Jason Bram and Richard Deitz

While the manufacturing sector typically drives recessions and recoveries more than the service sector, the opposite has been true during the pandemic recession. Finally this month, the Federal Reserve Bank of New York’s April business surveys point to a solid increase in service sector activity as well as continued strength in manufacturing activity in the New York-Northern New Jersey region, marking the first signs of widespread growth since the pandemic began. While manufacturing activity had been increasing through much of the pandemic, service sector activity had declined for thirteen straight months before finally increasing at its strongest pace in years in our April survey. About half of service sector firms said their revenues were currently at or above normal levels, as did two-thirds of manufacturers. All in all, regional firms expressed widespread optimism that conditions would improve in the months ahead.