February 2026 Nonmanufacturing Business Outlook Survey

Note: Survey responses were collected from February 9 to February 19.

Nonmanufacturing activity weakened this month, according to the firms responding to the February Nonmanufacturing Business Outlook Survey. The firm-level general activity, new orders, and sales/revenues indexes all declined, and the new orders index turned negative. The employment indicators suggested increases overall in employment. Both price indexes remained elevated. The firms continued to expect growth over the next six months.

Current Indicators Decline

The diffusion index for current general activity at the firm level declined from 16.2 to 5.8 in February, offsetting most of its increase from last month (see Chart 1). Over 28 percent of the firms reported increases in activity, 22 percent reported decreases, and half reported no change. The sales/revenues and new orders indexes also declined: The former dropped 17 points to 8.2, and the latter fell from 5.5 to -9.3 this month, its first negative reading since October. Over 24 percent of the firms reported decreases in new orders, exceeding the 15 percent that reported increases. The indicator for current regional activity remained negative and fell to -17.3.

Firms Report Overall Increases in Employment

The full-time employment index ticked up 1 point to 10.6. Nearly 70 percent of the firms reported no change in full-time employment, while the share of firms reporting increases (19 percent) exceeded the share reporting decreases (8 percent). The part-time employment index rose 6 points to 5.5. The average workweek index climbed 20 points to 29.5.

Firms Continue to Report Overall Price Increases

Both price indexes moved higher, and the prices received index joined the prices paid index at well above their long-run averages (see Chart 2). The prices paid index increased 6 points to 40.7 this month. More than 45 percent of the firms expect increases in prices, 5 percent expect decreases, and 40 percent expect no change. Regarding prices for the firms’ own goods and services, the prices received index rose from 13.2 to 22.0, its highest reading since May 2023.

Similar Share of Firms Expects Near-Term Changes to Costs Relative to Last Quarter

In this month’s special questions, the firms were asked about changes in core customer price sensitivity and anticipated cost changes. Almost 49 percent of the firms reported that their customers were more price sensitive compared with last quarter, while 46 percent reported customers’ sensitivity was about the same. Almost 56 percent of the firms anticipated changes in their industry’s costs in the near term (similar to the 59 percent last quarter), and of those firms, 55 percent expected their competitors to raise prices in response. Regarding when these price changes will occur, the firms’ median expectation was for competitors to change prices in the next three months.

Firms Continued to Anticipate Growth

The future indicators were little changed this month, following sharp increases last month. The diffusion index for future activity at the firm level edged down 2 points to 31.7 (see Chart 1). Over 49 percent of the firms expect increases, 18 percent expect decreases, and 32 percent expect no change. The future regional activity index rose 4 points to 14.2, its second consecutive positive reading and its highest reading since January 2025.

Summary

Responses to this month’s Nonmanufacturing Business Outlook Survey suggest weaker activity this month. The indicators for firm-level general activity, new orders, and sales/revenues all fell, and the new orders index turned negative. The full-time employment index remained positive and was little changed. Both price indexes were above their long-run averages. The firms continue to expect growth over the next six months.

Summary of Returns (February 2026)

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