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The Federal Reserve Bank of New York’s September 2014 Business Leaders Survey indicates that activity in the region’s service sector leveled off. The survey’s headline business activity index fell fifteen points to 1.6, indicating that growth slowed substantially. The business climate index declined eight points to -11.4, suggesting that on balance, respondents continued to view the business climate as worse than normal. The employment index was also lower, falling eight points to 14.1, and the wages index was little changed at 34.2. The prices paid index fell five points to 45.1, indicating slightly lower cost pressures, while the prices received index rose three points to 18.0, pointing to a slight acceleration in selling price increases. The current capital spending index dipped three points to 12.4, and indexes for the six-month outlook continued to suggest a fair degree of optimism about future conditions.
Business activity held steady in the region’s service sector this month, according to the September 2014 survey. The business activity index dropped fifteen points to 1.6, indicating just slight growth in the region’s service sector. This month, 31 percent of respondents reported that conditions improved, while 29 percent reported that conditions worsened. The business climate index fell eight points to -11.4, suggesting that on balance, the business climate continued to be viewed as worse than normal, and to a greater extent when compared with the prior few months.
Employment Continues to Grow
Following last month’s strong reading, the employment index fell eight points to 14.1, but continued to signal a moderate pickup in hiring activity. The wages index held steady at 34.2, pointing to a continued moderate increase in wages. The prices paid index fell five points to 45.1, indicating a decline in the pace of input price increases. The prices received index, however, rose three points to 18.0, signifying a slightly faster pace of selling price increases. The capital spending index declined three points to 12.4, suggesting that capital expenditures continued to climb, although at a slightly slower pace than last month.
Firms Remain Fairly Optimistic about Future Conditions
Indexes for the six-month outlook continued to convey optimism about future business conditions. The index for expected business activity rose six points to 36.9, and the index for future business climate rose ten points to 22.8, indicating that activity is expected to pick up and conditions are expected to be better than normal in the months ahead. The index for expected employment fell to 15.7, suggesting that employment is expected to continue to rise, despite firms being less positive about future hiring plans than they were over the summer. The future prices paid index fell to 47.8, while the future prices received index rose to 29.8. The index for expected capital spending fell for a fourth consecutive month, although it remained positive at 10.4.
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.