Activity in the region’s service sector declined slightly, according to firms responding to the Federal Reserve Bank of New York’s October 2020 Business Leaders Survey. The survey’s headline business activity index held steady but remained negative at -4.9. The business climate index was little changed at -65.9, indicating that the vast majority of firms continued to view the business climate as worse than normal. Employment levels edged lower, and wages moved somewhat higher. Input prices increased at the same pace as last month, while selling prices held steady. Capital spending fell for a seventh consecutive month. Looking ahead, firms expected little improvement in business conditions, on net, over the next six months.
Firms Report Little Change in Activity Business activity in the region’s service sector continued to decline slightly in October. At -4.9, the headline business activity index was similar to last month’s reading. Twenty-eight percent of respondents reported that conditions improved over the month, and 33% said that conditions worsened. The business climate index held steady at -65.9, with 76% of respondents viewing the business climate as worse than normal.
Employment Remains Stalled Like last month, employment levels fell slightly, with the employment index coming in at -6.7. The wages index was essentially unchanged at 7.6, its third consecutive positive reading, signaling another small increase in wages. The prices paid index held steady at 30.4, indicating that input prices increased at the same pace as last month, while the prices received index held at around zero, a sign that selling prices were little changed. The capital spending index was -20.7, suggesting ongoing significant declines in capital spending.
Firms Still Not Expecting Much Improvement The index for future business activity moved down six points to 1.3, and the future business climate index remained negative at -16.0, suggesting that firms do not expect conditions to improve in the months ahead. Employment levels are expected to edge slightly higher six months from now, and wages are expected to increase.