From the Federal Reserve:
The Second District’s economy has continued to grow at a modest pace since the last report. Businesses generally report that selling prices remain stable; while input price pressures have abated somewhat, there are signs of increased wage pressures. Labor markets have tightened further in recent weeks. Consumer spending has picked up somewhat in early August but remains generally soft; tourism remains sluggish. Manufacturing activity has weakened noticeably since the last report. Housing markets continued to improve, while commercial real estate markets were mixed but generally stronger. Both commercial and multi-family residential construction remain fairly robust. Finally, banks report stronger loan demand and lower delinquency rates, especially on consumer loans.
Construction and Real Estate
The District’s housing markets have generally been stronger since the last report, and new multi-family residential construction remains brisk. Northern New Jersey’s housing market continues to recover gradually, with a large overhang of distressed properties continuing to weigh on the market; the multi-family segment, as well as areas near New York City, continue to outperform the market as a whole. Realtors in western New York report that the housing market has picked up steam over the past month or two; low inventories and strong demand have pushed up prices and made bidding wars common. Home sales and prices across New York State more broadly have also been increasingly robust. New York City’s co-op and condo market has continued to strengthen gradually: activity is down from elevated 2014 levels, but steady, while prices continue to climb, except at the high end of the market.
Residential rental markets have been steady to somewhat stronger. Apartment rents have been running 3-5 percent ahead of a year earlier in Brooklyn, Queens and northern New Jersey, while they have been essentially flat in Manhattan and across upstate New York. Whereas vacancy rates on rental apartments have been steady or declining across most of the District, Manhattan’s vacancy rate, though still quite low, has climbed steadily over the past year. One contact notes that there is a large supply of new (mainly luxury) rental apartments in the pipeline. Multi-family residential construction remains brisk across most of the District.
Other Business Activity
The labor market has gained some further momentum since mid-year. Two major New York City employment agencies report that hiring activity has picked up further, while a major agency in upstate New York notes that the job market continues to improve moderately. Job candidates are getting job offers more quickly, and there is growing upward pressure on starting salaries. The financial sector is reported to be hiring more actively, but the recent increase has been broad-based. In particular, truck drivers, IT workers, creative workers, auditors, accountants, and human resource professionals are reported to be in high demand. Temp workers are also said to be in short supply, as many are being hired permanently.
Service-sector firms broadly report that business has continued to improve moderately in recent weeks, and they remain generally optimistic about the near-term outlook. In contrast, manufacturers report that business activity has weakened noticeably, though they too express fairly widespread optimism about the near-term outlook. Unlike business in other industries, manufacturers indicate they have scaled back hiring somewhat. Both manufacturers and service firms generally report that selling prices remain flat overall. Manufacturers also report that input prices remain flat, while service-sector firms report that input price pressures, though still fairly widespread, have abated somewhat.