Regional service-sector activity grew for the first time in nearly two years in July, according to the Business Leaders Survey from the Federal Reserve Bank of New York, covering New York, North Jersey and southwestern Connecticut.

Business activity increased 19 points to 8.7, the New York Fed reported this week. Additionally, the business climate rose 13 points (to -24.0).

While the latter remained negative, the sharp increase points to improved conditions in recent months as well as a jump from June. Looking ahead, it’s also driving an optimistic outlook. Over the next six months, the regional institution noted firms feel more positive about business conditions.

Employment increased slightly, while wage growth slowed and supply availability declined modestly. While price increases remained elevated, the NY Fed reported a slight easing.

The NY Fed said it collected Business Leaders Survey responses from July 2–10. The survey goes out to the same pool of about 150 business executives, typically the company leader, across the region’s service sector. About 100 responses are typically returned by the close. See a sample survey here.

A closer look: July 2026

The jump in business activity helped produce the indicator’s highest reading since 2022. While 34% reported improved conditions, 25% said things had gotten worse.

On business climate, 21% of respondents described favorable conditions and 45% unfavorable.

Employment continued to rise, though at a slower pace than in June, as the index dropped seven points. Wage growth, meanwhile, moderated some, declining by five points to 30.7.

While conditions still lag, the results appear to indicate regional businesses are ready to turn a corner.

The most encouraging sign came from respondent’s expectations. The index for future business climate jumped 17 points to zero. The improvement suggests “that for the first time in well over a year,” firms don’t expect things to get worse in the coming months.

“Employment is expected to grow modestly. Supply availability is expected to decline modestly. Capital spending plans remain subdued,” the NY Fed said.