Business Activity Cooled in June
The month-over-month services composite index was 5 in June, down from 10 in May, and up from 3 in April (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Growth in consumer and business services cooled from last month, driven by declines in retail trade and transportation services. All month-over-month indexes were positive except for the credit conditions index at -2. Most month-over-month indexes eased from last month except inventory levels, capital expenditures, employee hours worked and part-time/temporary employment. The monthly general revenue/sales index fell from 12 to 3, and employment declined from 5 to 1. The year-over-year composite index slowed from 12 to 10, driven by slower growth in consumer services. The capital expenditures index fell from 21 to 18. Expectations for future activity in services accelerated, driven primarily by general revenue/sales.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 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 |
| Apr-26 | 3 | 8 |
| May-26 | 10 | 12 |
| Jun-26 | 5 | 10 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Apr-26 | 9 | 6 |
| May-26 | 17 | 3 |
| Jun-26 | 9 | 12 |
Special Questions
This month, contacts were asked special questions about their ability to pass through prices and supply chain change expectations. Approximately half (51%) of firms reported that they are currently able to pass through 0-20% of the higher costs from inputs and labor, 5% of firms are able to pass through 20-40%, 13% are able to pass through 40-60%, 9% can pass through 60 80%, 14% can pass through 80-100%, 2% can pass through more than 100%, and 6% of firms had to decrease prices. Approximately half of firms reported that they will be able to pass through 0-20% of higher costs in the next 12 months, 5% of firms will be able to pass through 20-40%, 11% will be able to pass through 40-60%, 7% will pass through 60-80%, 18% will pass through 80-100%, 3% will be able to pass through more than 100%, and 5% of firms had to decrease prices (Chart 3). Firms were also asked about any expectations for supply chain disruptions and shortages to change in the next 6 months. Over three-fifths (61%) of firms expect no change, 6% expect them to significantly decrease, 16% expect them to slightly decrease, 15% expect them to slightly increase, and 2% expect them to significantly increase (Chart 4).
Selected Services Comments
“Business is tough, it seems consumers are delaying major purchases.”
“As a small business, we continue to struggle keeping up with the increase in subscription prices with software platforms that we have come dependent on to remain competitive and are necessary to stay in business.”
“Our business is very cyclical, and we try to ride out the highs and lows without making drastic or dramatic changes to the organization.”
“The uncertainty factors continue to march on and loom larger.”
“World Cup has helped increase revenue about 10%.”
“Quite a few non-commodity price increases, particularly on products using metal or derived from oil. Commodity lumber has seen increases over the last few weeks following several months of stability.”
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
