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August 2017 Nonmanufacturing Business Outlook Survey

Respondents to the August Nonmanufacturing Business Outlook Survey suggested that business activity continued to expand. The firm-level general activity index rose to its highest reading in four months, and the indexes for new orders and sales also improved. However, the indexes for full-time and part-time employment fell. The indicators for prices paid and prices received showed little movement. Both future activity indexes increased, but the respondents’ optimism has waned somewhat since the first half of the year.

Current Indicators Show Growth

The diffusion index for current general activity at the firm level rose 13 points to 30.7 (see Chart). This is the highest reading for this index since April 2017. More than 43 percent of the firms reported an increase in activity in August, while 12 percent reported a decrease. Firms’ perceptions of current activity in the region increased as well, as the regional activity index rose 8 points to 31.8.

Current and Future General Activity

New Orders and Sales/Revenues Indicators Strengthen

The indicators for new orders and sales/revenues rose. The new orders index increased from -0.1 in July to 19.4 in August. The percentage of firms that reported an increase in new orders rose 12 points to 38 percent. The sales/revenues index rose 7 points to 24.5. Almost 41 percent of the respondents reported an increase in sales or revenues in August, while 16 percent reported a decrease.

Employment Growth Flattens

The full-time employment index fell 16 points to 3.1, its lowest reading since July 2015. Most firms (74 percent) reported no change in full-time employment in August, while the percentage of firms reporting increases (14 percent) narrowly exceeded the percentage reporting decreases (11 percent). The part-time employment index fell 5 points to 8.7, while the workweek index rose 3 points to 22.4. The wage and benefit costs indicator rose from 30.0 in July to 35.9 in August.

Price Signals Are Steady

The prices paid index increased 2 points to 22.7, which is close to its historical average of 20.1. Almost 26 percent of the respondents reported increases in input prices compared with only 3 percent who reported decreases; most firms (59 percent) reported no change. The prices received index fell slightly to 6.0 and remains below its historical average of 11.7 for the third consecutive month. Most firms (66 percent) continued to report no change in prices received for their own goods and services.

Expectations for Inflation Hold Steady

In this month’s special questions, firms were asked to forecast the changes in the prices of their own products and services and for U.S. consumers over the next four quarters (see Special Questions). The median forecast was for an increase in their own prices of 2.2 percent, down slightly from 2.5 percent when the same question was last asked in May 2017. Firms expect their employee compensation costs (wages plus benefits on a per employee basis) to hold steady at 3.0 percent over the next year. When asked about the average rate of inflation for U.S. consumers over the next year, the median response was essentially unchanged at 2.9 percent. The firms also provided a 10-year inflation forecast, and the median remained at 3.0 percent.

Firms Continue to Expect Growth

The respondents continued to report optimism about future activity over the next six months. The diffusion index for future activity at the firm level rose 5 points to 44.9 (see Chart); however, the index remains below its historical average of 49.5 and the higher readings seen earlier this year. Nonetheless, the share of firms that expect to see an increase in activity at their firms over the next six months (59 percent) exceeds the share of firms that expect to see a decrease (14 percent). The future regional activity index also showed improvement, rising 10 points to 44.1.


Results from this month’s Nonmanufacturing Business Outlook Survey suggest continued business expansion in the region. Although the indicators for employment softened, other indicators of current activity rose from the prior month. Respondents remained optimistic about growth over the next six months.

Special Questions (August 2017)

August 2017 Special Questions

Summary of Returns (August 2017)

Summary of Returns

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Questions about the Nonmanufacturing Business Outlook Survey and its historical data can be addressed to Elif Sen. E-mail