A recent survey conducted by the Federal Reserve Bank of New York indicated a significant decline in factory activity in the state, marking the largest drop in almost two years. The report revealed a sharp decrease in new orders, while input prices surged at the fastest rate in over two years, suggesting a potential slowdown in the economy.

The Empire State manufacturing index fell by nearly 26 points to a reading of negative 20.0 from a positive 5.7 in February. This reading was below the expectations of economists, who had predicted a median of minus 1.50.

The report highlighted that new orders and shipments decreased, while input prices rose rapidly along with selling price increases. Additionally, optimism about future prospects diminished for the second consecutive month.

This latest development reflects the challenges faced by the manufacturing sector in adjusting to the tariffs imposed by President Donald Trump on a broad array of imported goods. President Trump has indicated his intention to introduce more tariffs in early April and reiterated that there would be no exceptions for the substantial levies on steel and aluminum imports that recently came into effect.