Service sector activity in the US Fifth District softened in August. The revenues index fell to -8 from -3 in July, and the measure of demand eased to 3 from 5. Assessments of local business conditions also worsened, slipping to -12 from -5.
Labor market indicators were more resilient. The current employment index rose to 8 from 4, and firms’ expectations for future hiring remained solid. Wage growth continued according to both current and forward-looking measures.
Price pressures showed some renewed momentum. The rate of increase in prices paid by firms edged higher, and prices received also continued to rise. Even so, businesses expect input cost inflation to moderate over the coming year, while anticipating little change in the pace of price increases passed on to customers.
Despite the recent softening in activity, firms’ outlooks remained relatively upbeat. Expectations for future revenues, demand, and local business conditions stayed clearly in positive territory.
