City business sprinting into spring.

As the hours of daylight in New York City lengthen with the progression of spring, so, too, does the Big Apple's recovery according to the latest monthly survey of local purchasing managers conducted by the National Association of Purchasing Management-New York (NAPM-NY).

For the local economy now finds itself sprinting into spring, with a variety of economic indicators lending solid supporting evidence to the upbeat anecdotal assessments provided by the purchasing managers.

Among the indicators that stand out: The City Comptroller's Office, which was at the leading edge of opinion in dating the recession's end during the autumn of last year, reports that the gross city product expanded at its quickest clip in 3-1/2 years in the fourth quarter of 2003, the residential real estate market is sizzling while the Manhattan office market is firming, hotel revenues are surging and Broadway receipts are booming.

The near-term fiscal fortunes of New York City have strengthened to such an extent that the "doomsday" budgeting of a year ago has been replaced by expectations of a hefty surplus in the current fiscal year.

Even the job market, which has been stubbornly resistant to the tide of improvement, is taking a turn for the better; the State Labor Department reports that private sector jobs were on the increase in February and March when compared with year-earlier levels.

To be sure, New York City's recovery from the protracted slump of 2001-2003 will remain incomplete, at least in the opinion of many residents if not economists, as long as the citywide jobless rate hovers near eight percent, not to mention 10-1/2 percent in the Bronx.

But the purchasing managers surveyed have noticed a decided betterment of business and the trend continued in April.

The second quarter stepped off to a strong start; the Business Conditions Index (BCI) of the NAPM-NY, the Association's principal gauge of current economic conditions, rose from 271.8 in March to 282.2 in April (see table opposite).

This is a gain of 3.8 percent month-over-month and denotes an acceleration of business activity when compared with the BCI's advance of 1.7 percent in March month-over-month. And, what a difference a year can make.

In April 2003, the BCI was traveling in the opposite direction, declining by 2-1/2 percent compared with March; at the time, local job losses were mounting, the national economy was only beginning to stir and the prognosis was glum.

The acceleration of the business pace was widely shared, encompassing both the manufacturing and service-providing segments of the economy. Among the latter, which comprise the lion's share of local businesses, April was a good month for the financial services industry, healthcare and hospitality and such business services as accounting and employee placement.

As a consequence, the NAPM-NY non-manufacturing diffusion index, which measures the industry breadth of expansions and contractions, rose from a reading of 57.5 in March to 69.8 in April--since levels above 50 are generally indicative of expansion, the April result clearly suggests that the services side of the economy has put the past recession behind it.

With the surveyed manufacturing industries also reporting brisk activity levels, the composite current conditions diffusion index advanced to its second highest reading of the year in April; in April 2003, the results were 180-degrees different--the composite diffusion index stood at 38.0, one of the lowest levels of 2003. There were no respondents reporting a deterioration of business conditions in April.

On a less optimistic note, the intensification of economic activity is being accompanied by an intensification of inflation pressures--in the services and manufacturing industries.

One purchasing agent cites the adverse impact of the run-up in metals prices and the imposition of surcharges; supplier delivery times, in contrast, are unchanged and offer little hint of looming price pressures.

Finally, purchasing manager optimism is trending steeply higher--the NAPM-NY outlook/expectations index rose to 85.7 in April, not far from the ebullient levels of December and January. But this does not mean that businesses are worry-free. One concern is "outsourcing," and a hefty 43 percent of purchasing managers surveyed believe that it will harm the city's economy.

Commenting on these findings, Marc M. Goloven, senior regional economist at JPMorganChase and Chair of the NAPM-NY Business Survey Committee said, "The New York City economy is railing itself onto a faster recovery track, as more businesses are affected by the reviving economy.

"Although price pressures are building, a hint of business pricing power due to a strengthening economy seems preferable to the doldrums of deflationary despair. The next milestone will be an acceleration of hiring--which should soon commence."