Manufacturing activity in New York crashed to the lowest level in two years, according to the New York Fed’s Empire State Manufacturing Survey.

The survey’s index of business conditions index crashed to 3.7 in March from 8.8 in the prior month. That is the worst reading since May 2017. Economists had expected a reading of 10, according to a survey by Econoday.

While that is much worse than expected, it still indicates expansion. Any reading above zero indicates improving conditions.

The new orders index fell 4.5 points to 3, which is perilously close to a contractionary negative reading. That is also the weakest since May of 2017.

Other measures in the survey were not as dire. Shipments are still moving out the door, falling 2.7 points to 7.7. While that’s also the lowest level in nearly two years, it is still at a healthy level.

And hiring is strong, with the index measuring employment climbing 10 points to 13.8.

Tariff watchers will note that while input costs are up, selling prices are not. This squeezes margins of businesses but once again suggests that the simple model that tariffs tax consumers is incorrect.