(Bloomberg) -- New York City’s recovery from the Covid-19 pandemic is lagging behind that of other major U.S. metropolitan areas as the iconic destination continues to suffer from the loss of tourism jobs, Fitch Ratings said Tuesday.
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When it comes to jobs lost during the worst months of the pandemic last year, the city had regained 56% as of September, worse than the Northeast region’s median rate of 69% and the nation’s major metropolitan figure of 71%, said Fitch Senior Director Olu Sonola.
The hit is largely due to the slower recovery of leisure and hospitality employment, which accounts for a quarter of the positions that are still lost, he said.
“The leisure and hospitality center continues to be a significant drag on employment recovery in the NYC metro,” he said.
Roughly two months after the period captured in Fitch’s assessment, that picture is slowly starting to improve, with international tourists just beginning to return.
New York City, once the U.S. epicenter of the outbreak, has seen high office vacancy rates and depressed ridership on its transit system as work and daily life have yet to recover fully. On the subway, for example, weekday ridership last week was more than 40% below pre-pandemic levels.
The loss of tourism has dealt a major blow. The most-populous U.S. city ranked 48 out of large 53 metropolitan regions in recouping the jobs lost during the pandemic as of September, according to Fitch’s analysis of federal data. The New Orleans area was last.
Fitch analysts led by Sonola said that for major metro areas nationally, the leisure and hospitality sector still account for about 38% of all job losses. The rise of virus variants and lagging vaccination rates pose risks, they wrote.
With the U.S. welcoming more foreign travelers as of this month, the city’s prospects look to improve. New York City’s jobless rate fell to 9.4% last month, the lowest since March 2020, when it was 3.8%. The rate soared to 20% in May last year.
The city projects 36.1 million international and domestic visitors this year, according to NYC & Co., the city’s tourism-promotion arm, as major draws like Broadway theaters reopen. That’s still way down from 66.6 million in 2019, but an improvement from 22.3 million in 2020.
Workplaces are also slowly filling back up, after delays to the return-to-office push in September as the delta variant was taking off. Office occupancy in the New York metro area has risen to around 35%, the highest since March 2020, and up from below 20% at one point in September, according to data from security company Kastle Systems as of Nov. 10.
The Northeast has a lot of ground to make up in part because officials have been relatively slow to lift pandemic-related limitations on economic activity. The median jobs recovery rate for major cities there fell in September from August, the only decline in regional medians that month, Fitch said.
“The slower removal of pandemic-related restrictions in the Northeast region is primarily what is causing job growth to decline compared to other regions of the U.S.,” Sonola said in a statement.
Investors are still bullish on New York state debt, at least in part because of the billions of dollars in federal pandemic relief it stands to receive.
Buyers of the state’s 10-year securities are accepting yields below those on benchmark debt, data compiled by Bloomberg show, signaling demand as municipal bonds remain attractive for residents of highly taxed states.
Daniel Barton, a portfolio manager and senior research analyst at Insight Investment Management, said that long-term, his team likes New York City as an investment.
“It is the worldwide center of finance, of tourism,” he said. “It has museums and the arts. We think that it’s going to come back.”
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