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Fifth District Survey of Service Sector Activity

April 26, 2022

Fifth District service sector activity continued its expansion in April, according to the most recent survey by the Federal Reserve Bank of Richmond. The revenues and demand indexes both moved up slightly in April to 13 and 24, respectively. Firms also expect revenues and demand to continue increasing in the next six months. Firms reported increases in business spending, as all three expenditure indexes remained firmly in growth territory.

Despite reports of growing revenues and demand, reports about local business conditions were only slightly positive. The local business conditions index came in at 4 in April following a reading of −3 in March. Optimism about business conditions in the next six months softened as the diffusion index dropped to 2 in April from 14 in March and 35 in February. The employment index was little changed from its March reading and remained positive at 9 in April. Firms continued to report trouble finding workers with the skills needed, and don't expect this to improve in the next six months. The wage index pointed to continued growth at 44, up from 38 in March. Firms expect to continue increasing wages in the next six months as the index for expected wages came in at 62 in April.

The average growth rate of prices paid and prices received by survey participants both increased in April. Firms' expectations for price growth in the next 12 months also rose from March to April.

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