New York Fed survey flags service-sector price pressures and weaker activity outlook

Traders Union
All News
Economic Data
NY Fed service price pressures

Highlights

New York Fed's October Business Leaders Survey reports headline index drops 12 points to negative 20.7, the weakest since March, with worsening business outlook.
Survey highlights services-sector input price increases remain sharp and selling prices accelerate to their fastest since 2022, signaling persistent inflation pressures.
September import prices rise 1.1%, well above expectations, as supply issues and cost pressures persist, fueling expectations that the Fed may tighten policy again before year-end.

October survey signals rising costs

As reported by Reuters, citing the Federal Reserve Bank of New York, its October Business Leaders Survey shows the pace of input price increases remains sharp, while selling price increases accelerate to their fastest pace since 2022 and supply availability continues to worsen.

The report says the business climate is "much worse than normal" and that firms are becoming more pessimistic about the outlook. Current business activity also weakens, with the headline index falling 12 points to negative 20.7, the weakest reading since March.

The survey also points to weak capital spending plans, while businesses expect supply availability to continue worsening. The downbeat reading stands in contrast to other economic data indicating strong activity across the broader economy.

Inflation implications for the region and Fed

The pricing trends in the New York Fed survey align with other indicators showing inflation pressures remain elevated amid the continuing effects of President Donald Trump's trade tariffs and the U.S.-Israeli war in the Middle East, which is driving higher energy costs.

The government also reports a sharp rise in September import prices, with those costs increasing 1.1%, well above expectations. Federal Reserve officials are closely watching services inflation after the central bank raised interest rates last month and is widely expected to tighten policy again before year-end.

Chicago Fed President Austan Goolsbee says services inflation shows little sign of improvement when the components of the latest consumer inflation report are examined. In the New York region, the uneven picture is reinforced by the New York Fed's October Empire State factory survey, which shows overall business conditions at a five-year high even as manufacturers also face elevated input and selling prices and supply-related challenges.

In our earlier article on how geopolitical conflicts and trade tariffs are reshaping global trade, we noted that companies are redesigning supply chains and shipping routes to be more resilient, even if that means higher costs. We also highlighted expectations that these shifts could persist beyond the current Middle East and Ukraine conflicts, with regional trade patterns changing and war-related disruptions weighing on exports and imports.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.