NY Fed: October Services Sector Selling Prices Hit Highest Since 2022, Business Activity Index Falls to Lowest Since March
nashnova research
The NY Fed's October survey shows services selling-price gains at their highest since 2022, while business activity fell to negative 20.7, the weakest since March — prices rising and business cooling at the same time makes the Fed's next rate call harder, not easier.
What does this survey actually say?
Services firms reported selling-price gains at the highest since 2022. Input costs stayed strong and supply availability kept deteriorating.
Yet the headline business activity index dropped 12 points to negative 20.7, the weakest since March. This means → firms are not seeing "higher prices, better business" — they are seeing costs climb while demand softens.
Surveyed firms rated the current business climate "well below normal." Capital spending plans are weak; pessimism is rising fast.
Why won't the price pressure ease?
Tariff-driven supply-chain disruption and Middle East tensions pushing up energy costs form a backdrop where price pressure is slow to fade.
Firms expect supply availability to deteriorate further. In plain terms = goods and services are getting harder to source, and more expensive when you find them.
Government data back this up — September import prices rose 1.1% month-on-month, well above expectations. Inflation pressure has not meaningfully eased.
Pessimism vs. a strong economy — which is real?
The survey's pessimism clashes with other macro data: overall U.S. economic activity remains strong, unemployment is low, and tech-related investment demand stays robust.
This reflects a deeper contradiction — macro aggregates say "fine," but services firms on the ground feel squeezed.
Put simply = the totals look decent, but price pressure is landing disproportionately on services. The pain is unevenly distributed.
What are Fed officials saying?
Chicago Fed President Austan Goolsbee said this week that the latest inflation report was "frustrating" and that "services inflation shows almost no signs of improvement." He urged close monitoring.
He stressed this price pressure "is not really coming from a supply shock." This means → you cannot count on supply-chain healing to bring prices down on its own — the root sits on the demand side.
Fed Chair Waller stayed deliberately vague — "I won't prejudge meeting outcomes" — and declined to signal any action for remaining meetings this year. Markets still price in a strong chance of another rate hike before year-end.
Why are services and manufacturing heading in opposite directions?
Also within the NY Fed system, the October Empire State Manufacturing Survey painted a starkly different picture — the headline business conditions index rose to a near-five-year high.
Yet manufacturing faces elevated input and selling prices and supply challenges too. This means → both sectors are absorbing price pressure, but manufacturing demand is holding up while services demand is cracking.
This reflects a widening services-manufacturing divergence — a split that will be the key variable in reading where U.S. inflation goes next.
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