The Philadelphia Fed Nonmanufacturing Business Outlook Survey General Business Activity (firm-level) index fell -2.4 pts to 2.2 in January. The New Orders index increased 5.0 pts to 1.6, but the Sales/Revenues index eased -0.6 pts to 2.6. Firms saw a much faster increase in unfilled orders with that index at 18.1, and inventories were barely decreasing at -0.5.

A significant result was the -23.6 pt drop in the Prices Received index to -0.3, the lowest reading since early 2023. Despite the dissipation of selling price inflation, Prices Paid remained elevated at 28.9 (though down -1.9 pts from the December reading). Full-time employment was barely increasing at 1.5 while part-time employment flipped from a moderate increase of 8.9 to a slight decline at -0.3 in January.

In general, firms saw cost growth slowing in 2025. Non-labor cost growth is expected to moderate significantly with energy and other commodities medians in the 1%-2% range. Labor cost growth is also expected to moderate, but to a lesser extent. Average total compensation growth was around 6.5% in 2024 and firms expect that segment of costs to grow another 5.5% in 2025.