US DATA: Mixed NY Fed Services Report Shows Spiking Prices, Limited Passthrough

The New York Fed's Business Leaders Survey was mixed in April. It pointed to an improvement in regional services sector activity, with the current General Activity index rising to a 6-month high -14.0 (-20.0 consensus, -22.6 prior). But that still implied a decline in activity, and sentiment was actually a little weaker, with the Business Climate index dipping to -49.3 from -46.2 for an 11-month low.

• And the 6-month outlooks for both indices deteriorated sharply, to the lowest levels since late 2025. The report summarized forward-looking sentiment: " firms expect little change in activity over the next six months. Employment is expected to grow only slightly. Firms’ expectations for future price increases remained elevated, and supply availability is expected to worsen considerably. Firms planned only modest increases in capital spending."
• There was an 8th consecutive contraction in employment, while current prices paid jumped 11+ points to 73.8 for the highest since November 2022 as supply availability worsened "significantly" per the report. Prices received ticked up only modestly, suggested limited passthrough, but also reached a post-Nov 2022 high.
• There's probably more signal to be taken from the "hard" current data than the forward-looking sentiment. The results are a reflection of the survey taking place in early April, capturing both the Iran-US war ceasefire announcement but also the month-long spike in energy prices.
• NY-region services sector sentiment is clearly weaker than that of manufacturing, which has remained buoyant per the latest Empire report, and in any case the headline activity index has been underperforming the improvement in the national ISM for the last several months.