Respondents to recent surveys from regional Federal Reserve banks are serving as the earliest signs of how the US manufacturing industry is growing concerned about the economic outlook as the scope of President Trump’s tariff plans begins to hit the business world.
On Thursday, the Philadelphia Federal Reserve’s Manufacturing Business Outlook Survey showed general activity in the sector dropped to an index reading of -26 in April, its lowest reading since April 2023 and well below the 12.5 seen the month prior.
April’s sharp move lower marked the fourth-largest monthly decline in history, only trailing drop-offs seen in 2020 and 2008. The prices paid index, a potential sign of future inflation, shot up to 51, its highest reading since July 2022.
The Philadelphia report followed a bleak survey from the New York Fed released Wednesday, which showed expectations among manufacturers plummeted this month.
The New York Federal Reserve’s Empire State Manufacturing Survey showed its current activity index increased to a reading of -8.1, up from -20 the month prior. But the survey’s future general business index tumbled to “its second lowest reading in the more than twenty-year history of the survey,” per the release.
The Philly Fed’s survey was conducted between April 7 and 14; the New York Fed gathered responses between April 2 and 9.
The New York Fed also released its April Business Leaders Survey this week, capturing responses from across industries. It showed that the headline activity index fell to a reading of -19.8, its lowest level in more than a year. The index for future business activity expectations fell to -26.6, its lowest reading since April 2020.
That survey’s index for the expected future business climate hit -50, its lowest reading since 2009, “suggesting the business climate is expected to remain considerably worse than normal,” according to the New York Fed’s release.
The souring sentiment among business leaders comes after Trump’s “Liberation Day” announcements boosted the effective US tariff rate to its highest level in a century.
Economists and policymakers, including Fed Chair Jerome Powell, have noted the tariffs are expected to boost inflation and slow economic growth.
Read more: The latest news and updates on Trump’s tariffs
These concerns have so far mostly shown up in surveys like the recent regional Fed releases or measures of consumer sentiment. Whether those intentions eventually lead to spending and investment pullbacks is the economic question of the year.
