Richmond Fed Services Index

The Richmond Fed Services Index is the market name for the Fifth District Survey of Service Sector Activity. The Federal Reserve Bank of Richmond, 1 of 12 regional Federal Reserve Banks, has run it monthly since November 1993. It surveys senior managers at service firms in the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia. It measures breadth of change, how many firms rose versus fell, not the size of any change. It covers only the Fifth District, not the nation, and excludes manufacturing and public administration.

Results appear on the fourth Tuesday of every month between 10:00 a.m. and 10:10 a.m. Eastern Time. Collection runs about 3 weeks, starting 2 business days after the prior release and ending the Wednesday before publication. Panelists get an emailed link before 10:00 a.m. plus 3 reminders. If a holiday falls on the Monday of publication week, publication moves to Wednesday.

Each release pairs services results with the sister manufacturing survey. It shows current tables, 6-month expectations, price and revenue charts with a 3-month moving average, plus history back to November 1993. Seasonal factors are recalculated every July and the full series is revised.

Each published line is a separate index; the services survey has no composite.

• Revenues: captures whether the firm's revenues and sales rose, held steady or fell.
• Demand: captures change in demand for products and services.
• Local business conditions: captures the respondent's view of business conditions where the firm sits.
• Spending: covers capital expenditures, equipment and software spending, and services expenditures.
• Labor: covers headcount, average wages, hours in the average workweek, and availability of needed skills.
• Prices and retail: covers average changes in prices paid and received. For retailers it also covers shopper traffic, big-ticket sales and inventories, reported separately.

On April 28, 2020, the revenues index fell from 1 to minus 87 on 80 replies, its largest 1-month drop on record. Demand reached minus 72 and local conditions minus 95, both record lows. Employment at minus 34, wages at minus 15 and the workweek at minus 50 also hit record lows. Skills availability rose above zero as layoffs made hiring easier. Expected revenues at minus 50 and expected conditions at minus 48 stayed far above current readings. Prices paid rose while prices received fell, widening the gap between them, and minus 87 meant breadth of decline, not an 87% fall in revenues.

1. Answers: Each firm reports whether the variable rose, held steady or fell, for the survey month versus the prior month. It also gives views 6 months ahead versus now.
2. Diffusion index: For each question, subtract the share reporting decreases from the share reporting increases, while unchanged answers count only in the denominator. Scores run from minus 100 to plus 100.
3. Equal weight: Each firm counts equally, with no adjustment for size, industry or question.
4. Seasonal adjustment: Indexes are adjusted through an Arima-13 process, and factors are recalculated every July with full history revised. Unadjusted indexes are also published.
5. Prices: Prices paid and received are average % changes over 12 months, trimmed at 5% to limit outliers. Expectations cover the next 12 months.
6. Example: Take 140 replies with 45 higher, 38 lower and 57 unchanged. Shares are 32.1% higher minus 27.1% lower, giving about 5, or nearly flat with a slight upward tilt. Seasonal adjustment would shift it slightly.