City Jobless Rate Drop Is Sharpest Since 1978

Despite the recent turmoil in the financial industry, New York City's unemployment rate dropped considerably between August and September, new data shows, suggesting the city's economy has yet to suffer any economic downturn.

As reported yesterday by the state's Department of Labor, the drop in the seasonally adjusted unemployment rate, to 5.1% from 5.7%, was the single largest month-to-month fall since the numbers were put on record in 1978.

The data comes as Wall Street feels reverberations from the collapse of the subprime lending industry, which has led creditors to tighten their standards and has crimped the availability of loans. Banks such as Washington Mutual and Citigroup have reported considerable declines in profits, and numerous major financial institutions have had to lay off workers and close lending units.

"Obviously, the whole mortgage crisis affected us as it did nationally, but I think New York City is resilient," the chairman of the City Council's Finance Committee, David Weprin, said. "It's a healthy sign for New York."

However, economists and business leaders were quick to caution that the woes of the financial industry, upon which the city's health is very dependent, have hardly passed.

"The momentum of the city economy has thus far really carried it forward, but there's not a great deal of confidence in what lies ahead," the CEO of the Partnership for New York City, Kathryn Wylde, said. "I don't know anybody who thinks that we have seen the worst of the consequences of the credit crunch."

Economists suggested a number of possible reasons for the drop in employment between August and September, including a strengthening tourism market due to the weak dollar, and a large drop in the number of people looking for jobs.

"You have to look at it in conjunction with what's happening with the labor force," an economist with the Fiscal Policy Institute, James Parrott, said. "People dropped out."

Many in the real estate industry, particularly those involved in the commercial market, welcomed the new data, as the credit crunch has left the normally booming industry with a newfound sense of uncertainty in recent months. The market for commercial real estate market is highly dependent on citywide employment levels, as a drop in the number of workers decreases the need for office space.

"We aren't seeing the collapse that people had worried about," the director for research at commercial brokerage Cushman & Wakefield's New York office, Kenneth McCarthy, said.

"The worry since August has been that trouble in the credit market would spill over," Mr. McCarthy said. "Things aren't falling apart."

With the task of leasing about 1.5 million square feet of space, Cushman & Wakefield was selected yesterday by the Port Authority of New York and New Jersey as the brokerage firm for the Freedom Tower.