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The Federal Reserve Bank of New York’s August 2014 Business Leaders Survey signals some acceleration in activity in the region’s service sector. The survey’s headline business activity index rose four points to 16.2. The business climate index rose to -3.0—still slightly negative but its highest level since the onset of the last recession. The employment index climbed ten points to 21.9, suggesting a pickup in hiring, while the wages index remained steady at 33.3. The prices paid index fell six points to 50.4, indicating a slight diminution in cost pressures, while the prices received index rose three points to 14.7, pointing to a slight acceleration in selling prices. The current capital spending index was little changed at 15.6. Indexes for the six-month outlook retreated somewhat but remain at elevated levels, suggesting a fair degree of optimism about the business outlook.
Business activity accelerated slightly in the region’s service sector, according to the August 2014 survey. The business activity index rebounded four points to 16.2, essentially reversing last month’s decline and signaling a slight pickup in growth. In the current survey, 39 percent of respondents reported that conditions had improved, while 23 percent reported that they had worsened. The business climate index advanced four points to -3.0—still below zero but at its highest level since late 2007, suggesting that respondents now view the business climate more favorably than at any time since the start of the last recession.
Increased Hiring Activity
The employment index jumped ten points to 21.9, suggesting a step-up in hiring activity. The wages index, holding steady at 33.3, pointed to continued moderate growth in wages. The prices paid index fell six points to 50.4, indicating that cost pressures were somewhat less widespread than in the past few months. The prices received index, however, rose three points to 14.7, pointing to a slight quickening in selling price increases. The capital spending index was little changed at 15.6—a sign that capital expenditures continued to climb at a modest pace.
Firms Somewhat Less Optimistic
Indexes for the six-month outlook conveyed somewhat less optimism about future business conditions than in recent months. The index for expected business activity fell eight points to 31.1—its lowest level since late 2013 but still fairly elevated. The index for future business climate fell seventeen points to 13.0, indicating that respondents are considerably less optimistic on that front than they have been for most of the past year. The index for expected employment slipped ten points to 18.0, suggesting some pullback in hiring plans. The two forward-looking price indexes and the index for expected capital spending were all down marginally but still at fairly elevated levels.
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.