In March, New York City purchasing managers reported directional optimism one year after the effects of the COVID-19 pandemic first materialized in this Report, according to the survey taken by the Institute for Supply Management-New York. The full report can be downloaded here: 2021_ISM-New_York_March_ROB_v1.pdf
Current Business Conditions saw a small increase over February, rising from a 9-month low of 35.5 to 37.2 in March. In March of 2020, this index was at 12.9, reflecting a 39-point drop in one month, but not yet at the lowest level that would be reported during the pandemic.
The Six-Month Outlook adjusted upward to reach 57.0. Although the Outlook in March of 2020 was also down, it had not yet reached the lows of the 2008-2009 recession. The six-month outlook has been a reliable short-run guide for current business conditions over time.
Employment, a seasonally adjusted index, rose 21.9 points, recovering from the 19.5-point fall reported in February and reaching a 19-month high of 63.0 in March (referencing 69.0 in August of 2019).
Quantity of Purchases increased to a 3-month high of 41.7, up from February's 9-month low of 35.3.
Top line and forward revenue guidance both rose in March. Current Revenues rose to a 3-month high with a breakeven finding of 50.0, a significant increase from the 8-month low of 35.3 reported in February. Expected Revenues rose even more, increasing by 16.2 points to reach a 14-month high of 63.3 (referencing 64.3 in January of 2020).
Prices Paid fell after increasing for four consecutive months, reaching a 3-month low of 70.8, down from the 30-month high of 76.5 reported in February.
The title for this month’s report was easy to choose – it was one year ago this month that the pandemic’s effects on the New York Metro business community hit home. And while March 2020 was the first drop, it certainly wasn’t the last. We really saw a division between the current indices and the forward-looking ones:
Current Business Conditions, Employment, Quantity of Purchases, Prices Paid, Current Revenues
For the most part, these indices dropped hard in March but didn’t bottom-out until April. Current Business Conditions, Quantity, and Current Revenues fell to the lowest levels ever based on the data I have access to (dating back to May 1993). The exceptions to this are:
Six-month Outlook, Expected Revenues
While the Outlook and Expected Revenues hit the lowest levels on record in April of 2020, what they gave us over the following months was more about uncertainty than good news or bad news.
As of April 6th, all residents of New York City above the age of 16 are eligible for the vaccine, which should support and speed the recovery, and yet concerns persist. According to the New York Times, “The New York metropolitan area lost more than one million jobs in 2020, close to double the Los Angeles area’s loss and triple the Chicago area’s, according to the federal Bureau of Labor Statistics. (The city’s official unemployment rate rose to 12.9 percent in February, more than double the national rate, which was 6.2 percent in February and fell to 6 percent in March.)” (April 2, 2021)
With travel and tourism being slow to restart, it will take many months of growth for the New York Metro area to achieve the business conditions enjoyed in early 2020.
Please join me on May 4th for the release of the March 2021 ISM-New York Report on Business.
The 2021 Report release schedule is as follows:
Like ISM’s national report, the ISM-New York Report on Business is compiled as diffusion indices –we add the percent of positive responses to one-half of those responding that conditions remained the same. A reading of 50.0 means no change from the prior month, greater than 50.0 indicates a faster pace of activity, and less than 50.0 a slower rate. Each month is not so much a reading of the current level of activity as it is an indication of growth or contraction from the previous month.
A note specific to the New York Metro area, where all of this report’s respondants are located: they are predominantly in professional services industries. It is important to keep this in mind when we think about the context for the trends being reported by these particular purchasing managers.