Business Activity Grew Slightly in December
The month-over-month services composite index was 3 in December, up from -7 in November, and -5 in October (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity in the auto services, health services, and transportation sectors increased modestly, while information services activity fell. Most month-over-month indexes were positive except for credit conditions and employment. The monthly general revenue/sales index increased from -4 to 7, while the employment index increased from last month but stayed negative at -6. The year-over-year composite index decreased from 6 to -1, driven by cooling in the consumer services sector. The capital expenditures index increased from 5 to 9. Expectations for future services activity increased moderately, particularly for employment and general revenue/sales.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 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 |
| Oct-25 | -5 | 8 |
| Nov-25 | -7 | 6 |
| Dec-25 | 3 | -1 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Oct-25 | 20 | -15 |
| Nov-25 | 11 | -5 |
| Dec-25 | 1 | -2 |
Special Questions
This month, contacts were asked special questions about employee turnover, productivity, and capital expenditures. Approximately half of firms (51%) reported no change in employee turnover over the past year, while 19% reported an increase and 30% reported a decrease. A third of firms reported average productivity increased, while 14% reported a decrease and 56% reported no change (Chart 2). Firms also reported expectations for capital expenditures in 2026, with 38% expecting them to be significantly higher, 13% expecting slightly higher, 21% expecting no change, 17% expecting slightly lower, and 11% expecting significantly lower capital expenditures (Chart 3).
Selected Services Comments
“Our focus is do more with less - use AI and push efficiency - no more new investments - sell what we have.”
“We need to build new facilities, but we are waiting on lower prices.”
“Too much uncertainty.”
“Still hearing from consumers that they are very strained and have lots of uncertainty.”
“Uncertainty has never been higher from our customer's perspective.”
“We have seen a tremendous lack of retail traffic. People are not "recreationally" shopping, they come in with an intention to buy something relatively specific & are not adding on items.”
“Economic uncertainty and lack of company-owned investment resources are slowing new product development.”
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.