Business slowed slightly in July
Tenth District services activity remained sluggish in July, and expectations for future growth were not as positive as in previous months (Chart 1). Most input and selling price indexes expanded modestly, while expectations for future selling prices eased lower but remained positive.
The month-over-month services composite index was -1 in July, down slightly from 1 in June and 15 in May (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Month-over-month indexes were somewhat mixed in July. While the general revenue/sales and inventory indexes continued to decline, the employment and employee hours work indexes bounced back into positive territory. The decrease in general revenue/sales index was driven mostly by declines in transportation activity, restaurants, and health services. Year-over-year services indexes picked up modestly compared to last month. Compared with a year ago, the services composite index rose from 12 to 17, while the general revenue/sales index inched down from 19 to 17. Expectations for the services composite index eased lower from 17 to 14 because of decreases in the part-time employment, inventory, and access to credit indexes.
This month contacts were asked special questions about the availability of workers, wage conditions, and their current level of confidence in their local economy. More than 61 percent of firms indicated that workers were in short supply, but just 36 percent said they were having to raise wages more than normal to attract or keep at least one type of worker (Chart 2). For firms struggling to find workers, most noted they were looking for entry level services workers or skilled workers. Respondents who have had to raise wages reported a typical salary increase of 5 to 15 percent. Just under half of the contacts said their firm’s uncertainty about the economy has increased recently, citing trade concerns and weaker domestic demand as the causes. However, 80 percent of contacts reported they were confident in their local economy, and only 5 percent reported no confidence (Chart 3).
Selected Services comments
“Our community is growing more diversified, has strong employment numbers and is moving forward with community and economic development initiatives that will surely produce significant benefits and competitive advantage in the near future.”
“National economy seems to be ok, however, local economy is down and individuals are holding on to their money.”
“Sales have been flat to down in most stores. Shoppers may be holding off until school time.”
“Consumer confidence is the highest I have seen it in the last decade.”
“Current lines of business are stagnant.”
“Customers seem to feel confident and are spending more, though the numbers of customers are flat, or up only slightly.”
“Things seem to be going pretty well, it is slower than last fall, but technology is helping offset wage increases.”
“Over the past four years we have had to raise wages by $4 per hour and still the biggest complaint is that we don’t pay enough.”
“We have had to raise wages 5 percent more than normal. To get the best workers we are paying higher wages.”