn, currently at 5.5%, is also above the citywide average.

The seasonally-adjusted unemployment rate in New York City also exceeds the state average of 4.3%. Excluding the city, New York state’s unemployment rate drops to 3.2%—below the national average. Including NYC, the state’s unemployment rate rises to 4.3%—0.8 percentage points higher than the U.S. average.