New York Manufacturing Plunges to Two-Year Low as March Index Hits -20

The Federal Reserve Bank of New York reported today that manufacturing activity in New York State dropped dramatically in March 2025. The Empire State Manufacturing Index plunged 26 points to -20.0, marking the largest decline since May 2023 and reaching its lowest level in nearly two years.

Economists expected a much smaller decrease to approximately -1.5, making the actual figure substantially worse than forecasted. The negative reading indicates significant contraction in the region’s manufacturing sector, following February’s positive 5.7 reading.

New orders fell sharply to -14.9 from 11.4 in February, while shipments declined to -8.5. These decreases suggest manufacturers face weakening demand throughout the supply chain. Input costs rose at the fastest pace in more than two years, adding pressure to already strained businesses.

Employment levels continued their downward trend alongside reduced working hours. Delivery times remained steady while inventories continued to grow, potentially indicating reduced sales rather than improved supply chain conditions.

The dramatic decline follows two consecutive months of waning business optimism. The future business activity expectations index fell further in March, though firms still expect some improvement in conditions over the next six months.

This manufacturing contraction comes amid President Trump‘s expanding tariffs on imported goods. Some analysts connect these trade policies to the sector’s struggles, as manufacturers adjust to new cost structures and supply chain disruptions.

Empire State Manufacturing Survey Signals Sharp Decline

The Empire State Manufacturing Survey polls approximately 200 manufacturing executives monthly to gauge economic conditions. This diffusion index considers readings above zero as expansion and below zero as contraction.

Historically, the index has averaged 6.59 points since 2001, with its record high of 39.00 points in April 2004 and record low of -79.90 points during the April 2020 pandemic shutdown.

Manufacturing often serves as a leading economic indicator, making this sharp decline potentially concerning for broader economic prospects. The unexpected severity of the drop has caught analysts’ attention, who will watch closely for similar patterns in other regional manufacturing surveys.

The data arrives as the Federal Reserve evaluates economic conditions ahead of potential interest rate decisions. This adds significance to the deteriorating manufacturing numbers.

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