U.S. Services Revenue Rises 0.8% in Q4 2025, Up 6.6% Year-Over-Year

The Census Bureau's Advance Quarterly Services Survey for Q4 2025 shows total selected services revenue reached $6.2 trillion on a seasonally adjusted basis, rising 0.8% from Q3 2025 — a marked deceleration from the prior quarter's 2.4% gain. On a year-over-year basis, services revenue expanded 6.6%, sustaining the broad upward trend that has more than doubled total services output since 2013. The headline deceleration carries direct implications for the Bureau of Economic Analysis's upcoming Second Estimate of Q4 GDP, due March 12, 2026.

GDP Revision Signal: Services Slowdown Points to PCE Headwind

The QSS is the primary hard-data input the BEA uses to calculate the Personal Consumption Expenditures Services component, which alone accounts for more than 45% of headline GDP. When the BEA published its Advance Q4 GDP estimate, it relied heavily on internal trend forecasts for services spending — because the QSS data was not yet available. Now that the hard survey data is in hand, the Q4 story is more nuanced than the Advance estimate may have assumed.

The 0.8% sequential gain in total services revenue — compared to a 2.4% pace in Q3 — suggests the Advance GDP estimate may have embedded an overly optimistic services trajectory. If BEA's internal forecast assumed services growth closer to the Q3 pace, the Second Estimate released on March 12 could see a modest downward revision to PCE Services and, by extension, to headline real GDP growth. The magnitude of any revision will also depend on how the BEA deflates nominal services revenue; if services price inflation moderated in Q4, the real PCE impact could be partially cushioned. Analysts should watch the Q4 PCE price deflator closely alongside this QSS print.

One important caveat: the press release notes that upcoming benchmarking revisions — incorporating results from the 2023 and 2024 Annual Integrated Economic Survey and new seasonal factors — have been delayed due to a lapse in federal funding. The absence of these historical corrections means the current QSS figures may be revised more substantially than usual when the full Quarterly Services Report is released on March 12.

Sector Divergence: Information Leads While Arts and Recreation Contracts

Beneath the headline, Q4 2025 revealed sharp divergence across the four key PCE-linked sectors. One basis note before the figures: the advance report updates the seasonally adjusted series only for the Selected Services Total, so every sector figure below is Census's published not seasonally adjusted estimate and is not directly comparable with the 0.8% seasonally adjusted headline:

• Health Care and Social Assistance: Revenue rose 2.3% quarter-over-quarter to $1,120.0 billion, up 8.1% year-over-year. Sequential growth picked up from the 1.9% Q2-to-Q3 pace Census carried unrevised into this release, keeping the largest PCE-linked services category on a firm footing.
• Information: The strongest sequential performer of the four sectors, with revenue rising 7.6% quarter-over-quarter to $690.3 billion, up 8.1% year-over-year. The gain marks a sharp re-acceleration from a 0.6% sequential pace in Q3, reflecting continued enterprise and consumer demand for digital services.
• Professional, Scientific, and Technical Services: Revenue grew 3.1% quarter-over-quarter to $811.2 billion, up 5.4% year-over-year. The sector firmed modestly, with Q4's 3.1% sequential pace running above the 2.2% Census now shows for Q3 (revised down from 2.5%).
• Arts, Entertainment, and Recreation: Revenue fell 1.3% quarter-over-quarter to $114.5 billion, up 2.1% year-over-year — the only sequential decline among the four sectors, though Census notes the 90% confidence interval around the quarterly change includes zero, and arts and recreation remains a small slice of total services revenue.

PCE Services Composition: Resilience With a Discretionary Fault Line

The sector mix in Q4 2025 tells a story of diverging consumer and business priorities. Health care, the largest single component of PCE Services, remains structurally supported — consumers cannot easily defer medical care, and the 8.1% year-over-year gain reflects both utilization growth and ongoing healthcare price inflation. Its 2.3% sequential pace in Q4 ran ahead of the 1.9% Q2-to-Q3 gain, so the quarter's deceleration is a headline-level story rather than a health care one.

The Information sector's 7.6% sequential gain — the fastest among the four sectors — marked a sharp re-acceleration from its 0.6% pace in Q3. This renewed momentum in digital and telecommunications services could partially offset the broader services deceleration when the BEA translates these figures into real PCE.

By contrast, the discretionary category reinforced the headline slowdown. Arts, entertainment, and recreation fell 1.3% sequentially — the only one of the four sectors to contract — a sign that consumers trimmed select leisure outlays as overall services growth cooled. Census's own 90% confidence interval spans zero, so the decline is directionally consistent with a softer discretionary read rather than statistically decisive on its own.

The combination of firm health care growth, a sharp re-acceleration in Information, and a discretionary category that contracted paints a picture of a services economy that is still expanding in aggregate — decelerating at the seasonally adjusted headline level even as the unadjusted sector detail runs hotter in necessity-driven and business-facing categories and softer in choice-driven ones.

Forward Look: What the March 12 Release Will Resolve

The full Q4 2025 Quarterly Services Report, scheduled for March 12, 2026, will provide complete industry detail, revised seasonal adjustment factors, and — pending resolution of the federal funding lapse — the first round of Annual Integrated Economic Survey benchmarking. That release will be the definitive input for the BEA's Second Estimate of Q4 GDP, also expected in late February or early March. The key data point to watch: whether the broad Q4 services deceleration — total revenue growth slowing to 0.8% from a 2.4% pace the prior quarter — is confirmed or revised in the full report, since the services aggregate is large enough to meaningfully shift the PCE Services component. A firmer reading would push the Second Estimate's real GDP growth rate toward the Advance print; confirmation of the slowdown would reinforce the services deceleration narrative implied by the headline 0.8% gain.