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The Federal Reserve Bank of New York’s July 2014 Business Leaders Survey indicates that activity in the region’s service sector grew modestly. The survey’s headline business activity index fell four points to 12.3. The business climate index was little changed at -7.1, suggesting that on balance, respondents continued to view the business climate as worse than normal. The employment index, at 12.1, pointed to a moderate increase in employment levels, and the wages index was little changed at 32.9. The prices paid index inched up two points to 56.4, indicating a slight increase in the pace of input price increases, while the prices received index fell two points to 11.6, pointing to a slight slowing in selling price increases. The current capital spending index fell six points to 15.0, and indexes for the six-month outlook continued to convey a good degree of optimism about future business activity.
Business activity expanded modestly in the region’s service sector, according to the July 2014 survey. After rising sharply last month and reaching a two-year high, the business activity index retreated four points to 12.3, indicating a slower pace of growth. This month, 36 percent of respondents reported that conditions improved, while 24 percent reported that conditions worsened. The business climate index rose two points to -7.1, but remained negative, suggesting that on balance, the business climate continued to be viewed as worse than normal.
Employment Gains Continue
The employment index was little changed from last month’s reading, and, at 12.1, it continued to signal a modest pickup in hiring activity. The wages index held steady at 32.9, pointing to a continued moderate increase in wages. The prices paid index rose two points to 56.4, indicating a slight pickup in the pace of input price increases. The prices received index, on the other hand, fell two points to 11.6, its second consecutive monthly decline, signifying a slightly slower pace of selling price increases. The capital spending index fell six points to 15.0, suggesting that capital expenditures continued to climb, although at a slower pace compared with last month.
Firms Remain Optimistic about Future Conditions
Indexes for the six-month outlook continued to convey optimism about future business conditions. The index for expected business activity fell four points, but remained at a fairly high level, at 39.3. The index for future business climate rose eight points to 30.0, indicating that conditions are expected to be better than normal in the months ahead. The index for expected employment was little changed at 27.9, suggesting that employment is expected to continue to climb. Both forward-looking price indexes inched higher, and the index for expected capital spending fell two points to 15.6.
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.