NY Fed Services Index Reflects Further Deterioration

The New York Fed’s Services Business Activity Index dropped to -8.7 in September 2026 from 0.5 in August, reversing the upbeat sentiment recorded over the previous two months. The business climate index fell ten points to -35.9, as nearly half of respondents reported an unfavorable climate, indicating that business conditions were notably worse than normal as supply availability continued to deteriorate. Employment edged lower by seven points to -4.9, while wage growth remained close to levels seen in recent months. Input price growth continued to increase significantly, while selling-price pressures also picked up. Capital spending remained weak. Looking ahead, firms expect modest growth in business activity over the next six months, with employment expected to increase. Price pressures are also expected to remain elevated as supply availability continues to deteriorate.

The New York Fed’s Services Business Activity Index dropped to 0.5 in August 2026 from 8.7 in July, which was the highest reading since May 2022. The business climate index remained deeply negative at -25.7, with 43% of respondents reporting unfavorable business conditions. At the same time, the supply availability index fell five points to -14.3, indicating a sharper deterioration in supply conditions than in the previous month Meanwhile, employment saw a slight improvement, while wages continued to rise at a modest pace. The prices paid index rose three points to 70.1, pointing to a modest acceleration in input price growth, while the prices received index was unchanged at 27.7. The future business climate index declined 17 points to -16.5, pointing to increased pessimism about the outlook. Employment is expected to rise modestly, while firms continue to anticipate elevated price pressures and some further deterioration in supply availability. Capital spending plans remained subdued.

The New York Fed's Services Business Activity Index rose 19 points to 8.7 in July 2026, as business activity in the service sector rose for the first time in nearly two years. The headline index reached its highest level since May 2022, with the business climate index rising 13 points to -24, indicating conditions improved significantly in recent months, though they remained below normal. Employment continued to grow, albeit at a slower pace, and wage growth moderated. Meanwhile, supply availability deteriorated further, while price increases eased slightly but remained elevated. Looking ahead, firms turned optimistic about business conditions for the first time in well over a year and do not expect the business climate to worsen over the next six months. Employment is expected to grow modestly, while supply availability is expected to worsen and capital spending remains subdued.