Future Focus: Insights from the January 2025 Manufacturing Business Outlook Survey

January 2025 Manufacturing Business Outlook Survey

Note: Survey responses were gathered from January 6 to January 13.

Manufacturing activity in the area has overall surged, as per the firms that participated in the January Manufacturing Business Outlook Survey. The survey’s metrics for overall activity, new orders, and shipments experienced a significant rise, reaching peaks not seen in years. The employment index saw an upward shift and continues to indicate rising employment levels overall. The price metrics reflect an overall escalation in prices, with both indexes exceeding their long-term averages. The broad indicators for future activity of the survey have escalated as well, indicating more widespread optimism for overall growth over the approaching six months.

Current Indicators Surge Significantly

The diffusion index for current general activity soared from a revised figure of -10.9 in December to 44.3 in January, marking its highest level since April 2021 (see Chart 1).* This represents the most substantial monthly rise since June 2020. Approximately 51 percent of the firms indicated increases (up from 19 percent last month), greatly outpacing the 7 percent reporting declines (down from 30 percent); 41 percent of the firms noted no change in current activity (down from 45 percent). The indexes for current new orders and current shipments rose sharply in January as well. The new orders index surged 47 points to 42.9, its highest level since November 2021. Simultaneously, the shipments index increased 39 points to 41.0, achieving its highest reading since October 2020.

Overall, firms continued to report an increase in employment. The employment index climbed 7 points to 11.9 in January. Almost 87 percent of the firms indicated no change in this month’s employment levels. Almost 13 percent noted increases, while 1 percent reported declines. The average workweek index became positive, rising from a revised reading of -3.7 to 20.3, its highest figure since March 2022.

Price Indexes Exceed Long-Term Averages

Firms continued to convey overall price increases, with both price indexes moving up to recent highs. The prices paid index advanced 5 points to 31.9 in January, marking its highest level since December 2022 (see Chart 2). Nearly 36 percent of the firms reported rises in input prices, whereas 4 percent reported decreases; 60 percent indicated no change. The current prices received index soared 24 points to 29.7, matching its highest level since January 2023. Almost 35 percent of the firms noted rises in the prices of their products (up from 9 percent last month), 5 percent reported declines (largely unchanged), and 60 percent noted no change (down from 85 percent).

Firms Anticipate Smaller Cost Increases for 2025

In this month’s special questions, firms were queried about modifications in their various input and labor costs over the past year and their forecasts for cost changes in the coming year. For all categories, the anticipated average percent change in costs for 2025 was less than the average percent change in costs reported for 2024. Respondents were also asked to rank the significance of different factors in determining prices. Demand for their goods/services emerged as the most pivotal factor, succeeded by the need to maintain consistent profit margins, wage and labor costs, and non-labor costs.

Most Future Indicators Continue to Strengthen

The diffusion index for future general activity increased from a revised reading of 33.8 in December to 46.3 in January (see Chart 1). Close to 54 percent of the firms envision an uptick in activity over the next six months, outpacing the 7 percent that foresee a downturn; 36 percent anticipate no change. The future new orders index rose 5 points to 57.3, and the future shipments index escalated 11 points to 60.2, achieving its highest reading since July 2021. Overall, the firms still expect employment increases over the next six months, with the future employment index climbing 8 points to 40.4, its highest reading since December 2021. Both future price indexes stood above their long-term averages: The future prices paid index increased 9 points to 67.3, its highest reading since January 2022; the future prices received index dipped slightly by 1 point to 53.6. The index for future capital expenditures rose by 17 points to 39.0, its highest level since July 2021.

Summary

Feedback from the January Manufacturing Business Outlook Survey indicates an overall enhancement in the region’s manufacturing activity. The indicators for current activity, new orders, and shipments all experienced significant rises. Firms continue to show signs of overall price increases, and both price indexes surpassed their long-term averages. There has also been a reported rise in employment levels. The broad indicators for future activities increased, suggesting greater expectations for growth in the coming six months.

* The annual revisions of the survey’s data, which reflect updated seasonal factors, were published on January 9, 2025. A complete history of the revised data is available here.

Return to the main page for the Manufacturing
Business Forecast Survey.