May 2025 Manufacturing Business Outlook Survey

Note: Survey responses were collected from May 5 to May 12.

Manufacturing activity in the region remained weak, according to the firms responding to the May Manufacturing Business Outlook Survey. The current general activity index rose but remained negative. The new orders index turned positive, while the shipments index remained negative and declined further. The employment index rose from a near-zero reading. Both price indexes remained elevated. The firms continued to expect growth over the next six months, and expectations were more widespread.

Most Current Indicators Rise

The diffusion index for current general activity rose from -26.4 to -4.0 in May, paring some of last month’s sharp decline but remaining negative (see Chart). Twenty-three percent of the firms reported decreases in general activity this month (down from 39 percent last month), while 19 percent reported increases (up from 13 percent); 58 percent reported no change (up from 41 percent last month). The new orders index rose 42 points to 7.5, offsetting nearly all of April’s decline. The shipments index declined for the fourth consecutive month, falling 4 points to -13.0, its lowest reading since November 2023.

The firms reported overall increases in employment, and the employment index rose 16 points to 16.5 in May. Most firms continued to report no change in employment levels (68 percent), while the share of firms reporting increases (23 percent) exceeded the share reporting decreases (7 percent). The average workweek index rose from -12.7 to 2.0.

Current and Future General Activity Indexes

Firms Continue to Report Overall Price Increases

Both price indexes rose to their highest readings since June 2022. The prices paid index increased for the sixth consecutive month to 59.8. The current prices received index rose from 30.7 to 43.6. Almost 44 percent of the firms reported increases in prices received, no firms reported decreases, and 56 percent reported no change.

Firms Expect Higher Growth for Own Prices and Inflation

In this month’s special questions, the firms were asked to forecast the changes in prices of their own products and for U.S. consumers over the next four quarters (see Price and Inflation Expectations on page 2). Regarding their own prices over the next year, the firms’ median forecast was for an expected increase of 3.8 percent, up from 3.0 percent when this question was last asked in February. The firms reported a median increase of 3.0 percent in their own prices over the past year, the same as last quarter. The firms expect their employee compensation costs (wages plus benefits on a per employee basis) to rise 4.0 percent over the next four quarters, up slightly from February. The firms’ median forecast for the rate of inflation for U.S. consumers over the next year rose to 3.8 percent from 3.0 percent in February.

The firms were also asked about changes in customer price sensitivity and anticipated cost changes. Half of the firms reported their core customers’ price sensitivity was about the same as last quarter, while 43 percent reported customers were more price sensitive. Over 72 percent of the firms anticipated changes in their industry’s costs in the near term, and nearly 86 percent of those firms expected their competitors to raise prices in response. Regarding when these price changes will occur, the firms’ median expectation was for competitors to change prices in the next two months.

Most Future Indicators Rise Sharply

The diffusion index for future general activity jumped 40 points to 47.2 in May after two months of low readings (see Chart). Similarly, the future new orders index rose to 49.7, and the future shipments index rose to 51.1. Both future price indexes moved lower but remained elevated. The future employment index rose from -0.6 to 23.0. The future capital expenditures index rose 25 points to 27.0.

Summary

Responses to the May Manufacturing Business Outlook Survey suggest regional manufacturing activity remained weak. The indicators for current activity and shipments remained negative, while the index for new orders turned positive. On balance, the firms indicated an increase in employment, and the price indexes rose further above their long-run averages. The survey’s broad indicators for future activity suggest more widespread expectations for growth over the next six months.

Special Questions (May 2025)

Please list the annual percent change with respect to the following:
	Current	Previous (Feb. 2025)
For your firm:
Forecast for next year (2025Q2–2026Q2)
1. Prices your firm will receive (for its own goods and services sold).	3.8	3.0
2. Compensation your firm will pay per employee (for wages and benefits).	4.0	3.9
Last year's price change (2024Q2–2025Q2)
3. Prices your firm did receive (for its own goods and services sold) over the last year.	3.0	3.0
For U.S. consumers:
4. Prices U.S. consumers will pay for goods and services over the next year.	3.8	3.0
5. Prices U.S. consumers will pay for goods and services over the next 10 years (2025–2034).	3.0	3.0
Note: For questions 1-5, the numbers represent medians of the individual forecasts (percent changes). For question 5, the firms reported a 10-year annual-average change.

6. Since last quarter, have your core customers become more or less price sensitive?
	Percent (%)
More sensitive	43.3
About the same	50.0
Less sensitive	3.3
Don't know	3.3

7. Over the near term (roughly the next six months or so), can you clearly anticipate any changes in your industry's costs?
	Percent (%)
Yes	72.4
No	27.6

7a. How do you anticipate that your competitors will respond?*
	Percent (%)
Raise prices	85.7
Hold prices steady	4.8
Lower prices	4.8
Don't know	4.8
*Only firms that responded “yes” to question 7 responded to question 7a.

7b. How soon do you anticipate your competitors will change prices?**
	Number of months
Median response	2.0
**Only firms that responded “raise prices” or “lower prices” to question 7a responded to question 7b.

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