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The Federal Reserve Bank of New York’s March 2014 Business Leaders Survey indicates that activity in the region’s service sector was little changed. After falling sharply in February, the survey’s headline business activity index recovered some of the ground it lost, but remained negative at -2.4. The business climate index rose seven points, holding firmly in negative territory at -21.8, suggesting that on balance, respondents continued to view the business climate as worse than normal. The employment index fell to 1.7, a sign that employment levels were little changed, and the wages index held steady at 36.9. The prices paid index rose four points to 55.7, indicating a pickup in input price increases, and the prices received index inched up to 16.5. The current and future capital spending indexes suggested an expansion in capital spending plans, with respondents remaining quite optimistic about the six-month outlook.
Business activity was little changed in the region’s service sector, according to the March 2014 survey. After falling sharply last month, the business activity index recovered some of the ground it lost, rising eight points to -2.4, its second consecutive reading below zero. Similarly, the business climate index increased, but remained firmly in negative territory: it rose seven points to -21.8, suggesting that the business climate continued to be viewed as worse than normal.
Employment Little Changed
The employment index fell seven points to 1.7, indicating that employment levels were little changed. The wages index held steady at 36.9, pointing to an increase in wages at a pace similar to that observed in February. The prices paid index rose four points to 55.7, a sign that the pace of increase in input price picked up somewhat. The prices received index inched up to 16.5, suggesting a continued moderate increase in selling prices. The capital spending index held steady at 9.0, indicating a modest increase in capital expenditures.
Outlook Remains Optimistic
Indexes for the six-month outlook continued to convey strong optimism about future conditions. The index for expected business activity rose four points to 45.5, and the index for future business climate also rose four points, reaching 33.1. The index for expected employment climbed thirteen points to 25.0, its highest level in over a year, and the index for future wages increased to 40.8. Expectations of future price increases were more widespread, with the forward-looking prices paid index rising five points to 62.5, its highest level in two years, and the future prices received index increasing five points to 33.6, also a multiyear high. Finally, the index for expected capital spending climbed eleven points to 22.7.
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.