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First Cut: Richmond Fed service sector revenues down a bit in November from October

The Richmond Fed’s index of service sector revenues declined a bit in November to 15 from 24 in October. The October reading got a boost from the start of the government’s 2020 fiscal year and the signing of contracts. The decline in November actually is a return to an underlying trend of modest growth and reasonably healthy activity. The six month expectations index reflected the improved outlook rising to 32 in November after 15 in October as service sector businesses anticipate ongoing expansion.

The index for service sector demand was not much changed and about on trend at 13 in November after 17 in October.

The index for employment is well off the highs of 2019. However, hiring continues with the employees index at 7 in November after 3 in October. Businesses may simply be cautious about adding to payrolls near year-end. There is still a deep lack of workers to hire with the available skills index at -22 in November after -13 in October. Business continue to have to offer higher wages to attract qualified candidates with the wage index at 29 after 27 in the prior month. The average workweek is bumping along with mild expansion at 13 after 12.

The prices paid index was up to 3.09 in November, in part due to a mild increase in gasoline prices in late October that has been unwinding in the past couple of weeks. Prices received were at 2.16 after 2.28, reflecting limited pricing power.


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