January 2026 Nonmanufacturing Business Outlook Survey

Note: Survey responses were collected from January 5 to January 15.

Nonmanufacturing activity increased overall, according to the firms responding to the January Nonmanufacturing Business Outlook Survey. The indexes for general activity at the firm level, new orders, and sales/revenues all rose this month. The firms continued to report overall increases in full-time employment. Both the prices paid and prices received indexes moved down this month and are near their long-term averages. Expectations for growth over the next six months were more widespread this month.

Current Indexes Rise

The diffusion index for current general activity at the firm level increased from a revised reading of 0.8 in December to 16.2 this month (see Chart 1), its highest reading since August.* Almost 36 percent of the firms reported increases, exceeding the 19 percent that reported decreases; 45 percent reported no change in activity. The new orders index rose from 0.2 to 5.5 this month. More than 20 percent of the firms reported increases in new orders, 15 percent reported decreases, and 37 percent reported no change. The sales/revenues index rose from 12.1 to 24.8, its highest reading since October 2024. Thirty-nine percent of the responding firms reported increases in sales/revenues, while 14 percent reported decreases. The regional activity index increased by 17 points but remained negative at -4.2 this month.

Firms Report Overall Increases in Full-Time Employment

The full-time employment index moved up from 7.5 in December to 9.7 this month. Fifty-three percent of the firms reported steady full-time employment levels, 28 percent reported increases, and 19 percent reported decreases. The part-time employment index fell from 14.9 to -0.4 this month, its lowest reading since September.

Price Indexes Are Near Long-Term Averages

Price indicator readings suggest continued increases in prices for inputs and prices for the firms' own goods and services, although both indexes moved down this month. The prices paid index moved down 2 points to 34.5 (see Chart 2). Almost 37 percent of the respondents reported higher input prices, 44 percent reported no change, and 2 percent reported decreases. Regarding prices for the firms' own goods and services, the prices received index fell 3 points to 13.2 this month. Almost 21 percent of the firms reported increases in prices received, and 8 percent reported decreases. Most of the firms (66 percent) reported no change in prices for their own goods and services.

Firms Expect Lower Input Costs but Higher Labor Costs This Year

In this month's special questions, the firms were asked about changes in their various input and labor costs over the past year and their expectations for changes in costs for the coming year. While the firms are expecting lower cost increases for inputs (energy, other raw materials, and intermediate goods) in 2026 compared with 2025, the firms are expecting higher cost increases for wages and both health and nonhealth benefits. The respondents were also asked to rank the importance of various factors in setting prices. Demand for their own goods/services was again the most important factor, followed by maintaining steady profit margins, the overall inflation rate, and their wages and labor costs (including benefits).

Firms Anticipate Growth

The future general activity indexes continued to suggest firms expect growth at their own companies and in the region over the next six months, and these expectations were more widespread this month. The diffusion index for future general activity at the firm level rose 28 points to 33.7, its highest reading since December 2024 (see Chart 1). Almost 50 percent of the firms expect an increase in activity at their firms over the next six months, 16 percent expect decreases, and 34 percent expect no change. Similarly, the future regional activity index rose from -19.1 to 10.3, its first positive reading since February 2025.

Summary

Responses to this month's Nonmanufacturing Business Outlook Survey suggest overall growth in activity among firms in the region. The indicators for firm-level general activity, new orders, and sales/revenues all rose this month. The full-time employment index moved up slightly and suggests overall increased employment. The prices paid and prices received indexes moved down but continue to indicate general price increases. Overall, the responding firms expect growth at their own firms and in the region over the next six months.

* The survey's annual data revisions, which incorporate updated seasonal factors, were released on January 13, 2026.

Summary of Returns (January 2026)

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