Business Activity Expanded Further
Tenth District services expanded further in April, and expectations for the next six months remained steady (Chart 1 & Table 1). Input price growth continued to outpace increases in selling prices, putting pressure on margins.
The month-over-month services composite index was 9 in April, up from 7 in March and down from 12 in February (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity in the wholesale, retail, and restaurant sectors grew, while it contracted in the professional services, healthcare, and education sectors. All month-over-month indexes were positive except access to credit. General revenue/sales stayed fairly steady, while employment growth cooled and inventories increased sharply. The year-over-year composite index increased from -2 to 7. The revenues/sales index was 7 following three months of negative readings, and capital expenditures also expanded from this time last year. The composite expectations index for services activity ticked up to 2 from 1, driven by firms’ expectations that heightened inventory levels will continue increasing amid steady sales in the next six months.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Apr-23 | 5 | -2 |
| May-23 | 2 | -4 |
| Jun-23 | 11 | -11 |
| Jul-23 | -1 | -11 |
| Aug-23 | -1 | 5 |
| Sep-23 | 1 | 4 |
| Oct-23 | -1 | 9 |
| Nov-23 | 0 | 2 |
| Dec-23 | -7 | 8 |
| Jan-24 | -2 | -7 |
| Feb-24 | 12 | -11 |
| Mar-24 | 7 | -2 |
| Apr-24 | 9 | 7 |
Special Questions
This month contacts were asked special questions about workforce training and hiring priorities. Nearly two thirds of firms have devoted more resources to training workers that do not meet skill requirements, with 15% devoting significantly more resources and 48% devoting slightly more. Additionally, 36% reported no change in the resources devoted to training and 1% devoted less resources (Chart 2). Firms were also asked about their biggest priority in hiring over the next six months. 46% reported hiring entry-level workers is their biggest priority, while 39% said mid-level workers, 9% said senior-level workers, 3% said temporary employees, and 3% of firms reported they are not hiring (Chart 3).
Selected Services Comments
“The inflationary prices we experienced in 2022 and 2023 have eased in our sector. We used a large percentage of our cash on hand to survive these last couple of years, however we are seeing our cash on hand starting to increase this month. The high interest rates, along with our increased employee costs, are taking a toll on our profitability.”
“Many young people are still looking for hybrid and/or remote work environments.”
“The cost of property and casualty insurance is going sky high, if you can get it.”
“Some multi-family has been put on hold because of costs and rates. Others with special financing such as TIF are going ahead even though the projects aren't initially forecast to do as well as the developers would like. One developer had to close on a swap for construction costs before they wanted to because of the rate environment.”