Business Activity Expanded Further in March
The month-over-month services composite index was 15 in March, up from 6 in February, and 2 in January (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity in the tourism sector and information services sectors fell, while health services rose slightly. All month-over-month indexes were positive except for the credit conditions index, which declined from 0 to -4. The monthly general revenue/sales index continued to increase from 15 to 18, and the employee count index increased from -5 to 7. The year-over-year composite index decreased slightly from 11 to 8, driven by cooling in business services. Expectations for future activity in the services sector increased slightly, driven primarily by the higher employment expectations.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Mar-25 | 0 | 2 |
| Apr-25 | 2 | 11 |
| May-25 | 8 | 8 |
| Jun-25 | 2 | 11 |
| Jul-25 | -3 | 1 |
| Aug-25 | 3 | 12 |
| 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 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Oct-25 | 20 | -15 |
| Nov-25 | 11 | -5 |
| Dec-25 | 1 | -2 |
| Jan-26 | 22 | 10 |
| Feb-26 | 12 | 11 |
| Mar-26 | 11 | 0 |
Special Questions
This month, contacts were asked special questions about expected changes in profit margins and product demand. Almost one-fifth (18%) of firms reported that they expect their profit margins to remain unchanged over the next 12 months, 2% of firms expect their profit margins to significantly increase, 29% expect a slight increase, 42% expect a slight decrease, and 9% expect a significant decrease (Chart 3). Firms were also asked about product demand compared with last year. Approximately half of firms (51%) expect their product demand to be slightly higher in 2026 than in 2025, 6% expect their product demand to be significantly higher, 21% expect no change in product demand, 17% expect their product demand to be slightly lower, and 5% of firms expect product demand to be significantly lower (Chart 4).
Selected Services Comments
“Uncertainty is a real large and seemingly growing issue.”
“We were planning to exceed our prior year’s sales. We are resetting to flat to down sales expectations for the rest of the year.”
“Uncertainty is a disincentive.”
“Sales have dropped and there are a lower number of customers coming to shop.”
“Consumers aren't spending.”
“It's difficult to make decisions because of uncertainty.”
“It's been rough, though beginning to look better.”
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
