Business Activity Declined Modestly in September
The month-over-month services composite index was -9 in September, down from 4 in August, and -5 in July (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity in education and professional services grew, while the tourism sector continued to fall. The monthly general revenue/sales index dropped from 5 to –13, and the employment index fell from 2 to -12, its lowest reading since May 2020. Year-over year growth slowed from 12 to 3, as growth in consumer services cooled and business services activity declined modestly (Chart 2). The revenues index fell from 16 to 5, while employment was essentially flat and the hours worked index declined to -12. Capital expenditures continued to accelerate from 8 to 14. Expectations for future services activity moderated but remained positive, with firms expecting declines in employment and slower price growth.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Sep-24 | 0 | 4 |
| Oct-24 | 5 | 9 |
| Nov-24 | 8 | 15 |
| Dec-24 | 4 | 24 |
| Jan-25 | -4 | 17 |
| Feb-25 | 2 | 6 |
| Mar-25 | 0 | 2 |
| Apr-25 | 3 | 11 |
| May-25 | 11 | 8 |
| Jun-25 | 3 | 11 |
| Jul-25 | -5 | 1 |
| Aug-25 | 4 | 12 |
| Sep-25 | -9 | 3 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| Sep-24 | 8 | -5 |
| Oct-24 | 9 | 11 |
| Nov-24 | 19 | 5 |
| Dec-24 | 30 | 11 |
| Jan-25 | 25 | 2 |
| Feb-25 | 1 | 14 |
| Mar-25 | 1 | 4 |
| Apr-25 | 10 | 12 |
| May-25 | 9 | 5 |
| Jun-25 | 8 | 17 |
| Jul-25 | -7 | 17 |
| Aug-25 | 14 | 7 |
| Sep-25 | 6 | -3 |
Special Questions
This month, contacts were asked special questions about expectations for employment and product demand for 2026. Over a third (38%) of firms reported expect their employment levels to be slightly higher by the end of 2026, while 4% of firms expect their employment levels will be significantly higher, 29% of firms expect no change, 26% expect they will be slightly lower, and 3% of firms expect they will be significantly lower (Chart 2). Almost half of firms (48%) expect demand for their products to be slightly higher in 2026, 7% of firms expect their demand to be significantly higher, 28% expect no change, 15% expect it will be slightly lower, and 2% expect their product demand will be significantly lower (Chart 3).
Selected Services Comments
“This has been a very busy year, specifically in coal mining and electric power generation.” “It's getting harder and harder to stay afloat as a small business.”
“Commodity lumber and plywood costs are lower than expected during this typical seasonal building period in the Midwest. The decline in entry level/first time homebuyers has reduced the demand lower than production in the markets. We continue to see higher pricing on windows, doors and all manufactured products due to increased labor costs in manufacturing.”
“Healthcare costs are increasing significantly, forcing us to decrease workforce.”
“Very little new products are being sold. This includes repair, parts and new equipment. We do not think this will change in the next year.”
“AI is creating productivity gains for us. We are reducing debt, using AI to boost productivity. Demand is weaker. Technology is allowing us to make our solution faster and cheaper, but prices to sell are dropping too.”
“Demand for Trucking services continue to decline. Pricing is down 15% since 2022. Most Trucking firms are operating at a loss. Trucking capacity will continue to exit the market until demand improves.”