Responses to the November Nonmanufacturing Business Outlook Survey suggest continued expansion in nonmanufacturing activity in the region. The indexes for general activity at the firm level and sales/revenues both increased, while the new orders index ticked downward. The index for full-time employment rose. The firms continued to report overall increases in prices of both their inputs and their own goods and services. The survey’s index for firm-level future activity held steady, suggesting continued optimism about growth over the next six months.

Firms Report Overall Growth
The survey’s indicators for current general activity suggest continued growth in the nonmanufacturing sector of the regional economy. After falling sharply last month, the diffusion index for current general activity at the firm level more than recovered and increased 23 points in November to 31.7 . Over 41 percent of the firms reported increases in activity (up from 33 percent last month), compared with 10 percent that reported decreases (down from 25 percent last month). The new orders index ticked down 1 point to 25.6 in November. The sales/revenues index increased for the second consecutive month, rising from 25.5 in October to 33.5 in November. Nearly 47 percent of the firms reported increases in sales/revenues, while 13 percent reported declines. The index measuring firms’ perception of regional activity rose 8 points to 20.7.

Full-Time Employment Index Strengthens
Responding firms reported overall increases in both full- and part-time employment. The full-time employment index rose 5 points to 21.1 in November. The share of firms reporting increases in full-time employment (30 percent) exceeded the share reporting decreases (9 percent); the majority (62 percent) reported no change. The part-time employment index was little changed at 10.1, and the average workweek index ticked up 2 points to 12.3. The wages and benefits indicator fell 5 points to 36.7.

Firms Continue to Report Overall Price Increases
The indexes for prices paid for inputs and prices received for the firms’ own products and services both increased in November. The prices paid index rose 8 points to 28.6. Over 32 percent of the respondents reported increases in input prices, while 4 percent reported decreases. The prices received index rose from 8.0 in October to 10.7 in November. Over 17 percent of the firms reported increases in prices received, while 6 percent reported decreases. The majority of the firms (61 percent) reported no change in their own prices.

Firms’ Forecasts for Prices Remain Stable
In this month’s special questions, the firms were asked to forecast the changes in the prices of their own products and services and for U.S. consumers over the next four quarters (see Special Questions). Regarding their own prices, the firms’ median forecast was for an increase of 2.0 percent, the same as when the question was last asked in August. Regarding the firms’ historical own price change over the previous year, the median response was 1.5 percent, down from the previous forecast of 2.0 percent. When asked about the rate of inflation for U.S. consumers over the next year, the firms’ median forecast was 2.0 percent, down from the previous forecast of 2.5 percent. The firms expect their employee compensation costs (wages plus benefits per employee) to rise 3.0 percent over the next four quarters, the same as the previous forecast. The firms’ forecast for the long-run (10-year) inflation rate remained at 3.0 percent.

Firms Anticipate Continued Growth
The diffusion index for future activity at the firm level remained stable at 47.2 (see Chart). More than 56 percent of the firms expect an increase in activity at their firms over the next six months, compared with 9 percent that expect a decline. The future regional activity index rose from 15.5 in October to 21.1 in November, suggesting optimism about growth in the region over the next six months.

Summary
Results from this month’s Nonmanufacturing Business Outlook Survey suggest continued expansion in regional nonmanufacturing activity. The indicators for firm-level general activity and full-time employment improved after decreasing last month, and the sales/revenues index strengthened further. The respondents continued to expect growth over the next six months.