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The Federal Reserve Bank of New York’s November 2014 Business Leaders Survey indicates that activity in the region’s service sector expanded briskly. The survey’s headline business activity index climbed seven points to 17.6. The business climate index rose eight points to -5.7, suggesting that on balance, respondents continued to view the business climate as worse than normal, but to a lesser extent than last month. The employment index was little changed at 12.9, pointing to a continued increase in employment levels, and the wages index inched up two points to 30.2. The prices paid index posted a sharp decline, falling fifteen points to 38.1, indicating a significant slowing in the pace of input price increases, while the prices received index rose two points to 13.7, a sign of a slight pickup in the pace of selling price increases. The capital spending index edged up to 20.1, suggesting a solid increase in capital spending. Many of the indexes for the six-month outlook posted sturdy gains and indicated that firms were quite optimistic about future conditions.
Business activity expanded briskly in the region’s service sector this month, according to the November 2014 survey. The business activity index climbed seven points to 17.6, its second consecutive monthly increase. Thirty-nine percent of respondents reported that conditions improved over the month, while 18 percent reported that conditions worsened. The business climate index climbed eight points to -5.7, suggesting that on balance, the business climate continued to be viewed as worse than normal, but to a lesser extent than in October.
Employment Continues to Grow
The employment index was little changed at 12.9, pointing to continued moderate gains in employment levels. The wages index edged up two points to 30.2, indicating a slightly faster pace of wage growth. The prices paid index posted a steep decline, falling fifteen points to 38.1, indicating a significant slowing in input price increases. The prices received index, on the other hand, climbed two points to 13.7, signifying a pickup in selling price increases. The capital spending index inched up one point to 20.1, suggesting that capital expenditures continued to rise at a solid clip.
Firms Remain Very Optimistic
Indexes for the six-month outlook conveyed strong optimism about future business conditions. The index for expected business activity rose thirteen points to 43.7, and the index for future business climate climbed twenty-one points to 31.0. The index for expected employment rose to 31.9, suggesting that employment is expected to climb in the months ahead. The future prices paid index fell four points to 54.4, and the future prices received index was little changed at 21.2. The index for expected capital spending fell six points to 18.5, suggesting that that capital spending plans remain fairly strong.
The Business Leaders Survey is a monthly survey conducted by the Federal Reserve Bank of New York that asks companies across its District – which includes New York State, Northern New Jersey, and Fairfield County, Connecticut – about recent and expected trends in key business indicators. This survey is designed to parallel the Empire State Manufacturing Survey, though it covers a wider geography and the questions are slightly different. Participants from the service sector respond to a questionnaire and report on a variety of indicators' both in terms of recent and expected changes. While January 2014 is the first published report, survey responses date back to September of 2004 and all historical data are available on our website.
The survey is sent on the first business day of each month to the same pool of about 150 business executives, usually the president or CEO, in the region's service sector. In a typical month, about 100 responses are received by around the tenth of the month when the survey closes.
Respondents come from a wide range of industries outside of the manufacturing sector, with the mix of respondents closely resembling the industry structure of the region.
The survey's headline index, general business activity, is a distinct question posed on the survey (as opposed to a composite of responses to other questions). Currently, no indexes are seasonally adjusted since none of the series exhibits stable seasonal patterns from a statistical perspective.