Manufacturing Business Outlook Survey, January 2025

Manufacturing Business Outlook Survey, January 2025

Note: Survey responses were collected from January 6th to January 13th.

Manufacturing activity in the region increased overall, according to responding firms in January Manufacturing Business Outlook Survey. Survey indicators of overall activity, new orders and shipments rose sharply to multi-year highs. The employment index edged higher and continues to suggest increasing employment levels overall. The price indices show general price increases and both indices rose above their long-term averages. Broad indicators of the outlook for future activity rose, suggesting more widespread expectations for overall growth over the next six months.

Current indicators increase significantly

The diffusion index for current overall activity jumped from a revised reading of -10.9 in December to 44.3 in January, its highest reading since April 2021 (see Chart 1).* This is the largest monthly increase in index since June 2020. Nearly 51 percent of firms reported increases (up from 19 percent last month), far more than the 7 percent declines reported (down from 30 percent); 41 percent of firms reported no change in current activity (down from 45 percent). Indices for actual new orders and actual shipments also rose sharply in January. The new orders index rose 47 points to 42.9, its highest reading since November 2021. Meanwhile, the shipments index rose 39 points to 41.0, its highest reading since October 2020.

On balance, firms continued to report employment growth. The employment index rose 7 points to 11.9 in January. Almost 87 percent of firms reported no change in employment levels this month. Nearly 13 percent reported increases, while 1 percent reported decreases. The average workweek index turned positive, rising from a revised reading of -3.7 to 20.3, its highest reading since March 2022.

Price indices move above long-term averages

On balance, firms continued to report overall price increases, with both price indices rising to recent highs. The price paid index rose 5 points to 31.9 in January, its highest reading since December 2022 (see chart 2). Nearly 36 percent of firms reported increases in input prices, while 4 percent reported decreases; 60 percent reported no change. The current price index jumped 24 points to 29.7, its highest reading since January 2023. Almost 35 percent of firms reported increases in the prices of their goods (up from 9 percent last month), 5 percent reported decreases ( little changed), and 60 percent reported no change (down from 85 percent).

Firms expect smaller cost increases for 2025

In this month’s special questions, firms were asked about changes in their various input and labor costs over the past year and their expectations of cost changes for the coming year. For all categories, the average percentage change in expected costs for 2025 was less than the average percentage change in reported costs for 2024. Respondents were also asked to rank the importance of different factors in determining prices. Demand for their goods/services was the most important factor, followed by maintaining stable profit margins, wage and labor costs, and non-labor costs.

Most Futures Indicators Strengthen Further

The diffusion index for future general activity rose from a revised reading of 33.8 in December to 46.3 in January (see Chart 1). Nearly 54 percent of firms expect an increase in activity over the next six months, outpacing the 7 percent who expect a decrease; 36 percent do not expect any change. The future new orders index rose 5 points to 57.3 and the future shipments index rose 11 points to 60.2, its highest reading since July 2021. On balance, firms continue to expect employment growth over six coming months and future employment The index rose 8 points to 40.4, its highest reading since December 2021. Both future price indices were above their long-term averages: The index of prices paid futures rose 9 points to 67.3, its highest reading since January 2022; The index of accepted future prices decreased by 1 point to 53.6. The index for future capital spending rose 17 points to 39.0, its highest reading since July 2021.

Briefing

Answers for January Manufacturing Business Outlook Survey suggest a general increase in the productive activity of the region. Indicators for current activity, new orders and shipments rose sharply. On balance, firms continued to show overall price increases and both price indices rose above their long-term averages. Firms also continued to report increased employment levels. Broad indicators of the outlook for future activity rose, suggesting more widespread expectations for growth over the next six months.

* Annual revisions to the survey data, which include updated seasonal factors, were released on January 9, 2025. The full history of the revised data is available here.

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