Here is your July economic recovery update from THE CITY. We publish a new analysis of the city’s employment, job and fiscal indicators each month.
New York City’s employment growth failed to accelerate in June as the city reported yet another modest monthly job gain, new labor data shows.
With 22,500 jobs added in June — a hair more than the 22,400 gained in May — the city has regained nearly 79% of those lost since the pandemic began but remains 205,800 positions shy of a full recovery.
The city’s unemployment rate was 6.2% in June, marginally up from 6.1% in May, and way higher than the national unemployment rate of 3.6%.
“It is a lackluster report. I won’t read too much into the unemployment rate increase as it happened last June too. It could be temporary, because of the college students looking for summer jobs,” said James Parrott, director of economic and fiscal policy at the Center for New York City Affairs, a part of The New School.
According to a report by the Center published Thursday, the unemployment rates among people between the ages of 18 and 24, who typically form a large chunk of the restaurants and retail workforce, was 19.5% in the first quarter of 2022, while the overall rate was only 7%.
These stats reflect the tepid recovery in industries that require workers to be present at the workplace.
Hiring in the Leisure and Hospitality sector slowed in June, as the sector remains far from the pre-pandemic employment levels. The construction sector also struggled to make any meaningful strides towards a full workforce recovery, as did the manufacturing sector.
A bright spot: tourists are coming back at a faster pace than expected as hotel occupancy reached close to 90% in June, compared to the same period in 2019, while office occupancy was slightly above 40% as of last week, according to THE CITY’s recovery tracker.
Inflationary Pressures
Workers are already under pressure from the rising cost of items, while the city’s economy is facing mounting challenges as recession fears loom large following aggressive interest rate hikes by the Federal Reserve to battle surging consumer prices.
The consumer price index, an inflation gauge, rose by 6.7% for the region this June from June of 2021, its steepest increase since 1981. Food and household energy prices are up by 9.1% and about 25%, respectively.
In an effort to combat rising prices, the Federal Reserve is expected to raise interest rates again at its July 27 meeting, following a 0.75 percentage point increase in June.
Economists predict that the Fed’s actions could slow down growth so much that it pushes the country into a recession. That would likely stall the job market or, worse, trigger another phase of layoffs.
According to Parrott, the Fed’s interest rate hikes currently pose the “biggest risk” to the city’s economy but he said it is soon to know whether those moves will tip us into a recession.
The June labor data doesn’t explicitly show “any early signs of contraction or recession”, Parrott said, noting that the real estate sector is showing some dampening that could be because of the interest rate increases.
“NYC has further to go than the nation and we aren’t even close. The Fed’s actions aren’t going to make it easy,” Parrott added.
There are already some early signs that employers are anticipating a slowdown. Several tech companies including Microsoft, Twitter, Facebook’s parent Meta, and Snap have recently announced hiring freezes, while a meltdown in the cryptocurrency market prompted Coinbase Global to cut its staff by nearly a fifth.
Those freezes matter to New York because the tech sector has been the backbone of the city’s job market in the past decade or so. Even during the pandemic, the sector added jobs.
And tech companies added more jobs in June, much like the finance and legal industries. But the hiring could be temporary as these sectors are known to hire a lot of summer interns.
New York City is already seeing tax collections plunge due to the recent slump in the stock market, and the Financial District is unlikely to get back to its former glory anytime soon. THE CITY last week reported on data that showed Manhattan is losing businesses to Brooklyn, leaving office space vacant in the Lower Manhattan area.
