The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.
The Outreach and Education function engages, empowers and educates the Second District communities that the Bank serves, especially civic leaders, students, educators, small business owners, policymakers and the general public. It furthers the Bank's commitment to the region by listening to the communities we serve and leveraging our unique attributes to positively impact school and university programs, as well as analysis and research.
The Federal Reserve Bank of New York’s January 2015 Business Leaders Survey indicates that activity in the region’s service sector grew moderately. The survey’s headline business activity index climbed eight points to 15.7, indicating a faster pace of growth than in December. Of particular note, for the first time since before the Great Recession, the business climate index moved out of negative territory, suggesting that on balance, respondents viewed the business climate as normal. The employment index held steady at 16.0, pointing to continued solid gains in employment, and the wages index rose four points to 29.2, indicating a slightly faster pace of wage growth. The prices paid index inched down three points to 39.3, while the prices received index rose seven points to 12.0. The current capital spending index climbed six points to 16.1. Indexes for the six-month outlook for business activity and employment were higher and suggested that firms were optimistic about future conditions. Faster wage growth is expected going forward, with the index for expected wages climbing a fourth consecutive month, reaching 56.7, its highest level in nearly three years.
Business Climate Returns to Normal for First Time since 2007
Business activity expanded moderately in the region’s service sector, according to the January 2015 survey. The survey’s headline business activity index rose eight points to 15.7, indicating a faster pace of growth than in December. This month, 39 percent of respondents reported that conditions improved, while 23 percent reported that conditions worsened. Of particular note in the January report, the business climate index climbed out of negative territory for the first time since 2007, reaching 0.7. This result indicates that, on balance, firms viewed the business climate as roughly normal for the first time since before the Great Recession.
Employment Expands, Wages Grow
The employment index was little changed at 16.0, pointing to continued moderate gains in employment levels. The index for wages rose four points to 29.2, a sign that wages grew more rapidly this month. The prices paid index inched down three points to 39.3, indicating a slightly less rapid pace of input price increases. After falling last month, the prices received index rose seven points to 12.0, signifying a pickup in the pace of selling price increases. The capital spending index climbed six points to 16.1, suggesting continued growth in capital expenditures.
Faster Wage Growth Expected
Indexes for the six-month outlook suggested that firms were optimistic about future business conditions. The index for expected business activity rose five points to 35.4, and the index for future business climate advanced four points to 26.5. The index for expected employment rose four points to 27.7. The index for expected wages climbed for a fourth consecutive month, to 56.7, resulting in a cumulative increase of twenty-eight points since September 2014. This trend suggests that respondents are expecting faster wage growth over the next six months. The future prices paid and prices received indexes were little changed, and the index for expected capital spending fell six points to 19.2.
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.