Richmond Fed Services Index Remains Flat in July

The Richmond Fed Fifth District Service Sector Survey was broadly unchanged in July 2026, marking a second consecutive month of flat activity. The revenues index slipped to -3 from 0, while the demand index edged up to 5 from 4. Current local business conditions improved slightly to -5 from -7, although expectations weakened, with the future business conditions index falling to 9 from 16. Employment growth moderated, as the current employment index declined to 4 from 8, while the forward-looking employment gauge was little changed at 23, pointing to continued hiring plans. Wage growth remained firm, with both current and expected wage indexes staying in positive territory. Price pressures eased slightly, as the growth rate of prices paid slowed, while prices received rose marginally. Firms expect both measures to moderate further over the next 12 months.

The Richmond Fed Fifth District Service Sector Survey was flat in June 2026, with the revenues index falling to -1 from 14 and the demand index declining to 3 from 15. Local business conditions also weakened, with the index dropping to -9 from 0 in May. Despite softer current activity, expectations remained resilient, as the indexes for future revenues and demand stayed firmly in positive territory. The future local business conditions index rose to 15. Labor market conditions improved, with the current employment index increasing to 8 from -1, while the forward-looking employment index held steady at 24. Both current and expected wages remained firmly positive. On prices, firms reported slightly faster growth in prices paid, while price growth received was little changed. Over the next 12 months, businesses expect slower growth in input costs and a slight pickup in prices received.

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.