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Fifth District Survey of Service Sector Activity

January 25, 2022

Fifth District service sector activity moderated in January, according to the most recent survey by the Federal Reserve Bank of Richmond. The revenue index declined from 12 in December to 4 in January. The demand index increased to 26 from 21 in December. Our indexes for business spending — capital expenditures, services expenditures, and equipment and software spending — declined in January but remained in expansionary territory. More firms reported deteriorating local business conditions this month than in December. However, firms are optimistic about future business conditions as our expected local business conditions index increased to 29.

There was little change in hiring reported in January, as our index nudged down slightly to 12 from 14 in December. Wages remained firmly in growth territory at an index value of 41, and firms expect to continue increasing wages in the next six months as the index for expected wages was 68 in January. Firms continued to report trouble finding workers with the necessary skills and don't expect the difficulty to ease in the near term.

The average growth rate of prices paid and priced received by survey participants declined in January, with the decline in prices received outpacing prices paid. The growth of prices paid over the next 12 months is expected to moderate, while growth in prices received is expected to increase slightly.

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Regional Survey Team (571) 287-0448