US Fifth District Services Stay Resilient

The Fifth District Service Sector Activity remained relatively solid in April, as the revenues index held steady at 9, while the demand index eased to 10 from 21 but stayed in positive territory, pointing to continued expansion. Expectations remained strong, with forward-looking indexes for both revenues and demand firmly positive. The local business conditions index slipped to -6 from 2, while the outlook index edged down slightly to 6. Employment conditions softened modestly, with the current index falling to 6 from 9, though the forward-looking measure rose to 25, signaling hiring optimism. Wage growth remained stable, and firms continued to expect increases, while price pressures picked up slightly but are seen easing ahead.

The Fifth District Service Sector Survey showed improvement in March 2026, easing from four consecutive monthly contractions in activity and marking the highest reading since March 2025, according to the Federal Reserve Bank of Richmond. The revenues index rose to 9 from -8 in February and the demand index improved to 21 from -3. Expectations for future revenues (36 versus 35) and demand (33 versus 28) remained firmly in positive territory. The local business conditions increased to 2 from -10 in February, while expectations for the future decreased to 9 from 16. The current employment index rose to 9 from 0 in February, and the forward-looking employment index rose (22 versus 15). The wages index edged up (19 versus 17) and firms continue to expect wage increases over the next six months. Average growth rates of prices paid and received decreased slightly. Over the next 12 months, firms expect growth in prices paid to decrease and growth in prices received to remain steady.

The Fifth District Service Sector Survey indicated a fourth consecutive monthly contraction in activity in February 2026, the steepest in the current stretch, according to the Federal Reserve Bank of Richmond. The revenues index decreased to -8 from -3 and the demand index fell to -3 from 2. Expectations for future revenues (35 vs 34) and demand (28 vs 32) remained firmly in positive territory. The local business conditions index edged down to -10 from -6 in January, while the future local business conditions index rose to 16. The current employment index decreased to 0 in February from 5 in January, and the forward-looking employment index decreased to 15 from 20. The wages index inched down to 17 from 20 and firms continued to expect to increase wages over the next six months. The average growth in prices paid rose notably, while prices received edged up slightly. Firms expect price pressures on inputs to ease over the next 12 months, with prices received seen holding steady.