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KC Fed Services Index Turns Negative in August

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The results of Federal Reserve Bank of Kansas City’s August Services Survey indicate a weakening services sector in the Tenth Federal Reserve District. The top line composite index moved into negative territory for the first time since November 2025, falling to -3 in August from 14 in July. Similarly, the general revenue/sales index fell to 0.0 in August from 19 in the prior month. The employment indexes, employee count, part-time employment and hours worked, were all in the negative single digit range, but it should be noted that these indexes have been bouncing between single digit positive and single digit negative all year. The declines in the six-month expectations indexes were particularly grim, with the composite index falling to 5 in August from 24 in July, and the general revenue/sales index falling to 12 from 39. Finally, the employment six-month expectations indexes all moved from modestly positive to modestly negative territory. One survey respondent noted that “business ...
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Dallas Fed Manufacturing Index Improves but Services Index Generally Weaker

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The Texas manufacturing sector posted solid growth in August according to the results of the Federal Reserve Bank of Dallas Texas Manufacturing Outlook Survey . The top line production index increased six points m/m to 16.1, while the new orders index jumped to 22 in August from 5.4 in July. Capacity utilization and shipments also increased m/m. Additionally, the general business conditions index and the company specific outlook index both gained in the month. The only relatively weak area was employment, with the employment measure falling, while the hours worked index ticked up only slightly. However, all of the six-month forward expectations indexes, including the employment measures, were higher m/m. The results from the Texas Service Sector Outlook Survey were a bit more muted. The top line revenue index fell in August to 6.6 from 9.5 in the prior month. Similar to the Manufacturing Survey, the employment and part-time employment indexes were lower m/m, but the hours worked index...
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Philly Fed Indexes Remain Strong

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The Federal Reserve Bank of Philadelphia’s State Coincident Indexes continue to sit in firmly positive territory. In July, the three-month diffusion index improved to 86 from the 84 registered in June. This is the fourth consecutive month in which the three-month diffusion index was 80 or greater. The indexes increased in 46 states with only Kentucky, Hawaii and Alabama posting index declines over the three-month period. Oklahoma’s index was flat. However, unlike the Alabama and Hawaii indexes, Kentucky’s index improved m/m in July. Fifteen states posted over 1.0% increases over the last three months, led by West Virginia and Rhode Island. The exhibit below is reproduced from the press release.  
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KC Fed: Glimmer of Hope in Recent Farm Credit Conditions Surveys

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The Ag sector continued to be under financial pressure in the second quarter but, according to the economists at the Federal Reserve Bank of Kansas City , “the pace of decline in farm loan repayment rates and farm income slowed slightly in recent months”. Based on the results from the second quarter Federal Reserve Surveys of Agricultural Credit Conditions, the economists conclude that while loan repayment rates continued to decline in the quarter, the pace of the decline has moderated, as has the rate of decline in farm income. Nevertheless, the survey results indicate that lenders continue to tighten credit standards. Despite all of this, farm values continue to remain strong, as the economists report that “the value of nonirrigated cropland across all regions increased by an average of about 2.5% from the previous year during the second quarter”. 
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Oregon Economist: State Economy No Longer Lagging US

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In the most recent economic forecast , released yesterday by the Oregon Department of Administration, the Oregon state economist reports that “state level economic growth, which has lagged the national trend through all of 2025, looks to have largely caught up to the U.S.”, and that “the state’s economic outlook has improved somewhat in the immediate n ear-term compared to the prior forecast iteration”. The resultant upside surprise in personal income tax collections has boosted the revenue outlook for the state’s general fund. 
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Case-Shiller Improves in June

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The summer improvement in home prices was confirmed in the latest release of the S&P Cotality Case-Shiller Indices. The National Composite Index (NSA) increased 1.5% y/y in June, compared to the 1.2% annual gain reported in the prior month. Nevertheless, seven metros in the 20-City Composite Index, primarily concentrated in the West and Sunbelt regions, posted y/y losses. Seattle saw the largest decline at -1.95%, followed by Las Vegas (-1.90%), Denver (-1.24%), Tampa (-1.19%), Phoenix (-0.88%), Dallas (-0.66%), and Portland (-0.38%). Growth rates posted by the top five cohort illustrate the wide geographic disparity in the current US housing market, with home prices in Chicago increasing 6.9% y/y, New York 4.79%, Cleveland 4.13%, San Francisco 3.22%, and Boston 2.71%. 
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Philadelphia Area Manufacturing Stronger, Services Weaker

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Manufacturing activity in the Philadelphia area increased in August, but services activity declined according to the two recent surveys from the Federal Reserve Bank of Philadelphia. Its August Manufacturing Business Outlook Survey indicates expansion in regional manufacturing activity, with the top line general business activity index increasing to 47.4 in August from 41.4 in July and, notably, the employee count index rose to 27.9 from 10.0 in the previous month. Similarly, the forward-looking six-month expectations indexes rose significantly with the general business activity index increasing 39 points to 73.6, its highest level since August 1983.  The story was entirely different in the services sector, with the Philly Fed’s Nonmanufacturing Business Outlook Survey registering m/m declines in almost all of its indexes in August. The top line general business activity index fell from a weak +7.4 in July to -10.6 in August. The employee count indexes were barely positive, and t...
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