Business Activity Grew Slightly in December
The month-over-month services composite index was 2 in January, up from 1 in December, and -6 in November (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Growth in the consumer sector was primarily driven by tourism activity. Business activity growth eased, with declines in real estate services. Most month-over-month indexes were positive, and almost all readings were higher than last month. The monthly general revenue/sales index increased from 3 to 4, along with wages and benefits from 14 to 24. However, all three employment indexes continued to fall. The year-over-year composite index increased from -1 to 19, and the revenues/sales index rose sharply from 0 to 36. Annual growth picked up for both the consumer and business sectors (Chart 2). Expectations for future services activity increased, as firms expect growth in sales in the next six months.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Jan-25 | -1 | 17 |
| Feb-25 | 1 | 6 |
| 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 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Jan-26 | 22 | 10 |
Special Questions
This month, contacts were asked special questions about labor demand and factors negatively impacting business. Most firms (61%) reported there were little to no changes in labor demand in the past year, while 7% shifted demand towards different roles, 11% reduced labor demand, 17% of firms increased overall labor demand, and 4% of firms are still evaluating impacts (Chart 2). Firms were also asked about concerns they have in 2026. Over a third (36%) of firms reported they are concerned about domestic demand for goods/services negatively impacting their business, 7% reported they are concerned about availability of inputs, 6% reported they are concerned about credit access, and 4% are concerned about the borrowing rate. A quarter of firms reported they are concerned about worker availability, 20% are concerned about geopolitical uncertainty, and 2% are concerned about the tax rate (Chart 3).
Selected Services Comments
“Availability of inputs will constrain us a bit in 2026, but the fact we are still struggling to find enough skilled technical workers will balance it out.”
“Uncertainly is the only "certain" theme.”
“Business has slowed.”
“More positive outlook trend.”
“It's still rough.”
“Labor supply will be a large hurdle in 2026.”
“I think the public is very nervous right now. When people get nervous, they quit spending money.”
“Planning is very difficult.”
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.