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Fifth District Survey of Service Sector Activity

January 24, 2023

Fifth District service sector activity improved slightly but remained soft in January, according to the most recent survey by the Federal Reserve Bank of Richmond. The revenues and demand indexes both rose to −6 from −12 and −8, respectively, in December. Firms' expectations for revenues and demand over the next six months also improved somewhat in January. Similarly, firms' assessments of current and anticipated local business conditions improved slightly but remained low. Most firms reported continued spending in capital, equipment/ software, and services, but the share of firms increasing capital and equipment/software spending decreased from last month.

A larger share of firms reported increased hiring in January, with the employment index rising from −2 to 9. Nonetheless, firms' ability to find workers with the necessary skills saw little improvement as the index remained unchanged at −10 in January. Firms continued to increase wages and expect further wage increases in the near term.

Average growth in prices paid increased slightly in January, while growth in prices received decreased somewhat. Firms expect both to moderate over the coming year.

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