(The Center Square) – Economic optimism showed a moderate increase as slight growth in the services sector was reported throughout the mountains and plains, according to a report by the Federal Reserve Bank of Kansas City.
“Business sentiment for the near future is high, as the expectations index reached its highest level since November 2022,” Chad Wilkerson, senior vice president at the organization, said in a statement.
The Kansas City Fed conducts a monthly survey and compiles information on sales, revenue, employment and capital spending. The survey also tracks changes in the prices of materials and selling prices. It found significant concerns about current and future transportation costs.
The month-over-month services composite index was 5 in August, compared to -4 in July and 2 in June. The index is a weighted average of revenue and sales, employment and inventory indexes, according to the report.
“Growth slowed in the consumer services sector, particularly in wholesale and hospitality, while business and professional activity expanded following a decline last month,” the report said. “The month-over-month indexes were mixed, with the three employment indexes, inventories, and access to credit falling while sales and other indexes posted positive readings.”
The general revenue/sales index was 17 in August after posting a -16 last August. The revenue/sales expectations index increased to 27, the highest since it posted a 15 in November 2022.
A wide variety of industries participate in the survey, including retail and wholesale trade, automobile dealers, transportation, information, high-tech and professional services, real estate, education, restaurants, health services tourism and service firms.
Survey participants also were asked special questions about hiring, capital expenditures and transportation costs in August. On hiring, 10% of firms reported they expect to add more workers by the end of 2024 than they originally planned at the start of the year. The survey found 27% expect to hire fewer workers and 63% expect no changes.
In capital expenditures, 12% of participants expect to spend more by the end of the year than originally planned while 30% plan to spend less and 58% project no change in spending plans.
The survey also found transportation costs increased for a majority of participants.
“In the last six months, transportation costs have increased significantly for 24% of firms, increased slightly for 36%, remained unchanged for 34% and decreased slightly for 6%,” according to the report. “In the next 6 months, 16% of firms expect transportation costs to increase significantly, 32% expect a slight increase, 46% expect no change, 4% expect a slight decrease and 2% expect a significant decrease.”
The Federal Reserve of Kansas City serves the western third of Missouri, northern New Mexico, Kansas, Colorado, Nebraska, Oklahoma and Wyoming.
