New York Manufacturing Activity Grows in January Amid Cooling Inflation Pressures

New York's factory sector expanded in January, with the Empire State Manufacturing Survey index rising to 8.5, signaling increased production and new orders. Inflation indicators softened, with prices paid and input costs declining from prior months.

The New York Fed's Empire State Manufacturing Survey reported a monthly expansion in production, with the general business conditions index climbing to 8.5 in January, up from -7.6 in December. This marks the first positive reading since September, reflecting improved sentiment among manufacturers in the region. The index for new orders rose to 14.5, indicating stronger demand, while employment levels remained stable, with the hiring index at 5.8. Price indicators showed a notable moderation. The prices paid index fell to 10.2 from 20.7 in December, suggesting easing input cost pressures. The index for selling prices dropped to 6.3 from 15.1, signaling reduced pricing power among manufacturers. These trends align with broader signs of disinflation across the U.S. manufacturing sector. The data suggests a gradual recovery in regional manufacturing activity, with firms reporting renewed confidence in near-term output and demand. The improvement follows a period of contraction in late 2025, when multiple indicators turned negative amid tight credit conditions and elevated energy costs. Market participants are closely monitoring the report as part of a broader evaluation of inflation trends and economic resilience. A sustained improvement in manufacturing could influence Federal Reserve policy considerations, particularly around the timing of potential interest rate cuts.