Manufacturing pessimism has spiked dramatically in April as industrial producers deal with changing tariff plans and try to assess how global trade policy will impact their costs and operations in the coming months.
Several surveys released this week show huge swings in business confidence between January, when most manufacturers had a positive outlook for near-term conditions and the full year, and April, when sentiment changed for the much, much worse.
In the Federal Reserve Bank of Philadelphia’s monthly “Manufacturing Business Outlook Survey,” in January about 39% of businesses reported plans to increase capital spending this year to improve operations — a figure similar to high points reached in 2017 and during the COVID recovery in 2021. In April, that figure fell to 2%. For context, that metric went negative during inflation run-ups during 2023 and during the financial crisis in 2009 but only fell to 9.7% at the worst of the COVID declines.
In New York, the Fed’s “Empire State Manufacturing Survey” showed a similar decline, dropping to 1.6% of businesses with capital spending increases planned, down from 9.2% in March.
“Firms expect conditions to worsen in the months ahead, a level of pessimism that has only occurred a handful of times in the history of the survey,” the Empire State authors wrote in their report. “The index for future general business conditions fell twenty points to -7.4; the index has fallen a cumulative forty-four points over the past three months.”