The Dallas Fed’s general business activity index for the service sector eased to 4.2 in August 2026 from 6.6 in July. While optimism moderated, the index stayed in positive territory, signaling continued—though slower—improvement in overall business conditions. Reported uncertainty was broadly unchanged.
Revenue growth cooled, with the revenues index slipping to 6.6 from 9.5, and sentiment on firms’ own prospects weakened notably: the company outlook index dropped to 3.0 from 10.4.
Cost pressures intensified. The input prices index rose to 35.6 from 33.5, even as selling-price growth decelerated, with the selling prices index falling to 8.9 from 14.2. Capital spending also lost momentum, declining to 6.0 from 11.5.
Labor-market indicators softened. The employment index edged down to 0.8 from 2.6, pointing to slower hiring, though wages and benefits continued to rise modestly.
Despite the mixed current readings, firms’ expectations strengthened. The future general business activity index increased to 18.6 from 16.8, indicating that service-sector businesses remain optimistic about the outlook.