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Texas Service Sector Outlook Survey

Report in PDF
June 1, 2011

Texas Service Sector Activity Expands but at a Slower Pace

What's New This Month

The Federal Reserve Bank of Dallas released the Texas Service Sector Outlook Survey (TSSOS) for the first time on June 1 at 9:30 a.m. CDT. TSSOS is analogous to the Texas Manufacturing Outlook Survey (TMOS) but covers the private service-producing sector of the Texas economy. The TSSOS data go back to January 2007 and include a breakout of respondents from the retail and wholesale sectors, called the Texas Retail Outlook Survey (TROS). TSSOS will come out monthly on the day following the TMOS release.

Texas service sector activity increased in May, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, fell from 12 to 2, which is indicative of slower revenue growth.

Labor market indicators continued to reflect some hiring and slightly longer workweeks. The May employment index edged down from 6 to 3, although 68 percent of the respondents noted no change in employment. The hours worked index rose from 7 to 10, posting a positive reading for the third consecutive month.

Respondents were less optimistic about the broader economy this month. The general business activity index fell from 8 to -2, its first negative reading since July 2010. The company outlook index stayed positive but moved down from 8 to 2.

Prices and wages rose again in May. The selling prices index came in at 9, its fifth consecutive reading in positive territory. The wages and benefits index held steady at a reading of 14, with the great majority of respondents indicating no change in compensation costs.

Indexes of future service sector activity generally decreased from April but remained positive with the exception of part-time employment, which dipped into negative territory.

Texas Retail Outlook Survey

June 1, 2011 

Retail Sales Weaken

Retail Sales Weaken

Retail sales fell in May, according to business executives responding to the Texas Retail Outlook Survey. The volatile sales index fell from 14 to -5 following two months of positive readings, and inventories were flat.

Labor market indicators generally reflected a slower pace of hiring and more hours worked. The employment index fell from 16 to 4, and part-time employment declined, although most respondents continued to note no change. The hours worked index held steady at 6, reflecting slightly longer workweeks.

Retailers were less optimistic about the direction of the broader economy in May. The general business activity index pushed further into negative territory this month, with nearly one-third of respondents noting weaker activity. The company outlook index moved down to 1, suggesting the outlook improved little from April.

Retail prices and wages continued to climb in May, although price increases appear to have slowed. The selling prices index fell from 30 to 18, which is consistent with a slower rate of price increase. The wages and benefits index rose from 13 to 18, although the majority of respondents noted no change in labor costs.

Indexes of future retail sector activity generally fell in May but remained in positive territory with the exception of part-time employment. The index of future part-time employment index came in at -3, down from a reading of 8 last month.

The Texas Retail Outlook Survey (TROS) is a component of the TSSOS that uses information only from respondents in the retail and wholesale sectors.

The Dallas Fed conducts the Texas Service Sector Outlook Survey monthly to obtain a timely assessment of the state’s service sector activity. Data were collected May 17–25, and 222 Texas business executives responded to the survey. Firms are asked whether revenue, employment, prices, general business activity and other indicators increased, decreased or remained unchanged over the previous month.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease.

Next release: June 28, 2011

Texas Service Sector Outlook Survey

June 1, 2011
 

Click on links in the table for greater details. Historical data are available from January 2007 to the most current release month.

Business Indicators Relating to Facilities and Products in Texas
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
1.6
11.7
-10.1
Increasing
19
26.6
48.4
25.0
Employment
3.0
6.1
-3.1
Increasing
15
17.7
67.6
14.7
Part-time employment
0.1
2.6
-2.5
Increasing
3
8.7
82.7
8.6
9.8
6.9
+2.9
Increasing
3
15.0
79.8
5.2
Wages and benefits
13.5
14.9
-1.4
Increasing
20
16.9
79.7
3.4
Input prices
30.7
40.4
-9.7
Increasing
25
37.7
55.4
7.0
Selling prices
8.8
12.3
-3.5
Increasing
5
18.0
72.8
9.2
Capital expenditures
16.0
18.2
-2.2
Increasing
21
23.6
68.8
7.6
General Business Conditions
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
1.7
7.8
-6.1
Improving
20
20.4
61.0
18.7
General business activity
-1.8
7.7
-9.5
Worsening
1
16.9
64.4
18.7
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
29.0
37.6
-8.6
Increasing
27
46.6
35.7
17.6
Employment
13.5
19.0
-5.5
Increasing
26
28.4
56.6
14.9
Part-time employment
-0.5
5.8
-6.3
Decreasing
1
10.2
79.0
10.7
7.6
4.8
+2.8
Increasing
21
13.6
80.4
6.0
Wages and benefits
33.7
28.8
+4.9
Increasing
53
37.4
58.9
3.7
Input prices
47.8
55.1
-7.3
Increasing
53
53.8
40.2
6.0
Selling prices
22.3
31.5
-9.2
Increasing
22
32.4
57.5
10.1
Capital expenditures
25.7
21.2
+4.5
Increasing
26
34.6
56.4
8.9
General Business Conditions
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
8.3
19.0
-10.7
Improving
26
27.2
54.0
18.9
General business activity
10.4
16.9
-6.5
Improving
25
28.8
52.8
18.4

*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.
**Number of months moving in current direction.
Data have been seasonally adjusted as necessary.

Texas Retail Outlook Survey

June 1, 2011
 

Click on links in the table for greater details. Historical data are available from January 2007 to the most current release month.

Business Indicators Relating to Facilities and Products in Texas, Retail
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
-4.6
13.5
-18.1
Decreasing
1
27.6
40.2
32.2
Employment
3.9
16.1
-12.2
Increasing
9
19.5
64.9
15.6
Part-time employment
-3.0
3.0
-6.0
Decreasing
1
9.1
78.8
12.1
Hours worked
6.2
7.3
-1.1
Increasing
3
15.4
75.4
9.2
Wages and benefits
17.9
13.2
+4.7
Increasing
3
23.9
70.1
6.0
Input prices
27.8
51.7
-23.9
Increasing
10
41.7
44.4
13.9
Selling prices
18.1
29.5
-11.4
Increasing
10
34.2
49.7
16.1
Capital expenditures
15.1
19.4
-4.3
Increasing
2
24.2
66.7
9.1
Inventories
1.2
20.9
-19.7
Increasing
8
26.7
47.9
25.5
Companywide Retail Activity
Sales
-8.1
20.0
-28.1
Decreasing
1
24.4
43.2
32.5
Internet sales
5.6
20.0
-14.4
Increasing
3
16.7
72.2
11.1
Catalog sales
0.0
0.0
0.0
No Change
2
13.3
73.3
13.3
General Business Conditions, Retail
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
0.6
7.5
-6.9
Improving
9
22.0
56.6
21.4
General business activity
-9.9
-1.3
-8.6
Worsening
2
20.0
50.0
29.9
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
36.7
43.4
-6.7
Increasing
27
52.2
32.3
15.5
Employment
13.5
23.6
-10.1
Increasing
17
29.9
53.7
16.4
Part-time employment
-3.4
8.4
-11.8
Decreasing
1
12.8
71.1
16.2
Hours worked
4.1
5.9
-1.8
Increasing
10
18.7
66.6
14.6
Wages and benefits
32.3
25.8
+6.5
Increasing
29
38.4
55.5
6.1
Input prices
37.4
49.2
-11.8
Increasing
25
47.8
41.8
10.4
Selling prices
30.3
46.2
-15.9
Increasing
25
40.9
48.5
10.6
Capital expenditures
20.0
27.6
-7.6
Increasing
2
33.8
52.3
13.8
Inventories
7.5
26.5
-19.0
Increasing
17
29.9
47.8
22.4
Companywide Retail Activity
Sales
26.6
45.1
-18.5
Increasing
26
43.4
39.8
16.8
Internet sales
18.9
30.6
-11.7
Increasing
26
26.4
66.0
7.5
Catalog sales
4.5
9.1
-4.6
Increasing
5
13.6
77.3
9.1
General Business Conditions, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
14.7
25.9
-11.2
Improving
25
29.0
56.8
14.3
General business activity
7.7
22.1
-14.4
Improving
25
26.0
55.7
18.3

*Indicator direction refers to this month's index. If index is positive (negative), indicator is increasing (decreasing) or improving (worsening). If zero, indicator is unchanged.
**Number of months moving in current direction.
Data have been seasonally adjusted as necessary.

Texas Service Sector Outlook Survey

June 1, 2011

Current and future production

Downloadable TSSOS chart: Low-res (72 dpi) | Hi-res (300 dpi)

 

Texas Retail Outlook Survey

June 1, 2011

Current and future production

Downloadable TROS chart: Low-res (72 dpi) | Hi-res (300 dpi)

Texas Service Sector Outlook Survey

June 1, 2011

Comments from Survey Respondents

These comments are from respondents' completed surveys and have been edited for publication.

Credit Intermediation and Related Activities
Data suggest that consumers are intent on deleveraging their personal balance sheets. Prepayments on consumer loans have increased, and loan demand remains very weak. Overall financial performance remains strong, but unknowns from future regulatory changes may negatively impact the outlook for future performance.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
There is caution on all fronts due to high federal spending, no progress in cutting the deficit and increasing regulation.

Real Estate
The current housing market combined with recent regulations by the Consumer Financial Protection Bureau (CFPB) make it very difficult to make hiring and growth decisions.

Professional, Scientific and Technical Services
The oil and gas business in South Texas is creating a very robust business climate for us. The outlook is very good.

We lost a client last month, which accounts for our reduction in revenue and employee counts. There is not a lot of intensity around projects. Business just seems OK, so we remain cautious.

Our country’s $14 trillion debt is a heavy burden, affecting our economy’s ability to grow and absorb jobs.

Management of Companies and Enterprises
Extensive government regulations have been the greatest deterrent to an improved outlook.

Banks’ bottom lines continue to remain under pressure from slow loan demand and decreases in noninterest income. With interchange fee income from debit cards due to be reduced by 70 percent in July, we have begun to review noninterest expense to try to offset some of the declines we are forecasting.

Hospitals
State budget reductions in the area of health care and Medicaid are expected to have a negative impact on hospital operations.

Accommodation
We believe the Eagle Ford Shale project will create as many good paying jobs as the Pecos project did in 2007.

Food Services and Drinking Places
Sales increased over the last four weeks. Employment is growing due to business expansion, but wages are stable. The cost of goods has increased in the last four week period. We have the same prices right now but will be taking a price increase of about 2.5 percent next month. We think the business climate is improving and will continue to do so.

Religious, Grantmaking, Civic, Professional and Similar Organizations
Significant changes are anticipated due to state of Texas budget reductions coming with the new state fiscal year. Approx 55 percent of the organization's revenue is tied to state contracts.

Animal Production
Parent company secured several new customers, resulting in higher dairy sales for our operation.

Merchant Wholesalers, Durable Goods
The energy industry continues to be very robust especially in South Texas.

Manufacturing orders increased in offshore drilling as rigs need to be upgraded due to the Macondo spill. Steel manufacturing improved as well; mining is still flat to poor.

While we see a lot of construction activity that is very promising at this time, we cannot emphasize enough that a large number of construction industry subcontractors who have managed to survive this recession are teetering on the edge of survival. There has been a major culling of subcontractors due to the recession. There are quite a few of these subcontractors hanging on that need a minimum of six to nine more months of patience and low interest rates to survive and be around to help get the nation's construction industry back on its feet. 

Motor Vehicle and Parts Dealers
Sales began declining in the last part of April, and the decline has accelerated in May. We do business across the country, and most regions have declined in this period as well.

Building Material and Garden Equipment and Supplies Dealers
Business activity has slowed significantly during May.

General Merchandise Stores
It is difficult to predict six months from now due to the current economic situation. 

Miscellaneous Store Retailers
We are scheduled to close the doors in mid-May if nothing changes to stop it.

Texas Service Sector Outlook Survey

Historical Data

Historical data can be downloaded dating back to January 2007.

Indexes

Download indexes for all indicators. For the definitions of all variables, see Data Definitions.

Texas Service Sector Outlook Survey
 
Texas Retail Outlook Survey
Unadjusted excel   Unadjusted excel
Seasonally adjusted excel   Seasonally adjusted excel

All Data

Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.

Texas Service Sector Outlook Survey
 
Texas Retail Outlook Survey
Unadjusted excel   Unadjusted excel
Seasonally adjusted excel   Seasonally adjusted excel

Questions regarding the Texas Service Sector Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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