Beige Book Report: New York
July 16, 2025
Summary of Economic Activity
Economic activity in the Second District continued to decline modestly as heightened uncertainty hindered decision-making. Employment was up slightly and wage growth was modest. Selling price increases remained moderate, while input prices rose steeply as tariff-related cost increases were widespread. Manufacturing activity continued to decline modestly, with new orders edging down. Activity in the service sector continued to decline but at a more modest pace than last period. Consumer spending declined slightly, weighed down by soft auto sales. Housing markets were mixed across the District, with steep price increases amid strong demand and limited supply. Rents in New York City rose sharply. After an episode of deep pessimism in the last reporting period, businesses became more neutral about the outlook.
Labor Markets
On balance, employment in the region was up slightly. Headcounts continued to decline significantly among business services and information firms, and edged down slightly in education and health, but employment grew among businesses in manufacturing, transportation, retail, leisure and hospitality, and personal services.
Labor supply still exceeded labor demand in many industries. Labor demand was especially weak in the tech sector, especially for jobs with remote work arrangements. Attrition remained exceptionally low in most industries, though contacts in construction and some other industries dependent on workers in the skilled trades continued to see high attrition and low labor supply, particularly amid a decline in immigrant labor. With the decline in available immigrant workers, some small seasonal businesses reportedly decided not to reopen. Although layoffs remained limited in the region, some businesses reported postponing both hiring and layoff decisions until uncertainty resolves.
Wage growth slowed to the low end of the modest range, continuing the slowdown from the previous period. Firms in the business services and information sectors saw exceptionally slow wage growth. Wage growth was steady and moderate in personal services, leisure and hospitality, and construction.
Prices
The pace of selling price increases was mostly unchanged at a moderate pace. However, the pace of input price increases remained steep as tariff-related cost increases were widespread. Many businesses reported continuing to pass on some or all tariff cost increases to their customers. A manufacturer of doors for a Manhattan construction project reported a significant jump in costs due to the tariffs on steel. Several food and beverage establishments reported significant concerns about the rising costs of inputs. Tariffs have pushed up the cost of auto parts and dealers are generally passing these on to customers. A regional retailer described selectively raising prices on goods with less elastic demand that were not subject to tariffs, in order to offset rising costs among tariffed goods. An appliance manufacturer noted that tariff surcharges were disappearing as higher costs were now baked into prices overall. Still, one contact noted that both gas prices and some materials costs have declined. Businesses expected substantial increases in input prices in the months ahead, but more moderate increases in selling prices.
Consumer Spending
On balance, consumer spending declined slightly. After exceptionally strong auto sales last period when many buyers shifted forward purchases to avoid tariff-related price increases, auto sales declined moderately this period. With the surge in sales activity last period, new car inventory was still running low. Further, lenders have become cautious, and the least creditworthy borrowers are finding it more difficult to get approved for car loans. An electronics retailer in Northern New Jersey noted a sharp decline in sales and foot traffic. Still, a department store chain reported improving sales, with strong sales in denim and fine jewelry. Restaurant visits have continued to pick up around New York City, especially in Brooklyn.
Manufacturing and Distribution
Manufacturing activity continued to decline modestly, with new orders edging down. Still, shipments moved somewhat higher in recent weeks. Uncertainty about tariffs and trade policy remained a challenge for manufacturers, and many contacts mentioned difficulty setting prices and finalizing contracts and purchase agreements. Still, one regional plastic and rubber products manufacturer noted an increase in business from firms looking to reshore manufacturing for some goods. Wholesale and distribution-related firms showed some recent signs of a pickup. Delivery times remained unchanged. Supply availability worsened, but firms have become less pessimistic about future supply availability. Many manufacturers noted planned reductions in capital spending. The outlook among manufacturers improved.
Services
Activity in the service sector continued to decline but at a more modest pace than last period. There were ongoing steep declines in the leisure and hospitality, information, and personal services sectors, but activity was largely unchanged in business services and education and health. A regional hospital expressed concerns about business viability for rural hospitals amid potential federal funding reductions.
Tourism activity in New York City held steady. Hotel occupancy continued to edge up, and room rates were near all-time highs. Ticket sales at Broadway theatres were strong. Still, with the number of international visitors declining, optimism among tourism contacts waned.
Real Estate and Construction
Housing markets were mixed across the District, with strong demand and limited supply. Inventory picked up slightly in some parts of the District but remained constrained. Sales picked up in upstate New York, but there was a slowdown in new contracts in the New York City metro area due to uncertainty. Still, sales prices remained near record highs, and a large share of sales outside of New York City closed over their asking prices.
New York City rents—already at historic highs during the last reporting period—rose sharply in June, on the heels of a new city law prohibiting landlords from charging fees on rentals. Rental supply declined notably around New York City, as some landlords held off listing properties until there was greater understanding of the law and how to set prices.
Commercial real estate markets continued to improve slightly. Leasing and sales activity in Manhattan's office market picked up further, with some spillover into adjacent suburban markets. The tech sector has become more active in office leasing after having been mostly absent in recent years. The industrial market has remained soft amid declining data center demand. The industrial warehousing market cooled in the New York City area due to a slowdown in sales of home-related goods requiring storage, though one contact in Northern New Jersey noted some pickup in the industrial warehousing market. Manhattan saw a sharp decline in multi-family building sales. Construction activity across the District declined strongly, as high construction costs weighed on developers.
Banking and Finance
Activity in the broad finance sector picked up slightly. Still, small-to-medium-sized banks in the District reported that loan demand continued to weaken for all types of loans as well as refinances. Generally, banking contacts in the region noted an easing in credit standards, and one senior loan officer noted that the quality of credit applicants was weaker. Deposit rates edged lower. Delinquency rates continued to improve, particularly for residential mortgages.
Community Perspectives
Households in the District continued to face challenges meeting their needs due to rising expenses and reduced availability of financial assistance. In particular, housing costs have climbed as tax burdens have increased due to higher reassessments, while insurance and maintenance fees have increased markedly. Funding shortfalls in childcare programs in New York City due to escalating costs have led to a freezing of childcare voucher enrollments, requiring parents to shoulder higher expenses. Further, the lifting of COVID-era protections on Medicaid and housing continued to put stress on some households.
For more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy.