Beige Book Report: New York
October 15, 2025
Summary of Economic Activity
Economic activity in the Second District continued to decline slightly. On balance, employment held steady during the reporting period, and wage growth remained modest. The pace of price increases remained elevated but was little changed, with selling prices rising moderately and input prices rising strongly. Manufacturing activity was little changed after a summer uptick. Consumer spending increased modestly, in part due to the resilience of mid- to upper-income households. Housing markets remained solid. Overall loan demand declined. Businesses did not expect much of an increase in activity in the months ahead.
Labor Markets
On balance, employment remained steady during the reporting period. Firms in wholesale, finance, business services, and personal services reported slight-to-modest upticks in head counts, while education and health care, retail, construction, and transportation firms reported fairly significant declines.
Labor supply continued to exceed labor demand. Contacts reported that it has been consistently easier to find workers, continuing a trend that has been in place all year. Attrition remained exceptionally low, creating less need to hire for replacement. Labor demand varied by industry, with solid demand for workers in finance and accounting alongside still-soft demand for tech workers. Several businesses in construction and leisure and hospitality reported some difficulty finding workers due to shifts in immigration policy. A large retailer reported that instead of making workforce adjustments through hiring and firing, they were repositioning longer-tenured workers to increase productivity. While some firms were strategically downsizing, there remained no signs of major layoffs.
Wage growth remained modest on balance. Firms in construction, leisure and hospitality, wholesale, and education saw strong growth in wages, while wage growth slowed to a slight pace in finance. Contacts anticipated acceleration in wage growth in the coming months.
Prices
The pace of price increases was mostly unchanged; selling prices continued to rise moderately while input prices again rose strongly. Many businesses continued to strategize around how to structure prices in consideration of new tariffs. One major retailer reported adjusting price increases based on the demand elasticity for each item, and many reported working with vendors to find alternative inputs to mitigate the impact of tariffs on their costs. A Long Island area importer and wholesaler of auto parts noted that tariffs on goods imported from India presented particularly steep challenges to their business, while a coffee roaster and supplier noted that tariffs on imports from Brazil threatened their ability to remain profitable. A specialty appliance manufacturer from upstate New York hiked their prices for the second time this year to account for the impact of tariffs on their costs. An upstate brewing company reported that elevated ingredient and packaging material costs were getting passed along to the consumer. A pharmaceutical company reported that foreign manufacturers were absorbing tariff costs to maintain market share and production levels. Some restaurants noted escalating costs for food—particularly beef—and imported wine were hurting their businesses. A New York City-based specialty contractor reported that congestion pricing was pushing up the cost of doing business considerably. Looking ahead, firms expect significant pricing pressures to persist.
Consumer Spending
Consumer spending increased modestly throughout much of the District. A department store reported that store sales had continued to strengthen and were outperforming the same stores last year, due in part to resilience among mid- to upper-income consumers. Apparel has been selling well, and sales of cosmetics and fragrances remained strong. Still, a food store from Long Island reported that sales were muted amid elevated costs for produce and meat. Auto dealers in upstate New York reported that sales edged up slightly as conditions continued to normalize after tariff-related volatility earlier in the year. Despite some softening in used car sales and concerns about affordability, dealers were optimistic in the face of solid demand and healthy inventory levels.
Manufacturing and Distribution
Manufacturing activity was little changed after a summer uptick. New orders were down, and shipments were mostly unchanged. Some manufacturers of electrical equipment, machinery, and instruments noted improving sales in the reporting period. Still, uncertainty relating to tariffs continued to weigh on manufacturers who faced elevated input prices and some difficulty procuring equipment and materials. An upstate manufacturer of kegs temporarily ceased production due to high steel prices. Some manufacturing contacts reported that overseas demand for U.S.-manufactured goods had dropped due to shifting international trade dynamics. Supply availability worsened, though delivery times were little changed. Inventories continued to shrink. Capital spending plans were soft. Activity declined among wholesale and distribution firms. Manufacturers expect conditions to improve in the months ahead.
Services
Activity in the service sector continued to decline moderately this period. Firms in the retail, leisure and hospitality, and business services sectors reported moderate declines, and firms in the information sector reported a particularly sharp contraction. A contact from a security services firm in the New York City metro area reported that while business activity had been steady, there were fewer opportunities for government contract bids.
While domestic tourism continued to grow in New York City, a modest decline in international visitors, who tend to spend more than domestic tourists, has taken a toll on attractions and restaurants. Attendance at Broadway shows remained solid, while activity was flat to down slightly at the city's other cultural attractions. Demand for hotel rooms continued to edge up during the busy September season, nearing levels last seen in 2019, with room rates remaining exceptionally high.
Real Estate and Construction
Housing markets remained solid across the District, though inventory remained at low levels. New listings slowed to a trickle in the New York City area, though new signed contracts edged up. With solid demand and low inventory across the District, prices continued to push upwards. Some contacts from the Rochester area reported that capacity-constrained electricity infrastructure prevented some communities from building new housing developments. Desirable properties continued to sell above asking price and often within days of hitting the market.
Rents continued to rise, and New York City rents were at historic highs. Still, with some easing in mortgage rates, contacts anticipated some reduction in rental demand in the coming months.
Commercial real estate markets continue to improve. New York City's office market remained stronger than many other large cities, although some of this strength was driven by a few large transactions. AI firms were increasingly seeking office space in New York City. Activity in the industrial sector was muted due to uncertainty around interest rates and tariffs. Demand for retail space was bifurcated, with the luxury end of the retail market in Manhattan remaining particularly resilient but other parts of the market were weak. Construction activity continued to decline.
Banking and Finance
Activity in the broad finance sector weakened slightly after a modest improvement during the previous period. Small-to-medium sized banks reported that while demand for consumer loans and commercial mortgages held steady, overall loan demand declined due to sagging demand for business loans. By contrast, bankers reported moderate growth in demand for residential mortgages, with strong lending volumes. Credit standards tightened. Delinquency rates worsened slightly, especially for business loans.
Community Perspectives
Many nonprofits are facing challenges due to unpredictable funding and a reduction in federal benefit programs. A community health-care center reported that financial distress among Medicaid patients has risen, limiting patients' access to care and straining the organization's finances. More generally, rising business costs, including insurance, added to financial pressures for community service providers.
For more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy.