April 16, 2008
Federal Reserve Districts
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The Second District's economy has shown further signs of weakening since the last report. Manufacturers report that business activity tailed off substantially in February and early March and has been flat since. Import volume at the Port of New York is also reported to have slowed noticeably. Contacts outside the manufacturing sector generally indicate continued softening in business activity and little change in employment levels. More broadly, a major employment agency indicates some slowing in hiring activity since the last report. Retailers indicate a moderate pickup in business in March, after a disappointing February; sales are said to be on or close to plan.
Tourism activity in New York City has held steady since the last report. Housing markets are reported to have softened further, including Manhattan's previously resilient co-op and condo market. Office markets across the New York City area showed some signs of slackening in the first quarter, with vacancy rates edging up and asking rents decelerating. Finally, bankers report further weakening in loan demand, more pronounced tightening in credit standards, and widespread increases in delinquency rates across the board.
Consumer surveys point to further erosion in confidence: Based on the Conference Board's survey of Middle Atlantic residents, consumer confidence declined for the sixth consecutive month in March, falling to its lowest level in nearly 12 years. Similarly, Siena College's survey of New York State residents shows sharp declines in consumer confidence across all metro areas in the first quarter; over the past year, the steepest declines, by far, have been in the New York City and Albany metro areas.
Tourism activity in New York City has been steady since the last report, with the level of activity still fairly high. While Manhattan's hotel occupancy rate was up 3 percentage points from a year earlier in February, room rates edged down in the month to a level 9 percent higher than a year earlier, compared with double-digit percentage gains throughout 2007. Broadway theaters report that attendance was up 3 percent from a year earlier in March--about the same as in February--but that revenues were up less than 2 percent, reflecting a slight decline in the average effective ticket price.
Construction and Real Estate
Commercial real estate markets have also slackened. Vacancy rates rose moderately throughout the New York City metropolitan area, led by somewhat large increases in Central New Jersey and Westchester County. Asking rents on Class A properties rose moderately in Manhattan and Fairfield County, though at a slower pace than in 2007; rents were flat to down slightly in Long Island, Westchester and northern, as well as central, New Jersey.
Other Business Activity
New York State manufacturers report that business activity weakened noticeably in February and early March, before leveling off in early April. Contacts also report further acceleration in prices paid but only modest increases in selling prices. Overall, manufacturers anticipate little change in their employment levels over the next year. A major shipping terminal at the Port of New York reports that import volume has slowed noticeably in early 2008: after 6-7 percent gains in 2007, the volume of incoming containers is running flat in early 2008, compared with a year earlier. In general, non-manufacturing firms in the District report continued weakening in general business activity and little change in employment levels; these firms also continue to rein in capital spending plans somewhat.