January 2023 Nonmanufacturing Business Outlook Survey

Note: Survey responses were collected from January 9 to January 19.

Nonmanufacturing activity in the region expanded this month, according to the firms responding to the January Nonmanufacturing Business Outlook Survey. The indexes for general activity at the firm level, sales/revenues, new orders, and full-time employment all rose this month. The firms continued to report overall increases in both prices paid and received; however, increases in prices paid were less widespread than in recent months. The respondents continue to anticipate growth over the next six months.

Current Indexes Improve

The diffusion index for current general activity at the firm level increased from a revised reading of 8.0 in December to 12.7 this month (see Chart 1).* Almost 38 percent of the firms reported increases in activity, while 25 percent reported decreases. The new orders index increased 13 points to 10.8, its first positive reading since July. Almost 31 percent of the respondents reported an increase in new orders, while 20 percent reported decreases. The sales/revenues index jumped 23 points to 20.3 in January. The share of firms reporting increases in sales/revenues (44 percent) exceeded the share of firms reporting decreases (24 percent). The regional general activity index increased 6 points but remained negative at -6.5.

Chart 1. Current and Future General Activity Indexes For Firms

Employment Indicators Strengthen

The firms reported overall increases in full- and part-time employment. The full-time employment index increased 11 points to a reading of 16.5 in January. The share of firms reporting increases (23 percent) was higher than the share reporting decreases (6 percent). More than 70 percent of the firms reported steady full-time employment levels. The part-time employment index increased 7 points, to 5.3.

Chart 2. Current Prices Paid and Prices Received Indexes

Firms Continue to Report Overall Increases in Prices

The prices paid index declined 6 points to 46.1, its lowest reading since June 2021 (see Chart 2). More than 47 percent of the respondents reported increases in input prices, while 40 percent reported steady input prices and 1 percent reported decreases. Regarding prices for the firms’ own goods and services, the prices received index moved up from 19.5 to 24.1. The share of firms reporting increases in prices received (28 percent) exceeded the share reporting decreases (4 percent). More than 54 percent of the firms reported no change in prices for their own goods and services.

Firms Expect Lower Cost Increases This Year

In this month’s special questions, the firms were asked about changes in their various input and labor costs over the past year and their expectations for changes in costs for the coming year. For nearly all categories, the average percent change in costs expected for 2023 was smaller than the average percent change in costs reported for 2022. The respondents were also asked to rank the importance of various factors in setting prices. Demand for their own goods/services was the most important factor, followed by wages and labor costs, the overall rate of inflation, and maintaining steady profit.

Firms Continue to Anticipate Growth

Both future activity indexes suggest that firms continue to anticipate growth over the next six months. The diffusion index for future activity at the firm level improved from a reading of 18.8 last month to 24.7 this month (see Chart 1). Over 42 percent of the firms expect an increase in activity at their firms over the next six months, compared with 17 percent that expect decreases and 38 percent that expect no change. The future regional activity index declined 4 points but remained positive at 2.4 this month.


Responses to this month’s Nonmanufacturing Business Outlook Survey suggest improved nonmanufacturing activity in the region. The indicators for firm-level general activity, new orders, and sales/revenues all increased. The indexes for full- and part-time employment improved. Both price indexes remained elevated, although the prices paid index declined from last month. Overall, the responding firms expect growth over the next six months.

* The survey’s annual data revisions, which incorporate updated seasonal factors, were released on January 17, 2023.

Special Questions (January 2023)

1. What were the percentage changes in costs for the following categories for 2022, and what do you expect they will be for 2023?
Energy 8.0 5–7.5 4.1 3–4
Other Raw Materials 9.4 5–7.5 5.2 3–4
Intermediate Goods 7.3 5–7.5 5.0 3–4
Wages 6.1 4–5 4.2 4–5
Health Benefits 6.3 5–7.5 6.2 5–7.5
Nonhealth Benefits 2.6 2–3 2.7 2–3
Wages + Health Benefits + Nonhealth Benefits 8.1 5–7.5 6.6 5–7.5
Note: Respondents selected ranges of percentage changes. The average percent change is calculated using the midpoints of the ranges of each answer option.
2. Currently, when you think about setting the prices of your goods/services, how important to you are the following factors in making those decisions?
  Weighted Average*
Your competitors' prices 60
The strength of demand for your most important good(s) or service(s) 84
Your wages and labor costs (including benefits) 79
Your nonlabor costs, such as energy prices, materials prices, transportation costs, rent, etc. 57
Maintaining steady profit margins (for price over costs) 69
Interest rates, borrowing rates, and the cost of capital 50
Problems with your supply chains, such as bottlenecks and product shortages 48
The overall rate of inflation in the U.S. economy, as measured by the Consumer Price Index 70
Other 58
* Respondents reported importance on a scale of 1 (least important) to 5 (most important). The weighted average gives 1 a weight of 0; 2 a weight of 0.25; 3 a weight of 0.5; 4 a weight of 0.75; and 5 a weight of 1.

Summary of Returns (January 2023)

Summary of Returns

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