TL;DR
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The New York Fed’s October Business Leaders Survey found that service-sector firms in its district turned pessimistic about the next six months for the first time since December 2025. Current business activity fell to its lowest reading since March, while input prices continued to rise sharply and prices received by firms reached a four-year high.
Service-sector firms in New York, Northern New Jersey and nearby Connecticut turned pessimistic about the business outlook, according to the New York Fed’s October Business Leaders Survey, released Friday. The survey’s future business activity index dropped 10 points to –5.1, its first negative reading since December 2025, indicating firms expect a small decline in activity over the next six months.
The survey also showed a sharp deterioration in firms’ assessment of current conditions. Its headline business activity index fell 12 points to –20.7, the lowest reading since March. A negative index reading indicates that, on balance, respondents reported declining activity; it is not a direct measure of the percentage change in output. The results point to weaker reported business conditions alongside a more downbeat outlook.
Price measures remained elevated. The prices paid index, which tracks firms’ input costs, stayed near 70.0, a level the New York Fed report associated with input prices continuing to rise sharply. The prices received index, reflecting prices charged by firms, rose three points to 36.3, its highest reading in four years. Those readings indicate that price increases remained widespread, even as activity weakened.
Employment was steadier: the employment index rose five points to zero, indicating no net change in employment among respondents. The survey was released October 16 and is based on responses collected from October 2 through October 9. The New York Fed says it asks about 150 service-sector executives across its district about business conditions and other indicators.
Weaker Activity Meets Persistent Cost Pressure
The combination of declining activity and continued cost increases gives the survey its main significance: firms are reporting a weaker business environment without a corresponding easing in input-price pressure. The fall in the future index suggests surveyed executives, on balance, expect that weakness to continue over the next six months, though the –5.1 reading points to a small expected decline rather than a forecast of a sharp contraction.
For households and businesses, elevated costs can affect the prices service firms charge, while weaker activity can influence hiring and demand for services. The survey does not establish how these developments will affect consumer prices, employment across the region or broader economic growth. Its employment reading was flat, and the results describe the experiences and expectations of respondents, not every firm in the district.
The four-year high in the prices received index may be relevant to the persistence of service prices, but it does not quantify the actual rate of price inflation. Read alongside the prices paid measure, it shows continued reports of cost and selling-price increases; it does not, by itself, establish how much firms passed through to customers or how their profit margins changed.
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A Monthly Snapshot of Regional Services
The New York Fed’s Business Leaders Survey is a monthly survey of service-sector firms in the bank’s district, which includes New York State, Northern New Jersey and Fairfield County, Connecticut. The respondents represent industries outside manufacturing. The October results reflect responses gathered over one week, October 2–9, rather than a full-quarter accounting of regional output.
Other recent business surveys also reported softer sentiment, though they cover different groups and periods. The National Federation of Independent Business said on October 13 that its small-business optimism index declined in September to its lowest reading since June and slightly below its 52-year average; it highlighted concerns about labor quality or availability. The Conference Board reported on October 15 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.
These reports provide separate snapshots, not a single combined measure of economic conditions. Their populations, timing and methods differ, so the New York Fed’s regional service-sector figures should be interpreted on their own terms.
“Business activity in the New York-Northern New Jersey region’s service sector declined significantly in October. Employment was flat, and price increases remained widespread. Firms turned somewhat pessimistic about the outlook.”
— Richard Deitz, economic research advisor at the Federal Reserve Bank of New York
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Limits of the Survey Results
The survey does not identify why activity weakened or prices stayed high, and it does not provide a full accounting of firms’ revenues, costs or margins. The supplied results also do not specify how respondents’ expectations changed across industries or company sizes. Because the survey covers about 150 executives and responses were collected during October 2–9, its findings are a limited regional snapshot, not a definitive measure of the entire economy.
It is also unclear from these results whether the negative outlook will persist, whether employment will weaken in later surveys, or whether firms will continue raising prices. The index readings summarize the balance of responses; they should not be read as percentage changes in activity, employment or prices.
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Upcoming Surveys Will Test the Shift
The New York Fed conducts the Business Leaders Survey monthly, so subsequent releases can show whether firms’ reported activity, hiring and price pressures continue in the same direction. The key measures to watch are whether the future activity index returns above zero, whether the headline activity index recovers from –20.7, and whether the prices paid and prices received indexes ease.
Until those results arrive, the October report establishes what surveyed executives said during the first week of the month, not what will happen next. No additional release date or policy response is specified in the source material.
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Key Questions
What did the New York Fed survey find?
The October survey found that regional service firms were pessimistic about the six-month outlook. The future business activity index fell 10 points to –5.1, its first negative reading since December 2025.
Does a –5.1 reading mean business activity will fall 5.1%?
No. The index is not a percentage forecast. The New York Fed described the negative reading as indicating that firms expect a small decline in business activity over the next six months.
What did the survey say about employment and prices?
The employment index rose five points to zero, indicating employment was flat among respondents. The prices paid index remained near 70.0, while the prices received index increased three points to 36.3, its highest reading in four years.
Which businesses were surveyed?
The New York Fed surveyed about 150 executives at service-sector firms in its district, covering New York State, Northern New Jersey and Fairfield County, Connecticut. The survey excludes manufacturing firms, according to the Fed’s description.
When were the survey responses collected?
The October survey responses were collected from October 2 through October 9, 2026. The New York Fed released the results on October 16.
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