5th District Service Sector Growth Hits Near 1-1/2-Year High

The Fifth District Service Sector Survey revealed strong improvement in May 2026, with the revenues index rising to 14 from 9, its highest since December 2024, according to the Federal Reserve Bank of Richmond. The demand index also increased to 15 from 10. The indexes for future revenues and demand remained firmly in positive territory. The local business conditions index improved to 0 in May from -6 in April, while the future index rose to 12. The current employment index fell to -1 from 6, while the forward-looking employment index was broadly unchanged at 24. Both current and future wages indexes stayed in positive territory. The average growth rates of prices paid (5.4 vs 5.7) and received (3.4 vs 3.5) eased slightly. Firms expect growth in prices paid and received to slow a bit over the next 12 months.

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.