New York State Manufacturing Activity Stalls as Inflation Expectations Ease

Manufacturing activity in New York State stalled in March, mainly due to a decline in shipments, but manufacturers expect inflation pressures to ease in the coming months.

Data released by the New York Federal Reserve on Monday showed the overall business condition index for manufacturing fell about 7 points to -0.2. A reading below zero indicates the industry is in contraction, while the median forecast from economists surveyed was 3.9.

Despite the overall index retreating, both orders and employment growth indicators slightly improved. Additionally, the outlook for payment prices dropped to its lowest level since the end of 2024. Although recent Iran-related conflicts have pushed energy costs higher, manufacturers’ expectations for factory gate prices have also declined.

Responses to this survey were collected from March 2 to 9, after the outbreak of the war. At the time of the survey results, the manufacturing sector showed initial signs of recovery but also faced uncertainty. The report indicated that firms’ capital expenditure expectations reached their strongest level in over three years.

The New York Fed’s report also showed declines in indicators measuring current raw material costs and product selling prices.

The indicator measuring current factory employment rose to its highest level this year.