TL;DR
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The New York Fed’s October Business Leaders Survey found that service-sector firms in its district expected a small decline in business activity over the next six months. The future activity index fell 10 points to –5.1, while the headline activity index dropped to –20.7 and input-price pressures remained high.
Service-sector firms in the New York Fed district turned pessimistic about the business outlook in early October, with the survey’s future activity index falling 10 points to –5.1, the first negative reading since December 2025. The October survey also showed a sharp decline in current business activity and continued steep increases in input prices, indicating that regional firms faced cost pressure alongside weaker activity.
The Federal Reserve Bank of New York said its headline business activity index fell 12 points to –20.7, its lowest level since March. A negative reading indicates that more firms reported declining activity than improving activity. Separately, the future activity index measures expectations over the next six months; its –5.1 reading points to a small expected decline, rather than a forecast of a large contraction.
Employment was flat: the survey’s employment index rose five points to zero. At the same time, the prices paid index remained near 70, which the Fed said reflected continued sharp increases in firms’ input costs. The prices received index, tracking prices firms charge customers, rose three points to 36.3, its highest reading in four years. The figures show widespread cost increases, but do not establish how much of those costs firms passed on to customers.
The New York Fed released the survey on October 16. It gathered responses from 150 service-sector executives between October 2 and October 9. The district covers New York State, Northern New Jersey and Fairfield County, Connecticut; the survey excludes manufacturing firms and includes service businesses across a range of industries.
Costs Rise as Service Activity Weakens
The survey offers a timely snapshot of regional services businesses, an important part of the district’s economy. Its combination of declining current activity and a negative six-month outlook suggests that respondents saw little near-term improvement, while elevated input costs could continue to pressure operating budgets. The flat employment index indicates that firms, on balance, were not reporting net employment growth or decline in the survey period.
Prices charged by firms were also rising, according to the prices received index. That may indicate some ability to pass costs along, but the survey does not show whether increases in selling prices fully offset higher expenses. The figures matter to workers, customers and policymakers because they bring together signals on demand, hiring and prices. They are a survey reading, however, not a full measure of the region’s economic performance or a prediction of what every business will do.
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October’s Survey and Other Confidence Readings
The future activity index’s move below zero marked its first negative reading since December 2025. The current activity index’s decline to –20.7 provides a separate measure: it reflects firms’ reports of recent business conditions, not their expectations for the coming six months. The two measures therefore point to related but distinct concerns: current activity was weak, and respondents’ outlook had turned slightly negative.
Other October reports also described softer confidence, though they cover different groups and periods. The National Federation of Independent Business said small-business optimism fell in September to its lowest reading since June and just below its 52-year average; it also cited owners’ concerns about labor quality or availability. The Conference Board reported that CEO confidence declined in the fourth quarter, with views of current and expected economic conditions turning moderately negative. Its survey ran from September 21 through October 5, so its results do not cover exactly the same dates or respondents as the New York Fed survey.
“Business activity in the New York-Northern New Jersey region’s service sector declined significantly in October.”
— Richard Deitz, economic research advisor at the New York Fed
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How Long Cost Pressures Will Last
The survey does not identify why business activity weakened or show whether higher input costs caused the drop in activity or the shift in expectations. It also does not establish whether prices paid will stay near current levels, how much additional expense firms will pass on to customers, or whether businesses plan to change hiring or investment. The reported results reflect responses from 150 executives during a one-week collection period, not every service firm in the region. The source material does not provide detailed results by industry or business size.
The negative future index is a measure of firms’ reported expectations, not proof that activity will decline over the next six months. The size and persistence of any slowdown remain uncertain, and the survey alone cannot establish how these regional readings compare with subsequent economic data.
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Next Monthly Survey Will Test the Outlook
The New York Fed conducts its Business Leaders Survey monthly. A subsequent release will show whether the negative future index persists, whether firms continue to report weak current activity and whether the prices paid and prices received measures change. Comparing new readings with the October results can help show whether this month’s deterioration was sustained or reversed, though it will not by itself explain the causes.
For now, the confirmed picture is limited to the survey period: current service activity fell, employment was steady, input prices were still rising sharply and expectations turned slightly negative. Further evidence will be needed to determine whether these conditions spread, ease or affect hiring and customer prices in the months ahead.
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Key Questions
What did the New York Fed find in its October survey?
The Fed reported that its future business activity index fell to –5.1, indicating a small expected decline over the next six months. The headline current activity index fell to –20.7, while employment was flat and input-price increases remained sharp.
What does a negative future activity index mean?
It means survey responses point to a net expectation of declining activity over the next six months. The New York Fed described the –5.1 reading as signaling a small decline; it is not a guarantee that activity will contract.
Were businesses laying off workers?
The survey does not report that firms were laying off workers overall. Its employment index rose to zero, which the Fed interpreted as employment holding steady across respondents.
What do the price indexes show?
The prices paid index stayed near 70, indicating continued sharp increases in input prices. The prices received index rose to 36.3, its highest reading in four years, but the survey does not establish whether firms fully passed higher costs on to customers.
Who and what does the survey cover?
The monthly survey asks 150 service-sector executives in New York State, Northern New Jersey and Fairfield County, Connecticut, about business conditions. The October results were based on responses collected from October 2 through October 9 and exclude manufacturing firms.
Source: rss
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