Philadelphia Fed non-manufacturing index plunges to -25.8 in June, lowest since May 2025
The regional activity gauge signals deepening pessimism across the service sector even as individual firms report slightly improving conditions
The Federal Reserve Bank of Philadelphia’s Nonmanufacturing Business Outlook Survey for June painted a grim picture of service-sector confidence in the mid-Atlantic region. The general activity diffusion index fell to -25.8, its lowest reading since May 2025.
For context, any reading below zero signals contraction. A reading below negative 25 means a substantial majority of surveyed firms believe conditions are getting worse, not better.
A tale of two readings
The headline number tells one story, but the survey’s firm-level activity index tells a very different one. That gauge actually improved to +2.4, up from -3.8 in May. It’s the first positive firm-level reading since February.
The disconnect is worth paying attention to. Individual businesses are saying their own operations look okay. But when those same firms are asked about the broader regional economy, they’re deeply pessimistic.
The survey covers nonmanufacturing firms across Delaware, southern New Jersey, and eastern and central Pennsylvania. Responses were collected between June 8 and June 18 and published at 8:30 a.m. ET on June 23.
Under the hood: sales surge, hiring stalls
The sales and revenues index surged 27 points to +19.6 in June, suggesting that actual revenue generation hasn’t collapsed even as sentiment has.
New orders came in at -0.7, essentially unchanged and hovering just below the breakeven line.
The full-time employment index dropped to -4.8, indicating that more firms are cutting jobs than adding them.
The prices paid index registered at +25.8, while the prices received index rose to +20.2, meaning firms are managing to pass along at least a portion of their costs to customers.
What this means for investors
The -25.8 reading is notable because of where it sits historically. Hitting the lowest level in over a year suggests that whatever optimism existed in the non-manufacturing sector earlier in 2026 has largely evaporated.
The employment contraction is particularly worth monitoring. A full-time employment index of -4.8, if this trend persists into July and August, could begin to shape expectations around Federal Reserve monetary policy.