Business activity in the Northeast region of the country cooled this month, according to new data from the Federal Reserve Bank of New York. Specifically, the 2nd Fed district’s general business conditions index fell to 19.0 in September, much worse than expected and the weakest headline reading since April. Under the hood, measures of new orders, shipments, and profit margins all deteriorated this month, and forward-looking gauges (six months ahead) also softened.
All of these metrics, though, remain well above pre-election levels, and much of the weakness appears related to U.S. trade policy. Moreover, another poll conducted by the New York Fed found that a majority of surveyed business managers believe recent tariffs have raised their input costs, either directly or indirectly. That is an unneeded inflation headwind considering that businesses in September continued to add staff and increase hours in an effort to reduce capacity strain, something which has become more challenging (expensive) in the tight labor market.
Sources: Econoday, FRBNY
Post author: Charles Couch