U.S. Services Revenue Rises 0.8% in Q4 2025, Up 6.7% 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 6.7%, 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 Surges While Healthcare Moderates

Beneath the headline, Q4 2025 revealed sharp divergence across the four key PCE-linked sectors:

• Healthcare and Social Assistance: Revenue rose 2.3% quarter-over-quarter to $1.1 trillion, up 8.1% year-over-year. However, the pre-computed trend shows sequential growth has decelerated from 3.0% in Q2 to 2.9% in Q3 to 0.5% on a comparable basis in Q4 — signaling that even the most structurally resilient services category is losing momentum.
• Information: The standout performer, with revenue jumping 7.6% quarter-over-quarter to $690.3 billion, up 8.1% year-over-year. Within the sector, other information services surged 12.3% and software publishers rose 6.0%, reflecting continued enterprise and consumer demand for digital services. This is the strongest single-quarter gain in the Information sector in recent history and represents an accelerating trend after a sluggish 0.9% sequential gain in Q3.
• Professional, Scientific, and Technical Services: Revenue grew 3.1% quarter-over-quarter to $811.2 billion, up 5.4% year-over-year. Legal services led with a 13.8% quarterly jump, while advertising and public relations rose 11.2%. The broader sector, however, showed sequential deceleration — the pre-computed data shows Q4's 0.4% comparable sequential pace well below Q3's 3.4%.
• Arts, Entertainment, and Recreation: Revenue slipped 1.3% quarter-over-quarter to $114.5 billion, though the confidence interval for this estimate includes zero, meaning the decline is not statistically distinguishable from flat. Year-over-year, the sector is up 3.4%. Amusement, gambling, and recreation fell 5.7% sequentially, partially offsetting a 12.1% surge in museums and historical sites.

PCE Services Composition: Resilience With a Discretionary Fault Line

The sector mix in Q4 2025 tells a story of diverging consumer and business priorities. Healthcare, 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. Hospitals alone posted $484.8 billion in revenue, up 2.1% from Q3 and 11.0% year-over-year, with tax-exempt (nonprofit) hospitals accounting for the bulk of that gain.

The Information sector's 7.6% quarterly surge is the most significant upside surprise in this report. Cloud computing, software subscriptions, and wireless telecommunications all contributed. Data processing and hosting services rose 5.4% sequentially, consistent with continued enterprise AI infrastructure buildout. This strength in Information could partially offset the services deceleration elsewhere when the BEA translates these figures into real PCE.

By contrast, the discretionary bellwether — Arts, Entertainment, and Recreation — posted a statistically ambiguous decline, with amusement and recreation venues down 5.7% sequentially. This is consistent with a consumer who is still spending but increasingly selective about leisure outlays. Accommodation also fell sharply, down 6.4% quarter-over-quarter, though this sector is not seasonally adjusted and Q4 typically sees lower hotel and lodging demand relative to the summer peak.

The combination of sticky healthcare growth, a digital-services surge in Information, and softening in discretionary leisure paints a picture of a services economy that is still expanding in aggregate but increasingly bifurcated between necessity-driven and choice-driven spending.

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 Information sector's 7.6% quarterly surge is confirmed or revised down, since that figure is large enough to meaningfully shift the PCE Services aggregate. A confirmation would likely push the Second Estimate's real GDP growth rate above the Advance print; a significant downward revision would reinforce the services deceleration narrative implied by the headline 0.8% gain.