Empire State Manufacturing Contracts Less Than Forecast but Outlook Deteriorates

Empire State Manufacturing Contracts Less Than Expected, But Outlook Weakens

The Empire State Manufacturing Survey showed business activity in New York State remained in contraction in April, though the decline was milder than anticipated. The headline general business conditions index rose to -8.1, beating expectations of -12.8 and recovering from March’s steep -20.0 reading. Despite the upside surprise, underlying components and forward-looking measures signal sustained pressure on the manufacturing sector.

Labor Market Steady, Costs Climb Sharply

Employment was largely flat, with the number of employees index at -2.6. However, firms cut back hours, as shown by the average workweek index falling to -9.1. Pricing pressures picked up meaningfully: the prices paid index jumped to 50.8, and prices received climbed to 28.7—the fastest pace of price increases in over two years. This signals a renewed squeeze on margins and potential pass-through effects downstream.

Future Expectations Fall Sharply

The index for future general business conditions plunged 20 points to -7.4, its second lowest level on record. Future orders and shipments also moved into negative territory, and capital expenditure plans were flat. Supply chain concerns intensified, with the forward-looking supply availability index dropping to -18.0. At the same time, firms anticipate input and output prices to continue rising, further straining outlook confidence.

Market Forecast: Bearish

While April’s data came in above expectations, the broader trend remains negative. Manufacturing in New York State is still under pressure from weak demand, tightening supply, and rising costs. The sharp drop in forward indicators adds weight to a bearish short-term forecast for regional industrial equities and manufacturing-sensitive assets.