Current Release

October 2025

Summary of Economic Activity

Economic activity in the Seventh District was little changed over the reporting period, and contacts expected a slight decrease in activity over the next year. Consumer spending increased modestly; construction and real estate activity increased slightly; employment was flat; nonbusiness contacts saw no change in activity; business spending declined slightly; and manufacturing activity declined modestly. Prices rose moderately, wages were up modestly, and financial conditions loosened slightly. Prospects for 2025 farm income were unchanged.

Labor Markets

Employment was flat over the reporting period, though contacts expected a slight pickup over the next 12 months. Reports on labor market conditions continued to be mixed. Job turnover was low, and contacts across many industries observed softening labor market conditions. An employment placement agency reported a continued decline in demand from manufacturers and one contact in state government observed that previously announced layoffs in agricultural machinery manufacturing had been completed. A retail industry analyst expected that hiring for the holiday season would be weaker than last year. A few contacts in manufacturing and construction said they were looking to hire new workers. One noted that fear of immigration enforcement was reducing labor availability. Another contact said that revoked visas for workers at a local factory created the need to rehire for those positions. Wages and benefits costs were up modestly overall, and many contacts cited increases in health insurance premiums.

Prices

Prices rose moderately in late August and September and contacts expected a similar pace of growth over the next 12 months. Nonlabor input costs rose moderately, with contacts highlighting higher costs for energy and raw materials like aluminum, copper, and steel. Manufacturing contacts attributed the increases in metals prices to tariffs. In contrast, several contacts in the construction industry noted no change in input prices in recent weeks. Overall, producer and consumer prices rose moderately. One retail industry analyst said that, in general, retailers were trying to hold off passing tariff-related cost increases on to consumers for as long as possible, though several smaller retailers reported already raising prices because of tariffs.

Consumer Spending

Consumer spending increased modestly over the reporting period. Contacts reported a healthy back-to-school shopping season as well as strong increases in spending on appliances, computers, and landscaping. However, spending on other consumer electronics and building materials declined some. Leisure and hospitality sales were mixed, with softness in some travel-related categories, including airlines and hotels, but increased spending at restaurants in the fast food, fast casual, and family dining segments. New light vehicle sales were brisk, reflecting a combination of strong underlying demand and the end of tax incentives for electric vehicle purchases. Used vehicle sales remained steady, though dealerships located in low-to-moderate income communities reported softer demand.

Business Spending

Business spending declined slightly in late August and September. Capital expenditures fell slightly and expectations for the coming year also decreased. Demand for truck transportation edged down, though freight rates increased slightly. One contact in the trucking industry called current conditions “recession-like.” Retail inventories were lean, stocks of vehicles were lower, and manufacturing inventories were a little high.

Construction and Real Estate

Construction and real estate activity increased slightly on balance over the reporting period. Residential construction edged up. Residential real estate activity was unchanged, prices were flat, and rents increased modestly. One contact felt that the single-family market had shifted from being a seller’s market to “barely a seller’s market” amidst an increase in inventory and stable demand. Contacts noted that in the multifamily sector rent concessions for new tenants had become more common. Nonresidential construction increased slightly as demand remained robust for data centers and healthcare facilities. Commercial real estate activity also increased slightly. Leasing activity in the office sector picked up and demand from restaurant groups remained solid. Prices and rents were unchanged. Contacts noted that sellers have brought down asking prices for properties, opening the door for some movement in the market. Vacancy rates and the availability of sublease space both grew slightly. Some contacts indicated that while industrial vacancy rates were low, the space that is available is sitting longer. Separately, more warehouse inventory was available.

Manufacturing

Manufacturing demand declined modestly in late August and September. Steel orders were flat overall. A few contacts noted some reshoring of steel production. Fabricated metals demand was unchanged on balance, as higher sales to a range of sectors was offset by lower sales to the construction and automotive industries. Machinery orders decreased moderately, driven by a decline in demand from the auto sector. Auto production was down modestly, while heavy truck production was flat.

Banking and Finance

Financial conditions loosened slightly in late August and September. Bond and equity values rose a bit, while volatility remained unchanged. Business loan demand decreased slightly on net, with one contact citing a decline in acquisition activity. Business loan quality declined modestly, as multiple contacts noted weaknesses among suppliers in the auto industry. Business loan rates moved down, but terms tightened. In the consumer sector, loan demand increased slightly, with a few contacts noting a pickup in mortgage refinancing. Loan quality remained flat and rates edged down, but terms tightened slightly.

Agriculture

Net farm income prospects for the District were unchanged over the reporting period, though elevated uncertainty continued to unsettle agricultural operators. Corn and soybean fields were in good shape across most of the District. Dry conditions assisted harvest but hurt yields in some places; in addition, crop disease trimmed yields a bit. Fruit and vegetable production was subpar for most products. Soybean prices were lower, in part due to the absence of new-crop exports to China. Corn prices were down despite strong export volumes. Cattle and hog prices increased to record territory, while milk and egg prices declined. Concerns about higher input costs for 2026 intensified due to rising fertilizer prices. Farm operations, particularly crop producers, have already cut costs, with a contact saying, “there is limited flexibility left to further reduce expenses.” Contacts noted that lack of clarity on the economic outlook was putting a damper on capital investment, such as equipment purchases and repairs.

Community Conditions

Community, nonprofit, and other nonbusiness contacts reported no change in activity over the reporting period and noted ongoing uncertainty about economic conditions. State government contacts noted modest year-over-year increases in sales tax revenue. Workforce development contacts who support individuals facing barriers to employment reported that firms had become more “selective” in hiring as existing workers were more likely to stay in their current jobs and employers weren’t as eager to fill empty positions. In planning for 2026, many nonprofit organizations anticipated the need to find new funding streams and adapt to smaller budgets. Social service contacts reported that increased operating costs, such as for insurance, combined with reduced income and donations, were causing them to think carefully about which services to prioritize.