Federal Reserve Bank of New York

Summary of Economic Activity

On balance, economic activity in the Second District held steady in the latest reporting period. Labor market conditions remained solid with labor supply and labor demand coming into better balance. Employment continued to grow slightly, and wage growth remained moderate. The pace of selling price increases remained modest. Manufacturing activity declined modestly. Consumer spending was flat, on the heels of weak sales earlier in the year. Tourism activity in New York City continued to move slowly towards pre-pandemic levels, and the solar eclipse brought an off-season boost to parts of upstate New York. Housing markets continued to strengthen, with the spring selling season picking up beyond the seasonal norm in much of the District. Commercial real estate markets deteriorated noticeably. Activity in the finance sector continued to weaken, with sagging loan demand and rising delinquencies on business loans and commercial mortgages. Nonetheless, businesses generally remained optimistic.

Labor Markets

Labor market conditions remained solid. Labor demand and labor supply have come into better balance as conditions continued to normalize. Employment grew slightly, with modest increases in the service sector offset by reductions in the construction and information industries.

Though businesses continued to hire, there has been a slowdown in hiring among the fastest growing companies, in part due to the high cost of capital curbing expansion plans. Many businesses are hiring more selectively and deciding to make do with less rather than hiring workers who are not a good fit. Manufacturing firms cited ongoing difficulties hiring skilled machinists amid a wave of retirements, but otherwise it has become easier to find qualified workers. Outside of a few smaller businesses shutting down, layoffs remain fairly limited in the region. Businesses anticipate only modest increases in headcounts in the coming months.

Wage growth eased somewhat but remained moderate. Notably, a major payroll firm in the District noted that pay increases received by those switching jobs have returned to normal. Firms do not anticipate significant change in the pace of wage growth in the months ahead.


The pace of selling price increases remained modest, and the pace of input price increases remained moderate. Still, manufacturing firms pointed to more significant price increases for some raw materials, along with pricing volatility for electronics components. Looking ahead, input price increases are expected to pick up, with some contacts expressing concern about potential shipping route obstructions due to the Key Bridge collapse in Baltimore and obstacles in the Middle East.

Consumer Spending

Consumer spending was flat, on the heels of weak sales earlier in 2024. Spending on goods remained sluggish and declined for services such as restaurant meals and entertainment after a sustained period of strength. By contrast, auto dealers in upstate New York pointed to a pickup in auto sales, with solid increases in both new and used vehicle sales. Buyers have enjoyed greater choice with improved inventory levels. Some auto manufacturers have begun subsidizing interest rates—even offering zero percent financing—to help boost sales and manage inventories, and borrowers are turning to leasing amid the high price of new cars.

Manufacturing and Distribution

Manufacturing activity declined modestly, following pronounced weakness in early 2024. Shipments and new orders fell, and some firms have reduced employee hours. In contrast, transportation and distribution firms reported strong business activity. Supply availability continued to improve, and delivery times shortened, though some contacts noted new challenges receiving inputs in a timely manner. Manufacturers generally expect conditions to improve, though optimism has become subdued.


On balance, service sector activity was flat. Though the business services and leisure and hospitality sectors grew modestly, activity in the education & health sector edged down, and activity fell noticeably in the personal services and information sectors. Nonetheless, service firms remained fairly optimistic about the outlook.

A New York City tourism contact reported that the spring travel season has been slow, and the number of visitors is only slightly above levels seen last spring. Still, business travel and international tourism have both increased, with a notable uptick in visitors from Europe and South America during the Easter holiday week boosting attendance at Broadway shows. Hotel rates in New York City have remained high, in part reflecting a compositional shift towards higher-end rooms as more modest rooms have been set aside as housing for asylum seekers, reducing options for tourists. Visitors seeking the path of totality to observe the solar eclipse provided a sizeable boost to hotel and restaurant establishments in parts of upstate New York.

Real Estate and Construction

Housing markets continued to strengthen, with the spring selling season picking up beyond the seasonal norm in much of the District. Though mortgage rate lock-in has continued to limit new listings, inventory edged up. Still, low inventory remains the key factor restraining sales, and strong demand has generally kept sales prices above ask in both upstate New York and the New York City suburbs as bidding wars increased.

Residential rental markets continued to firm, with rents increasing modestly at high levels. Contacts from across the District noted that many former homeowners have turned to renting because of limited options on the purchase market, augmenting rental demand. Bidding wars on rentals remained common.

Commercial real estate markets weakened noticeably, with a strong decline in demand for office space. Vacancy rates in Manhattan increased sharply, due in part to a decline in both lease and sublease renewals. While Manhattan saw the brunt of the decline, office markets in Brooklyn, Northern New Jersey, Westchester, and Fairfield also weakened. Although rents were unchanged, rental concessions remained historically high. Office markets in upstate New York, where supply is more limited, remained more steady. The industrial sector also weakened, with continued declines in new leasing. Northern New Jersey, the key market for the New York City metro area, saw a sharp decline in demand. Still, industrial rents have held steady. Multifamily markets held steady, but credit cost and availability remained a challenge. All in all, financial strain among property owners in New York City continued to build as debt service payments rose.

Construction contacts reported sharply declining activity. Office construction remained at low volumes. Multi-family construction starts have been low across the District. Industrial construction was solid in Northern New Jersey but declined in upstate New York.

Banking and Finance

Activity in the region's broad finance sector continued to weaken in the latest reporting period. On balance, small- to medium-sized banks in the region reported slightly weaker loan demand, particularly for consumer loans and residential mortgages. Banking contacts indicated that credit standards continued to tighten for business loans and commercial mortgages but held steady for consumer loans and residential mortgages. Deposit rates declined slightly, and loan spreads narrowed. While delinquency rates were unchanged for consumer loans and residential mortgages, delinquencies continued to rise for business loans and commercial mortgages.

Community Perspectives

Community leaders noted that non-profit operations have been strained. Inflation has caused the cost of providing services to increase, but there has not been a corresponding increase in funding. Further, many non-profits have endured higher employee turnover and vacancies as many workers have left for more lucrative and less stressful roles in the public and private sectors. With shortfalls in funding and staffing, recipients of social services such as childcare, mental health, housing placement, and senior ambulettes have experienced increasing wait times and service reductions.

For more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy.

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Last Update: April 17, 2024