The New York Fed’s Services Business Activity Index climbed 19 points to 8.7 in July 2026, marking the first increase in service-sector activity in nearly two years. The headline index reached its highest reading since May 2022. The business climate index also improved, rising 13 points to -24, signaling a notable strengthening in conditions in recent months, though they remain weaker than normal.
Employment continued to expand, but at a slower rate, and wage growth eased. At the same time, supply availability deteriorated further. Price increases moderated slightly but stayed elevated.
Looking ahead, firms turned optimistic about business conditions for the first time in well over a year and do not anticipate any worsening in the business climate over the next six months. They expect modest employment growth, further deterioration in supply availability, and persistently subdued capital spending.
