The Federal Reserve Bank of Philadelphia's non-manufacturing index plunged to -25.8 in June, its weakest reading since a similar contraction in May 2025. The monthly survey of service-sector businesses in the region shows activity shrinking at a faster pace than in recent months.
What the index measures
The Philadelphia Fed's non-manufacturing index tracks business conditions across industries like retail, healthcare, finance, and hospitality. A reading below zero signals that more firms reported a decline in activity than an improvement. The June figure of -25.8 means the contraction is widespread and deepening.
A sharp drop from recent trends
While the index has been negative for most of 2025, the June reading marks the lowest point since May 2025, when it also fell deep into contraction territory. The latest data suggests the region's service sector has not yet found a bottom. Companies responding to the survey cited weaker demand and uncertainty about the economic outlook.
The non-manufacturing sector accounts for a large share of employment and economic output in the Philadelphia area. A prolonged contraction could lead to slower hiring and reduced business investment. The June reading adds to a string of soft regional data that has caught the attention of economists tracking the health of the U.S. economy.
What comes next
The Philadelphia Fed will release its July non-manufacturing index in late July. That report will show whether the contraction is easing or intensifying. For now, the June data leaves little room for optimism among local business owners and policymakers.
