The New York Fed’s Business Leaders Survey for April suggests that business activity for the District’s service sector is about stable. The current business activity index was 10.9 in April, essentially unchanged from the 10.8 in March. In fact, it may hint at a slight firming of activity after the reset to a slower underlying pace in late 2018. The average for the first quarter was 8.2 — accounting for the impacts of the partial federal government shutdown in January and rebound in February, the pace seems to have settled into one of middling expansion.
Supporting some hope for a resumption of moderate expansion, the forward looking business activity index rose to 31.1 in April after 29.2 in March, holding on to the stronger outlook that followed on the rebound to 31.2 in February.
I also note that while the survey reflected slower employment and wage growth, the numbers are by no means discouraging for service sector workers to find job and improve earnings. If at present the pace is a bit slower in the face of uncertainties the future looks a bit brighter. The private service sector accounts for roughly 70% of the US nonfarm payrolls.
Uncertainties also effect perceptions of the business climate, but this should not obscure that it remains mostly to the upside.
The index doesn’t have the strongest correlation to the ISM Non-Manufacturing Index (0.646). However, it does suggest that when the national index is reported at 10:00 ET on Friday May 3, it could be flat-to-up from the 56.1 in March.
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