New York manufacturing activity rebounded sharply in April with strong gains in orders, shipments, and employment, while rising input costs, weakening optimism, and softer capital spending signaled cautious outlook.
New York factory activity chugged along in April even as the shadow of the ongoing U.S.-Iran war loomed overhead, the results of the Empire State Manufacturing Survey published Wednesday showed. A separate report showed a tamer than expected monthly increase in import prices in March.
The stock market reacted positively to the data, with the S&P 500 E-mini futures (ES) rising slightly but the 10-year U.S. Treasury note futures slid marginally as yields continue to be positive. The odds of a rate hike at the upcoming April Federal Open Market Committee (FOMC) meeting rose slightly to 1.6% from 1% on Tuesday.
The market optimism also traced back to comments from U.S. President Donald Trump in an interview with the Fox News that the war with Iran is “close to over.” “I view it as very close to over. ... If I pulled up stakes right now it would take them 20 years to rebuild that country, and we’re not finished.”
Strong Rebound: The headline general business conditions index climbed 11.2 points to 11 in April from -0.2 in the previous month, with news orders, shipments and employment all increasing during the month. Economists, on average, had expected a more modest rise to 0.30. The new orders and shipment indices rose to their highest levels since 2023.
General Business Conditions Diffusion Index (seasonally adjusted)
Source: NY Fed
Here’s how the other indices fared:
- New Orders: +19.3 (up 12.9 points)
- Shipments: +20.2 (up 27.1 points)
- Unfilled Orders: +9.1 (down 1.7 points)
- Delivery Time: +12.1 (down 1.6 points)
- Inventories: +5.1 (down 1.8 points)
- Prices Paid: +51 (up 14.4 points)
- Prices Received: +21.8 (up 0.4 points)
- Number of Employees: +9.8 (up 4 points)
- Average Workweek: +13.7 (up 11.8 points)
- Supply Availability: -10.1 (down 6.2 points)
While firms faced input price inflation, they have apparently chosen not to pass these costs through to their customers.
Outlook Moderates: While firms continue to expect expansion of manufacturing activity in the future, their optimism has waned. The future business conditions index fell 11 points to 19.6.
The assessment of future conditions showed that new orders and shipments are expected to increase, and employment is expected to grow in the months ahead. On the other hand, the capital expenditures index dropped nine points to 13.1, indicating that capital spending plans weakened. Firms also expect supply availability to continue to worsen.
Import, Export Prices in Check: A Bureau of Labor Statistics report released Wednesday showed that import prices rose 0.8% month over month (MoM) in March, slightly slower than the 0.9% increase in February. Economists anticipated a 2.3% increase for the month
On a year-over-year (YoY) basis, import prices climbed 2.1% compared to the 2% consensus estimate. March’s rise was the largest since a 2.2% increase in December 2024.
Meanwhile, export prices jumped 1.6% MoM in March, slightly faster than the 1.5% expected by economists, and climbed 5.6% from a year ago, marking the largest annual increase since November 2022.
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