Federal Reserve Bank of New York

Summary of Economic Activity

On balance, economic activity in the Second District grew slightly in the latest reporting period. The labor market remained solid, with ongoing slight employment gains and moderate wage growth. Still, labor demand and labor supply continued to come into better balance. Selling price increases remained modest. Manufacturing activity declined modestly. Consumer spending grew slightly after slow sales in the spring. Tourism activity picked up in New York City. Housing markets remained solid, though low inventory continued to restrain sales. Commercial real estate markets weakened further. Activity in the finance sector declined slightly, with loan demand continuing to fall—though delinquency rates edged lower. Optimism about the outlook became more subdued.

Labor Markets

Labor market conditions remained solid. On the whole, employment continued to increase slightly, with gains in leisure and hospitality, personal services, and health and education partially offset by ongoing reductions in information, construction, and manufacturing. A contact at an employment agency in New York City reported a notable uptick in hiring among financial services firms.

Labor demand and labor supply continued to come into better balance. Still, businesses in the region reported ongoing difficulty finding the workers they need. These shortfalls are particularly acute in the service sector. Firms anticipate solid hiring in the coming months.

Wage growth remained moderate during this reporting period, though contacts from trade, personal services, and construction firms noted sharper wage increases. The increase in New York State's minimum wage earlier this year is being felt by some food service and manufacturing firms.


Selling price increases remained modest, and input price increases remained moderate. Still, the prices of some inputs have risen more rapidly, especially among service firms. Food and beverage businesses point to rapidly rising costs of cocoa and coffee, and contacts reported that obstructions to shipping in the Suez and Panama canals are causing shipping delays and pushing up the cost of freight, putting additional pressure on selling prices. Businesses expect little change in pricing pressures in the months ahead.

Consumer Spending

Consumer spending picked up slightly after slow sales in the spring. Spending on goods mostly held steady, while spending on entertainment and recreation ticked up. Auto dealers in upstate New York reported solid but slowing new car sales, as the high cost of credit and some shipping logistics issues have limited sales activity. Interest rates on auto loans have risen noticeably in the past several months, and coupled with higher car prices, new cars have become unaffordable for many. With improved inventory levels, manufacturer and dealer incentives have become somewhat more prevalent. Sales of used cars have been solid, as the price gap between new and used cars has normalized.

Manufacturing and Distribution

Manufacturing activity continued to decline modestly. Shipments were flat, and new orders continued to decline. Transportation and warehousing firms also reported a modest decline in activity, with a contact reporting that third party logistics companies have seen a particularly sharp decline in activity amid a retrenchment in consumer demand for goods. In contrast, wholesalers reported a strong increase in activity. Delivery times shortened, and supply availability was little changed. Still, contacts noted ongoing difficulty obtaining some supplies, including copper, various electronics, and heavy equipment. Manufacturers anticipate modest improvements in business conditions in the coming months.


Activity in the service sector increased slightly. Business services and leisure and hospitality continued to grow modestly, but the information sector saw a moderate decline. Service firms remained optimistic about the outlook, particularly those in the health and education sector.

Tourism activity picked up in New York City. An industry expert reported that an unusually spread-out spring holiday calendar brought in a steady stream of international visitors, particularly from Europe and South America. Still, tourism from Asia has not fully recovered to pre-pandemic levels because of reduced flight availability due to more restricted flight patterns, and business travel was more limited during the spring holiday season. Hotel rates held steady but are notably more expensive than pre-pandemic levels. Many visitors are offsetting high hotel expenses with reductions in spending on retail and dining. Broadway show attendance continued to improve. While tickets for some shows were in very high demand, less successful productions have seen low attendance, and five Broadway theatres remain out of use.

Real Estate and Construction

Housing markets remained solid, though supply remains extremely constrained in most parts of the District. Although inventory has edged up, it is still too low to satisfy existing demand, and prices have continued to rise. Sellers are hesitant to list because of high prices and limited inventory when looking for a new home. Mortgage lock-in remains a significant factor, and many people are waiting for a modest decline in interest rates to consider listing. Manhattan is an exception, where inventory is near normal levels. Home prices on Long Island have risen significantly, particularly at the higher end of the market, while upstate New York has seen greater demand at the lower end and middle of the market.

Residential rental markets continued to strengthen, and rents have risen across the District. Vacancy rates remain low, particularly in and around New York City, where rental vacancy rates are near long-term lows.

Commercial real estate markets weakened further. The industrial market in Northern New Jersey saw significant increases in vacancy rates, with multiple tenants exiting leases and significant deliveries of new space. Activity in the Manhattan office sector edged up slightly after a notable worsening in the first quarter. Strong demand remains for new high-end office buildings, and rents in these buildings have been resilient, but lower quality buildings are seeing slowly declining demand. Rent concessions for office leases are at historic highs. Finance and legal firms continue to seek office space, while tech sector businesses continued to reduce their office footprints during this reporting period. Office markets in upstate New York and the New York City suburbs have remained more resilient. Sales of commercial real estate reached low levels, and were down significantly for office, retail, and multi-family, as the high cost of credit constrained demand and transactions.

Construction contacts reported that activity continued to fall following a sharper contraction earlier in the year. Office construction remained at low volumes. Multi-family construction starts remained low across the District. Industrial construction was solid in Northern New Jersey but declined in upstate New York.

Banking and Finance

Activity in the broad finance sector weakened slightly this period. On balance, small- to medium-sized banks in the District reported slightly weaker loan demand, particularly for residential and commercial 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 increased, and loan spreads narrowed. Delinquency rates edged down slightly on business loans, consumer loans, and residential mortgages.

Community Perspectives

As the cost of providing services to communities has risen, federal, state, and local governments have responded with an array of grants and subsidies to help defray expenses for communities and populations in need throughout the District. With funds made available from the Infrastructure Investment and Jobs Act, the CHIPS Act, and remaining Covid subsidies, these grants and subsidies have been made to cover expenses for homeowners in disadvantaged areas, victims of natural disasters, and to communities in need of infrastructure improvements for utilities and broadband.

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

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Last Update: May 29, 2024