Business Activity Declined Modestly
Tenth District services activity declined modestly in July while expectations for the next six months remained expansionary (Chart 1 & Table 1). Selling prices were flat month-over-month while input prices still grew, although the pace of growth slowed.
The month-over-month services composite index was -4 in July, down from 2 in June and 11 in May (Tables 1 & 2). The composite index is a weighted average of the revenue/sales, employment, and inventory indexes. Activity expanded in the consumer services sector, particularly in wholesale and hospitality, while it contracted in the business and professional sector. Most month-over-month indexes were positive or basically flat, with revenues/sales as a notable exception falling from 4 to -16. The number of employees and employee hours worked indexes grew moderately while part-time employment and access to credit was essentially unchanged from last month. The year-over-year composite index fell from 8 to 3, as revenues declined slightly and employment growth eased. Capital expenditures expanded only modestly for the second consecutive month following strong readings earlier in the year. The composite expectations index for services activity cooled from 10 to 6, as firms expect employment levels to moderate and inventories to decline in the coming months.
Services Composite Indexes
Skip to data visualization table| Date | Vs. a Month Ago | Vs. a Year Ago |
|---|---|---|
| Jul-23 | -1 | -11 |
| Aug-23 | -1 | 5 |
| Sep-23 | 1 | 4 |
| Oct-23 | -1 | 9 |
| Nov-23 | 0 | 2 |
| Dec-23 | -7 | 8 |
| Jan-24 | -2 | -7 |
| Feb-24 | 12 | -11 |
| Mar-24 | 7 | -2 |
| Apr-24 | 9 | 7 |
| May-24 | 11 | 4 |
| Jun-24 | 2 | 8 |
| Jul-24 | -4 | 3 |
Special Questions
This month contacts were asked special questions about employee turnover. Responses concerning the change in turnover were mixed. 23% of firms reported an increase in employee turnover in the past year, while 50% reported no change in turnover, and 27% reported a decrease (Chart 2). Additionally, 56% of the firms that reported an increase in turnover said that it has primarily increased for production workers and 6% said it has primarily increased for managerial workers, while 38% said it has primarily increased for both production and managerial workers (Chart 3).
Selected Services Comments
“We have downsized the number of our employees due to the escalated costs of doing business. The inflated cost of interest on our debt is almost overwhelming.”
“Our mix of payers has changed resulting in a slower collection of revenue. Once this situation improves, our profitability will also improve.”
“Our business has gotten much tougher in the last year. Our employees are staying and we are able to recruit additional/better qualified employees.”
“Hiring has become easier.”
“As a small staffing company business, we are coming to the conclusion that businesses are utilizing less outsourcing for their staffing needs.”
“Commodity lumber prices have dropped considerably and are at levels similar to March 2020 before the big Covid rise happened. Planned multi-family projects are stalled waiting for better financing terms, equity requirements, and lower interest rates. Our single-family estimates (semi-custom to custom) are strong but haven't yet seen sales rise significantly because of it. Storms and very wet conditions have probably delayed some starts. Expenses of operating have increased greatly. Wages for temporary workers are up 20 to 25% over the past two years.”