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Texas Service Sector Outlook Survey

Report in PDF
June 28, 2011

Texas Service Sector Activity Strengthens

What's New This Month

For this month's survey, Texas business executives were asked supplemental questions on issues facing their firms and changes in wage and benefits costs. Read Special Questions.

Texas service sector activity increased in June, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, rose from 1.6 to 6.4, with 30 percent of respondents noting that revenue increased from May.

Labor market indicators continued to reflect some hiring and slightly longer workweeks. The June employment index held steady at a reading of 2.8, with 72 percent of the firms reporting no change in employment. The hours worked index fell from 9.8 to 2.7, suggesting hours worked rose more slowly in June.

Respondents were more pessimistic about the direction of the broader economy this month. The general business activity index pushed further negative, falling to –12. The company outlook index moved down from 1.7 to –5.9, its first negative reading since September 2009, with about one-fifth of respondents reporting their outlook had worsened from last month.

The pace of price and wage increases was largely unchanged in June. The selling prices index came in at 7.2, down from a reading of 8.8 last month. The wages and benefits index fell to 12.7 from 13.5, although the great majority of respondents continued to indicate there has been no change in compensation costs.

Indexes of future service sector activity generally decreased from May but remained positive, with the exception of general business activity, which dipped into negative territory for the first time since April 2009.

Texas Retail Outlook Survey

June 28, 2011 

Retail Sales Rebound

Retail Sales Rebound

Retail sales increased in June, according to business executives responding to the Texas Retail Outlook Survey. After posting a negative May reading, the volatile sales index rose to 4.6 this month, and inventories fell.

Labor market indicators reflected a slightly faster pace of hiring in June. The employment index advanced from 3.9 to 9.5, although most respondents continued to note no change. The hours worked index edged down from 6.2 to 3, suggesting hours worked rose more slowly as new workers were added.

Retailers were mixed in their assessment of the broader economy in June. The general business activity index was negative for the third month in a row, although it rose from its May reading. The company outlook index was zero, suggesting outlooks were about the same as in May.

Retail prices and wages continued to climb in June. The selling prices index rose from 18.1 to 24.5, suggesting prices rose at a faster pace than in May. The wages and benefits index fell from 17.9 to 12.2, although the majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity remained in positive territory in June, with the exception of part-time employment. Indexes of future business activity and company outlook improved.

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 June 14–22, and 220 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: July 26, 2011

Texas Service Sector Outlook Survey

June 28, 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 Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
6.4
1.6
+4.8
Increasing
20
29.5
47.5
23.1
Employment
2.8
3.0
-0.2
Increasing
16
15.3
72.2
12.5
Part-time employment
0.1
0.1
0.0
Increasing
4
10.5
79.1
10.4
2.7
9.8
-7.1
Increasing
4
11.3
80.1
8.6
Wages and benefits
12.7
13.5
-0.8
Increasing
21
16.2
80.3
3.5
Input prices
34.6
30.7
+3.9
Increasing
26
38.4
57.8
3.8
Selling prices
7.2
8.8
-1.6
Increasing
6
17.2
72.8
10.0
Capital expenditures
11.9
16.0
-4.1
Increasing
22
20.6
70.8
8.7
General Business Conditions
Current (versus previous month)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
-5.9
1.7
-7.6
Worsening
1
15.5
63.2
21.4
General business activity
-12.0
-1.8
-10.2
Worsening
2
13.2
61.6
25.2
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
27.5
29.0
-1.5
Increasing
28
46.7
34.1
19.2
Employment
13.6
13.5
+0.1
Increasing
27
27.0
59.6
13.4
Part-time employment
-0.2
-0.5
+0.3
Decreasing
2
11.0
77.8
11.2
1.6
7.6
-6.0
Increasing
22
8.0
85.6
6.4
Wages and benefits
32.6
33.7
-1.1
Increasing
54
36.0
60.6
3.4
Input prices
48.1
47.8
+0.3
Increasing
54
51.8
44.6
3.7
Selling prices
19.7
22.3
-2.6
Increasing
23
28.0
63.7
8.3
Capital expenditures
15.0
25.7
-10.7
Increasing
27
28.3
58.5
13.3
General Business Conditions
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
6.5
8.3
-1.8
Improving
27
26.2
54.1
19.7
General business activity
-1.5
10.4
-11.9
Worsening
1
20.9
56.7
22.4

*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 28, 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 Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
4.6
-4.6
+9.2
Increasing
1
31.5
41.6
26.9
Employment
9.5
3.9
+5.6
Increasing
10
20.8
67.9
11.3
Part-time employment
1.6
-3.0
+4.6
Increasing
1
12.5
76.6
10.9
Hours worked
3.0
6.2
-3.2
Increasing
4
18.2
66.7
15.2
Wages and benefits
12.2
17.9
-5.7
Increasing
4
16.7
78.8
4.5
Input prices
36.6
27.8
+8.8
Increasing
11
43.5
49.6
6.9
Selling prices
24.5
18.1
+6.4
Increasing
11
33.1
58.3
8.6
Capital expenditures
12.1
15.1
-3.0
Increasing
3
21.2
69.7
9.1
Inventories
-2.3
1.2
-3.5
Decreasing
1
25.3
47.2
27.6
Companywide Retail Activity
Sales
12.9
-8.1
+21.0
Increasing
1
34.6
43.7
21.7
Internet sales
-2.1
5.6
-7.7
Decreasing
1
10.4
77.1
12.5
Catalog sales
2.3
0.0
+2.3
Increasing
1
11.6
79.1
9.3
General Business Conditions, Retail
Current (versus previous month)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
0.0
0.6
-0.6
No Change
1
22.2
55.6
22.2
General business activity
-5.8
-9.9
+4.1
Worsening
3
22.1
50.0
27.9
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
36.7
36.7
0.0
Increasing
28
53.1
30.5
16.4
Employment
12.5
13.5
-1.0
Increasing
18
23.4
65.6
10.9
Part-time employment
-10.4
-3.4
-7.0
Decreasing
2
3.7
82.2
14.1
Hours worked
2.3
4.1
-1.8
Increasing
11
11.6
79.1
9.3
Wages and benefits
24.4
32.3
-7.9
Increasing
30
31.5
61.4
7.1
Input prices
48.4
37.4
+11.0
Increasing
26
53.1
42.2
4.7
Selling prices
33.4
30.3
+3.1
Increasing
26
41.3
50.8
7.9
Capital expenditures
12.5
20.0
-7.5
Increasing
3
26.6
59.4
14.1
Inventories
3.1
7.5
-4.4
Increasing
18
21.9
59.4
18.8
Companywide Retail Activity
Sales
36.2
26.6
+9.6
Increasing
27
50.9
34.4
14.7
Internet sales
19.1
18.9
+0.2
Increasing
27
25.5
68.1
6.4
Catalog sales
4.6
4.5
+0.1
Increasing
6
11.6
81.4
7.0
General Business Conditions, Retail
Future (six months ahead)
Indicator Jun
Index
May
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
24.2
14.7
+9.5
Improving
26
38.8
46.6
14.6
General business activity
17.7
7.7
+10.0
Improving
26
33.0
51.7
15.3

*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 28, 2011

Current and future production

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

 

Texas Retail Outlook Survey

June 28, 2011

Current and future production

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

Texas Service Sector Outlook Survey

June 28, 2011

Comments from Survey Respondents

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

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Drought is taking its toll on cattle, farming and consumer attitudes. A noticeable slowdown in the last four months.

Professional, Scientific and Technical Services
We are seeing a slow improvement in business activity. We had some part-time additions this summer. They are paid minimum wage. We expect slow growth over next 12 months.

We continue to see weakening in government capital expenditures, and commercial lending has not improved. We think it is going to be a very slow recovery.

Things have slowed down quite a bit.

Management of Companies and Enterprises
Government regulations continue to add a huge burden in terms of lost productivity and increased cost that is passed on to the consumer.

Accommodation
We experienced a small softening of revenues during June. Our restaurant remodel came to an end last May. We are still planning some capital expenditures for the remainder of the year.

Bookings for future hotel stays have shown a slowing trend for several weeks now.

Food Services and Drinking Places
We are experiencing one of the worst summer sales in the history of our company. Consumer confidence has worsened due to high gasoline price and food cost. According to our projection, top line will remain under pressure for quite some time, which could force some restaurant and retail owners to fold their businesses.

We took a 2.6 percent price increase early in the month in our coffee shops. The price increase was not enough to totally recoup the reduction in margins we have seen in recent months because of the increases in cost of goods. Our incremental gain (gain over price increases) is running right at 1 percent so far in June, but it may very well be lower by month-end. We had planned a 1.5 percent increase for the entire fiscal year, but that did not seem prudent after the recent softening we have seen. Our restaurant business, with a much higher menu price per person, is having an extraordinarily good year. Our dinner houses are up 10 percent from a year ago. The recession is over for them. We had a major jump in the number of employees both last month and this month because we opened a new restaurant in the first week of June. We added 50 to 60 people. Cost of goods sold has been up every month for the last few months. We are not planning any major remodeling of any of our existing restaurants at this point. We would like to do several but want to wait until the economy is a little stronger.

Merchant Wholesalers, Durable Goods
The energy sector is still the main driver for our business. Our industrial space improved slightly in the month of June.

Building Material and Garden Equipment and Supplies Dealers
We are optimistic about the next six months. We have made all the cuts we can, and we are on track to break even. We need more activity in construction and confidence in the economy.

We can't find help: Everyone has a degree; if not, they can't read or write. We need more middle-of-the-road employees. There is a huge labor supply imbalance between low-skill and high-skill workers.

Miscellaneous Store Retailers
We continue experiencing lower sales. The downturn in the general economy is taking its toll on consumers' ability to maintain lifestyle. We just closed down a retail store. We had to terminate all employees except three to keep basic services operating.

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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