January Office-Using Employment Starts Strong
New York City office-using employment jumped in January. In addition, the latest revisions to the employment statistics for 2013 show an office sector that was stronger than initially reported. The revisions indicate the creative industries that have led the office recovery continued to do so in 2013.
Office-using employment increased by more than 4,000 jobs in January 2014, the strongest gain in six months, as the number of jobs increased in each industry category: financial services (+1,000), information (+1,500) and professional & business services (+1,500). It’s a bit early to draw conclusions about 2014, but January’s performance represents a solid start, comparing favorably to office-using employment growth of approximately 30,000 jobs per year in each of 2010-12 and growth of just 17,000 jobs in 2013.
Measuring the economy is an inherently difficult task. I once had it described to me as trying to measure a sprinter for a new suit while he is in the middle of a race. The professionals who report data on the economy know that their statistics have flaws and they do their best to adjust for those flaws. But the data and the processes used to calculate the data need to be reviewed and updated on a regular basis.
For employment data in New York City, part of this process is an annual review called benchmarking. Without getting too technical, the data reported every year are compared to a benchmark of all people for whom unemployment insurance is being paid. Once a year, the labor department revises its historical estimates based on the unemployment insurance benchmark.
For employment totals at the local level, including New York City, this benchmarking process always occurs during the first quarter. Last week, the Bureau of Labor Statistics reported the revised data for New York City and it showed a somewhat better picture for the office market than previously reported. Prior to the revision, employment in the three key office-using industries increased by only 8,700 jobs from December 2012 to December 2013. The revised growth of 17,000 jobs was roughly twice the pace previously reported.
Most of the revision was in the estimate of employment for professional & business services, which are now estimated to have added 10,000 more jobs in 2013 than first reported. In addition, information employment grew by almost 4,000 more jobs. The bad news is that employment in financial services, a critical industry in New York City, lost jobs in 2013 as employment growth there was revised down by 4,000 jobs. Most tech and creative industry jobs reside in the professional & business services and information categories, so the revisions reinforce the importance of these industries to the economy of New York City.
While office-using employment growth was better than we thought during 2013, it was still subpar. The positive signs in the data for January suggest this may be the start of a stronger year for office-using employment than the one just ended.