Business Activity Rose Moderately in May
The month-over-month services composite index was 10 in May, up from 3 in April, and down from 15 in March (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity in the tourism sector and retail trade grew, while restaurant services declined. All month-over-month indexes were positive except for the temporary and part-time employment and credit conditions indexes. Most month-over-month indexes rose from last month except wages and benefits, selling price index, and temporary and part-time employment. The monthly general revenue/sales index grew from 6 to 12, while employment increased slightly with a reading of 5. The year-over-year composite index increased from 8 to 12, driven by gains in consumer services. Capital expenditures rose sharply from 7 to 21. Expectations for future activity in the services sector cooled, driven primarily by general revenue/sales and employment.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| 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 |
| Apr-26 | 3 | 8 |
| May-26 | 10 | 12 |
Composite Indexes vs. a Year Ago by Sector
Skip to data visualization table| Date | Consumer Services | Business Services |
|---|---|---|
| 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 |
| Apr-26 | 9 | 6 |
| May-26 | 17 | 3 |
Special Questions
This month, contacts were asked special questions about changes in input and output prices and hiring and capital investment plan changes. Almost half (49%) of firms reported their input prices are changing more often, 16% reported their input prices are changing less often and 35% reported their input prices are changing at about the same rate. Over a quarter (27%) of firms reported their output prices are changing more often, 19% reported their output prices are changing less often, and 49% reported output prices are changing at about the same rate as 2025 (Chart 3). Firms were also asked about any changes in their hiring and capital investment plans since the start of the year. Almost a quarter (24%) of firms expected to hire fewer workers, 16% expected to hire more workers, and 60% have not changed their hiring plans. Over two-thirds (68%) of firms have not changed their capital investment plans, 14% expected to decrease capital investments, and 18% expected to increase capital investments (Chart 4).
Selected Services Comments
“Business continues to be very challenging. Input prices that stabilized late last year are in chaos again due to oil prices, etc. We need stability.”
“Retail consumer traffic is slow.”
“Fuel costs and customer sentiments are dangerously impacting our sales.”
“Consumers are holding back on discretionary services.”
“It is getting difficult for us to stay in business due to low demand for outsourcing staffing.”
“We anticipate continued competitive pressure in the labor market.”
“Labor availability continues to be the governor of growth.”
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
