Growth in Activity Was Flat in September
The month-over-month services composite index was 0 in September, up from -3 in August and 14 in July (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Consumer services grew moderately, driven by increased activity in the transportation sector, while business services declined further. The month-over-month indexes were mixed. The monthly general revenue/sales index grew from 0 to 6, while the employment index fell further from -4 to -10. The year-over-year composite index eased slightly from 11 to 6, driven by slower growth in consumer services. On the other hand, the capital expenditures index edged higher from 14 to 15. Expectations for future activity in services increased modestly from 5 to 12.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Sep-25 | -6 | 3 |
| Oct-25 | -4 | 8 |
| Nov-25 | -6 | 6 |
| Dec-25 | 1 | -1 |
| Jan-26 | 2 | 19 |
| Feb-26 | 6 | 11 |
| Mar-26 | 15 | 8 |
| Apr-26 | 3 | 8 |
| May-26 | 10 | 12 |
| Jun-26 | 5 | 10 |
| Jul-26 | 14 | 10 |
| Aug-26 | -3 | 11 |
| Sep-26 | 0 | 6 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| Sep-25 | 6 | -3 |
| Oct-25 | 20 | -15 |
| Nov-25 | 11 | -5 |
| Dec-25 | 1 | -2 |
| Jan-26 | 22 | 10 |
| Feb-26 | 12 | 11 |
| Mar-26 | 11 | 0 |
| Apr-26 | 9 | 6 |
| May-26 | 17 | 3 |
| Jun-26 | 9 | 12 |
| Jul-26 | 10 | 11 |
| Aug-26 | 13 | 10 |
| Sep-26 | 3 | 10 |
Special Questions
This month, contacts were asked special questions about conditions to reduce headcount and investments/capital spending and retirement for current workforce. Almost a quarter (24%) of firms would not reduce their investments/capital expenditures regardless of sale conditions, 17% cited a decline of 5% to less than 10%, 16% are already planning cuts, 14% cited a decline of less than 5%, 14% cited a decline of 10% to less than 20%, 10% cited a decline of 20% to less than 30%, 5% cited a decline of 30% or more. Nearly a fourth (24%) of firms would need a decline of 5% to less than 10% before they reduced their headcount, 23% cited a decline of 10% to less than 20%, 16% cited a decline of less than 5%, 13% are already planning cuts, 11% cited a decline of 20% to less than 30%, 10% would not reduce, 3% cited a decline of 30% or more (Chart 3). Firms were also asked what share of their workforce is close to retirement eligibility. Over half (57%) of firms reported less than 10% of their current workforce is within 5 years of retirement eligibility, 32% cited 10-20%, 7% cited 20-30%, 2% cited more than 30%, and 2% were not applicable or unable to estimate (Chart 4).
Selected Services Comments
“We are seeing product shortages despite slow sales”
“Succession planning is a much larger portion of our planning than it has ever been.”
“The uncertainty right now is very challenging. It’s hard to feel optimistic for the next year.”
“Available labor and rising fuel costs continue to be major headwinds this year.”
“Business has slowed down.”
“Our headcount is driving by specific sales and needs. Selling more equipment doesn't create a need for employees but increase service demand/sales drives a need for mechanics/technicians. Same concept applies to aging workforce; it depends on where the aging issue exists. Locations also drive headcount, and given economic uncertainty, we have no plans for organic growth to add locations. We would add locations if an acquisition presented itself, though.”
Survey Data
The views expressed are those of the authors and do not necessarily reflect the positions of the Federal Reserve Bank of Kansas City or the Federal Reserve System.
Authors
Cortney Cowley
Assistant Vice President and Oklahoma City Branch Executive
