Activity Declined in July Business Leaders Survey
Activity declined in the region’s service sector, according to firms responding to the Federal Reserve Bank of New York’s July 2022 Business Leaders Survey. The survey’s headline business activity index fell 13 points to -10.7, its first negative reading in over a year. The business climate index was little changed at -34.3, indicating that firms generally viewed the business climate as worse than normal for this time of year. Employment growth slowed, and wage increases remained widespread. While still elevated, the prices paid and prices received indexes moved notably lower, pointing to a deceleration in price increases. Looking ahead, firms no longer expect activity to increase over the next six months, and they remained pessimistic about the expected future business climate.
Activity Declines for First Time in over a Year
Business activity in the region’s service sector declined for the first time since March 2021, according to the July survey. The headline business activity index fell thirteen points to -10.7. Twenty-two percent of respondents reported that conditions improved over the month and 33% said that conditions worsened. The business climate index held steady at -34.3, indicating that on net, firms continued to view the business climate as worse than normal.
Employment Growth Slows amid Rising Wages
The employment index fell eleven points to 7.6, pointing to a modest increase in employment levels. The wages index was little changed at 53.5, signaling another month of strong wage growth. After reaching a record high last month, the prices paid index fell eight points to 81.3, indicating a slowing in input price increases. The prices received index fell nine points to 35.9, a sign that selling price increases also slowed. The capital spending index held steady at 6.6.
Firms No Longer Expect Activity to Increase
Firms believe activity will not increase over the next six months. The index for future business activity fell 13 points to 0. The index for the future business climate was little changed at -21.2, indicating that firms expect the business climate to remain worse than normal. Employment is expected to grow in the months ahead, and wage and price increases are expected to remain widespread.