Input Stories

Manufacturing activity in New York state continued to decline in May. The headline general business activity index worsened slightly from April, slipping from -8.1 to -9.2. On the other hand, the new orders and shipments indexes grew after contracting the previous month, with new orders increasing from -8.8 to 7.0 and shipments rising from -2.9 to 3.5. Unfilled orders and delivery times both inched up from 4.1 to 4.8 and from 0.0 to 1.0, respectively. Meanwhile, inventories fell from 7.4 to 4.8, and supply availability dropped from -5.7 to -11.4.

The index for the number of employees fell further into negative territory, declining from -2.6 to -5.1, while the average employee workweek improved but remained negative, rising from -9.1 to -3.4. Input prices ticked up for the fifth consecutive month to 59.0, the highest level in two years. Meanwhile, selling prices fell 5.8 points to 22.9, a reflection that prices received increased at a slower pace while the pace of rising input prices continued to quicken.

Looking forward, firms continue to expect conditions will remain gloomy six months ahead. The index for future business activity remained negative but rose 5.4 points to -2.0. New orders are anticipated to decrease, but by a smaller degree, with the indicator rising from -6.6 to -2.7. Meanwhile, capital spending plans turned negative, decreasing 8.3 points to -6.7. On the other hand, employment expectations rose 8.2 points to 11.6, but the average employee workweek outlook weakened, continuing a trend from the prior four months. Input prices are expected to remain high, but selling price expectations retracted 10.7 points to 35.2. Meanwhile, supply availability is forecasted to continue to contract in the next six months and at a faster pace than predicted in April.

In May, Philadelphia’s regional manufacturing activity remained weak. The index for current general business activity rose but remained negative, increasing from -26.4 to -4.0. Twenty-three percent of firms reported decreased activity this month, while 19.0% saw increases in May, an improvement from the 12.5% reporting increases in April. The index for new orders recovered from a sharp decline last month, rising from -34.2 to 7.5. On the other hand, the shipments index continued to fall, dropping 3.9 points to -13.0. Meanwhile, employment and the average employee workweek rose in May, to 16.5 and 2.0, respectively.

The prices paid index edged up from 51.0 to 59.8, the highest reading since June 2022, while the prices received index increased from 30.7 to 43.6. As has been the case for many months, the prices received index remains lower than the prices paid index, indicating manufacturers have been absorbing a sizable portion of those higher costs paid.

Looking ahead, indicators showed growing optimism about the future after two months of gloomy readings. The index for future general business activity soared more than 40 points to 47.2 in May. Compared to the previous month, a lower proportion of firms (20.2%) expect decreases in activity, compared to last month’s reading of 29.0%, while 67.3% anticipate activity will improve. Similarly, the future new orders index surged from 6.6 to 49.7, and the future shipments index rocketed from 5.0 to 51.1. Meanwhile, the index for future employment turned positive, rising from -0.6 to 23.0. The capital expenditures index improved from 2.0 to 27.0. The future prices paid index edged down from 63.1 to 61.6, while the future prices received index fell from 67.7 to 50.0, indicating manufacturers’ concerns about future costs are easing slightly.

The Producer Price Index for final demand (also known as wholesale prices) decreased 0.5% over the month in April, after remaining unchanged in March. Over the year, producer prices moved up 2.4%, coming in slightly lower than expectations. Meanwhile, prices for final demand excluding foods, energy and trade services edged down 0.1% over the month in April, the first decline since falling 0.8% in April 2020. On the other hand, prices for these goods still advanced 2.9% from April 2024.

In April, prices for final demand services declined 0.7%, which drove the decrease in the headline rate, while prices for final demand goods were unchanged. More than 40% of the decline in the final demand services index in April can be traced to a 6.1% decrease in margins for machinery and vehicle wholesaling. Meanwhile among the final demand goods prices, the index for general purpose machinery and equipment advanced 1.1%, and residential electric power and utility natural gas also moved up. On the other hand, prices for chicken eggs dropped 39.4% over the month in April, contributing to the decline in finished consumer foods.

Processed goods for intermediate demand rose 0.2% in April, following a 0.1% decrease in March. The increase can be attributed to a 0.5% rise in the index for processed materials less foods and energy, which more than offset price decreases for processed foods and feeds and processed energy goods, which fell 1.0% and 0.2%, respectively. Over the year, the index rose 0.5%, down from the 0.7% increase in March.

Meanwhile, prices for unprocessed goods for intermediate demand fell 3.2% in April. Nearly 60% of the April decline can be traced to a 5.0% drop in the prices for unprocessed energy materials. Additionally, the unprocessed foodstuffs and feedstuffs index decreased 3.8%. Despite the monthly declines, prices for unprocessed goods for intermediate demand were still up 1.7% from April 2024.

Consumer prices increased 0.2% over the month and 2.3% over the year in April, slowing from the 2.4% rise in March to the slowest over-the-year increase in more than four years. Core CPI, which excludes more volatile energy and food prices, edged up 0.2% over the month and rose 2.8% over the year, the same as the 12-month increase in March.

Energy costs increased 0.7% over the month in April, driven by a 3.7% hike in the utility (piped) gas service index, but fell 3.7% over the year. On the other hand, the rise in the utility (piped) gas service index was offset partially by an over-the-month decrease in the index for fuel oil (down 1.3%).

Food prices dipped slightly in April, falling 0.1% over the month, driven primarily by a 12.7% decrease in the index for eggs, but were still up 2.8% over the year in April. The food at home index fell 0.4% from March, the largest decline in that index since September 2020, but increased 2.0% from April 2024. Meanwhile, food away from home rose 0.4% in April and 3.9% over the year.

Shelter grew 0.3% over the month and 4.0% over the year, consistent with the 12-month increase in March. Meanwhile, prices for transportation services edged up 0.1% over the month and rose 2.5% over the year, with motor vehicle insurance and motor vehicle maintenance and repair leading the increase, surging 6.4% and 5.6% over the year, respectively. On the other hand, airline fares declined 2.8% over the month and 7.9% over the year, partially offsetting some of the increase in the transportation services index.

Although the over-the-year headline inflation rate continues to tick down, risks of higher inflation have risen. In the press conference following the May meeting, Federal Reserve Chairman Jerome Powell indicated that the Federal Open Market Committee will keep its policy stance consistent until notable changes to inflation or the labor market are seen in the data. Therefore, markets are anticipating that the FOMC will keep rates steady at its meeting in June.

Industrial production was unchanged in April. Meanwhile, manufacturing output dipped 0.4%. Growth in wood products; aerospace and miscellaneous transportation equipment; fabricated metal products; and furniture and related products was more than offset by declines in most other major categories, particularly nonmetallic mineral products; motor vehicles and parts; and apparel and leather. At 103.9% of its 2017 average, total industrial production in April rose 1.5% from the same month last year. Capacity utilization slipped to 77.7%, down 0.1 percentage point from March, but increased 1.4% over the past year. Capacity remains 1.9 percentage points below its long-term average from 1972 to 2024.

In April, major market groups had mixed growth. Among consumer goods, the production of durables decreased 1.3%, with declines in every major category, while the index for nondurables inched up 0.1%, with the greatest improvement in energy goods (3.2%). The business equipment index advanced 0.2% in April, driven by a 0.9% increase in industrial and other business equipment.

Durable goods manufacturing fell 0.2% in April, with a decline in motor vehicles and parts (-1.9%) partially offset by an increase in wood products (1.3%). Meanwhile, nondurable goods manufacturing decreased 0.6% in April. Manufacturing capacity utilization fell 0.4 percentage points to 76.8% and remains 1.4 percentage points below the long-term average.

Real GDP decreased at an annual rate of 0.3% in the first quarter of 2025, down from a 2.4% increase in the fourth quarter of 2024 and below consensus expectations of meager growth. The decrease in GDP during the quarter was mostly reflective of an increase in imports, which are a subtraction in the calculation of GDP, and a decline in government spending. This was partially offset by greater investment, consumer spending and exports. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.8%, down from a 4.0% increase in the fourth quarter, with both spending on goods (up 0.5%) and services (up 2.4%) contributing to the gain. Consumer spending on durable goods decreased 3.4% after exhibiting significant growth of 12.4% in the fourth quarter. The decline in consumer spending was led by motor vehicles and parts, with a slight decline in other durable goods. Meanwhile, consumer spending on nondurable goods rose 2.7%, down from 3.1% growth in the fourth quarter. Within services, spending increases were widespread, with health care, housing and utilities being the largest contributors to the increase. The decrease in federal government spending (down 5.1%) was led by an 8.0% decline in defense spending, but nondefense spending was also down 1.0%.

Investment surged 21.9% at an annual rate in the first quarter, driven by a 22.5% increase in business spending on equipment, with information processing equipment being the largest contributor. Meanwhile, business spending on industrial equipment declined. Exports rose 1.8% in the first quarter, with the increase entirely concentrated in goods exports.

In February, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recorded a 3.9% annual gain, down slightly from 4.1% in January. The 10-City Composite saw an annual increase of 5.2% in February, down from 5.4% the previous month, while the 20-City Composite rose 4.5% year-over-year, down from 4.7%. Among the 20 cities, New York again posted the highest annual gain at 7.7%, followed by Chicago at 7.0% and Cleveland at 6.6%. Tampa again exhibited the lowest annual return, with prices falling 1.5%.

On a month-over-month basis, the U.S. National Index rose 0.4%, the 10-City Composite improved 0.8% and the 20-City Composite increased 0.7% before seasonal adjustment. Meanwhile, after seasonal adjustment, the 10-City and 20-City Composites posted increases of 0.5% and 0.4%, respectively, while the U.S. National Index improved 0.3%. Of the cities tracked by the 20-City Composite Index, 17 showed monthly price increases, a reversal of recent seasonal weakness. San Francisco (+1.8%), Seattle (+1.6%) and Los Angeles (+1.5%) led monthly price gains, while only Tampa (-0.3%) and Miami (-0.3%) exhibited monthly declines.

Even as mortgage rates have slipped from their peaks to the mid-6% range, affordability continues to be a challenge, with the monthly payment burden remaining historically elevated relative to incomes. Consequently, buyer demand has cooled compared to peaks in recent years, but limited housing supply continues to support price growth—resulting in slower, more sustainable price increases rather than broad declines.

Consumer confidence declined 7.9 points in April to 86.0. The Consumer Confidence Index fell for the fifth consecutive month to levels not seen since the onset of the pandemic, driven mainly by consumers’ expectations.

The Present Situation Index, reflecting current business and labor market conditions, fell 0.9 points to 133.5. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, dropped 12.5 points to 54.4, the lowest level since October 2011 and well below the recession signal threshold of 80.

All components of the Consumer Confidence Index declined sharply, exhibiting pervasive pessimism about the future. Views of the current labor market situation softened, with 31.7% of consumers saying jobs were “plentiful,” down from 33.6% in March, while 16.6% said jobs were “hard to get,” up from 16.1%. Looking to the future, 32.1% anticipate there will be fewer available jobs in the next six months, nearly as high as April 2009 in the middle of the Great Recession. Additionally, expectations about future income turned negative for the first time in five years, with 18.2% of respondents anticipating decreases.

Although April’s drop in confidence was broad-based across age and income groups, the decline was steepest for consumers between the ages of 35 and 55 and among consumers in households earning more than $125,000 a year. Inflation expectations likewise ticked up to 7.0% in April, the highest since November 2022. Meanwhile, expectations for higher interest rates continued to rise. Consumers’ views of their current financial situation softened from March to the lowest level since 2022, while expectations for a recession in the next 12 months increased to a two-year high.

Consequently, buying plans for homes and cars declined, as did vacation plans. Plans to buy big-ticket items also lowered but remained slightly elevated on a six-month moving average. Mentions of trade and tariffs in written responses reached an all-time high. Respondents also mentioned the impact of the high cost of living, stock prices and uncertainty.

In April, Texas factory activity rose, but at a slightly slower pace than the prior month. The production index slipped 0.9 points to 5.1, still indicating modest positive output growth. On the other hand, the new orders index plummeted nearly 20 points to -20.0, after March’s reading of -0.1. The capacity utilization index dropped to -3.8 from -2.3, while the shipments index turned negative for the first time this year, dropping from 6.1 to -5.5.

Perceptions of manufacturing business conditions worsened in April, with the general business activity index plunging more than 19 points to -35.8, the lowest reading since May 2020. The company outlook index fell more than 17 points to its post-pandemic low of -28.3. Meanwhile, the outlook uncertainty index, which has been volatile in previous months, increased again in April, rising nearly 11 points to 47.1. The series average is 17.3.

Labor market indicators suggested a decrease in head counts and shorter workweeks in April, with the employment index inching up to -3.9, while the hours worked index decreased to -6.4. Just more than 9% of firms reported net hiring, and a larger percentage (13.0%) noted net layoffs.

Upward pressure on prices intensified in April, while wage growth remained relatively stable. The prices paid for raw materials index jumped from 37.7 to 48.4, the highest reading since mid-2022. Meanwhile, the prices paid for finished goods index increased from 6.3 to 14.9. The wages and benefits index edged down from 16.0 to 14.3, below the series average of 21.1.

The outlook for future manufacturing activity is still positive, but less optimistic than March’s reading, with the future production index decreasing from 27.6 to 14.8. On the other hand, the future general business activity index fell nearly 9 points to -15.2, and the future company outlook index turned negative, falling 10.2 points to -6.0.

New orders for manufactured goods rose 4.3% in March, up for three consecutive months. When excluding transportation, new orders slipped 0.2%. Orders for durable goods jumped 9.2%, following a 0.8% increase in February. Year to date, durable goods orders are up 5.5%. Nondurable goods orders ticked down 0.3% in March after increasing 0.1% in February. Nondurable goods orders are up 0.8% over the year.

New orders for nondefense aircraft and parts led the increase in durable goods by leaping 139.0%, after shrinking 7.4% in February. In March, the largest monthly decrease occurred in mining, oil field and gas field machinery, which declined 16.3%, after rising 11.7% the month prior. The largest over-the-year changes also occurred in nondefense aircraft and parts (up 99.3%) and ships and boats (down 19.2%).

Factory shipments decreased 0.1% in March, after rising 0.7% in February. Shipments over the year increased 1.6%. Shipments excluding transportation were flat in March, following a 0.4% increase the previous month. Shipments for durable goods improved 0.1% in March, down from 1.3% in February but up 2.4% year to date. Meanwhile, nondurable goods shipments declined 0.3% in March but are up 0.8% year to date.

Unfilled orders for all manufacturing industries rose 2.0% in March, following a 0.1% increase in February. Inventories rose 0.1%, the same as the past three months, and the inventories-to-shipments ratio remained the same at 1.45. The unfilled orders-to-shipments ratio for durable goods increased to 6.98 from 6.81 in February.