Business Activity Fell in August
The month-over-month services composite index was -3 in August, down from 14 in July and 5 in June (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Wholesale trade and leisure/hospitality activity fell considerably, while education and health services? activity rose. The month-over-month indexes were mixed, with moderate declines in the inventory and employment indexes. The monthly general revenue/sales index fell from 19 to 0 and employment fell from 4 to -4. The year-over year composite index increased slightly from 10 to 11, with activity in consumer services stronger than business services. The capital expenditures index continued to tick down from 16 to 14. Expectations for future activity in services fell considerably from a reading of 24 to 5, driven primarily by general revenue/sales.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 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 |
| Apr-26 | 3 | 8 |
| May-26 | 10 | 12 |
| Jun-26 | 5 | 10 |
| Jul-26 | 14 | 10 |
| Aug-26 | -3 | 11 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Apr-26 | 9 | 6 |
| May-26 | 17 | 3 |
| Jun-26 | 9 | 12 |
| Jul-26 | 10 | 11 |
| Aug-26 | 13 | 10 |
Special Questions
This month, contacts were asked special questions about factors for increases in production and turnover. Over a third (38%) of firms reported their primary factor allowing them to increase production without adding workers was reduced turnover, 31% reported their primary factor was technology improvements, 27% reported they have not been able to increase production without adding workers, 3% reported it was outsourcing, and 1% reported their primary factor was not listed (Chart 3). Firms were also asked about their employee turnover this year compared to their typical turnover level. Over half (54%) of firms reported unchanged turnover, 16% reported slightly lower turnover, 14% reported slightly higher turnover, 12% reported significantly lower turnover, and 4% reported significantly higher turnover this year (Chart 4).
Selected Services Comments
“Although we have seen a huge reduction in our overall input prices, we have had huge increases in the shipping costs of our inventory. The increases in shipping exceed 40%. These additional costs have put a great amount of pressure on small businesses.”
“It's still rough but improving.”
“Business remains poor and uncertainty remain high.”
“Consumers continue to be cautious and affected by high gasoline and food prices.”
“As a small business, we do not currently have the capital to invest in AI at this point.”
“We are cautiously growing to meet demand but are being very careful and looking for any sign that things might change.”
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
