Thread by @NewYorkFed

JUST RELEASED: Tariffs and trade policy seen to be pushing up prices and reducing profits nyfed.org/2MiMYhT #ESMS #BLS

Supplementary questions to the August Empire State Manufacturing Survey and Business Leaders Survey focused on the effects of recent changes in trade policies—and specifically tariffs—on businesses in the region. #BLS #ESMS

In the current survey, 72% of manufacturers and 45% of service firms indicated that at least some revenues came from foreign customers over the past year. #BLS #ESMS

On average, manufacturers indicated that 11% of revenues had come from foreign customers, while the corresponding figure among service firms was 8%. #BLS #ESMS

All these figures were moderately lower than when this question was posed in the August 2018 survey. #BLS #ESMS

When asked where these revenues were coming from, the average manufacturer noted that 42% came from Canadian customers, followed by 18% from European customers, and 13% from Asia—not much different than in the August 2018 survey. #BLS #ESMS

For the average service firm, Canada jumped to the top of the list, representing 37% of revenues, on average—up from 29% last year—leapfrogging Europe which accounted for 22% of revenues (down from 31%). #BLS #ESMS

Asia accounted for 18% (little changed), while Latin America represented 9% (up from 7%). #BLS #ESMS

When asked how much, if at all, recent increases in tariffs have raised input costs—either directly or indirectly—79% of manufacturers and 60% of service firms said at least slightly, with 14% and 12%, respectively, characterizing the increase as substantial. #BLS #ESMS

The data illustrate a considerably more widespread effect of higher input costs among service firms than in last year’s survey. #BLS #ESMS

Businesses were also asked how they saw changes in trade policy affecting the prices they pay, their selling prices, and other measures in 2019 and in 2020. #BLS #ESMS

For both years, roughly two-thirds of manufacturers saw an upward effect on prices paid, and roughly 45% saw an upward effect on selling prices due to changes in trade policy. #BLS #ESMS

Among service-sector respondents, the numbers were somewhat lower but up noticeably from last August’s survey: for the current year, 60% saw an upward effect on prices paid (up from 49% in 2018), and 39% reported an upward effect on their selling prices (up from 32% in 2018).

Both manufacturers and service firms said they see a modest negative effect, on balance, on sales to foreign customers but little or no effect on domestic sales. #BLS #ESMS

In assessing the overall effect of trade policies on the bottom line, results are not much different than those in last year’s survey. #BLS #ESMS

In assessing the overall effect of trade policies on the bottom line, 51% of manufacturers perceive a negative effect in 2019, and 47% anticipate a negative effect in 2020.
For service firms, the proportions are just under 40% for both 2019 and 2020.
#BLS #ESMS

READ THE FULL REPORT → nyfed.org/2MiMYhT
#ESMS #BLS