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Texas Service Sector Outlook Survey

Report in PDF
July 26, 2011

Texas Service Sector Activity Strengthens

Texas service sector activity increased in July, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, climbed from 6.4 to 8.8, with 31 percent of respondents noting revenue increased from June.

Labor market indicators continued to reflect some hiring and slightly longer workweeks. The July employment index edged up from 2.8 to 3.7, although two-thirds of respondents noted no change in employment. The hours worked index ticked up to 3.7, suggesting hours worked rose again in July.

Indexes reflecting general business conditions improved this month. After two consecutive months of negative readings, the general business activity index jumped from –12 in June to zero in July, suggesting perceptions of general business activity stabilized. The company outlook index moved back into positive territory, rising from –5.9 to 1.7, with one-fifth of respondents reporting their outlooks had improved from last month.

Changes in price and wage pressures were mixed in July. The selling prices index came in at 6.4, down from a reading of 7.2 last month. The wages and benefits index rose to 15.6 from 12.7, although the great majority of respondents continued to indicate there had been no change in compensation costs.

Indexes of future service sector activity generally increased from June and remained in solid positive territory.

Texas Retail Outlook Survey

July 26, 2011 

Retail Sales Flat

Retail Sales Flat

Retail sales held steady in July, according to business executives responding to the Texas Retail Outlook Survey. After rebounding last month, the volatile sales index came in at zero, suggesting retail sales were unchanged from June. Inventories rose in July.

Employment and hours worked fell in July. The employment index declined from 9.5 to –5.6, its first negative reading since August 2010, although most respondents continued to note no change. The hours worked index dipped from 3 in June to –1.6 in July, after posting four consecutive months of positive readings.

Retailers were more pessimistic about the direction of the broader economy this month. The general business activity index posted its fourth consecutive negative reading, falling to –16.4. The company outlook index came in at –6.9, its first negative reading since August 2010. A quarter of respondents said their outlook had worsened from the prior month compared with 18 percent who noted their outlook had improved.

Retail prices and wages continued to climb in July albeit at a diminished pace. The selling prices index fell from 24.5 to 20.8, suggesting prices rose at a slower pace than in June. The wages and benefits index edged down from 12.2 to 10.8, although the great majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity remained in positive territory in July with the exception of part-time employment, inventories and companywide catalog sales.

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 July 12–20, and 215 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: August 30, 2011

Texas Service Sector Outlook Survey

July 26, 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 Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
8.8
6.4
+2.4
Increasing
21
31.1
46.7
22.3
Employment
3.7
2.8
+0.9
Increasing
17
18.3
67.1
14.6
Part-time employment
1.2
0.1
+1.1
Increasing
5
10.5
80.2
9.3
3.7
2.7
+1.0
Increasing
5
11.4
80.9
7.7
Wages and benefits
15.6
12.7
+2.9
Increasing
22
17.9
79.8
2.3
Input prices
29.4
34.6
-5.2
Increasing
27
33.2
63.0
3.8
Selling prices
6.4
7.2
-0.8
Increasing
7
16.9
72.6
10.5
Capital expenditures
11.1
11.9
-0.8
Increasing
23
23.4
64.3
12.3
General Business Conditions
Current (versus previous month)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
1.7
-5.9
+7.6
Improving
1
20.9
59.9
19.2
General business activity
-0.2
-12.0
+11.8
Worsening
3
19.6
60.6
19.8
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
33.8
27.5
+6.3
Increasing
29
50.6
32.6
16.8
Employment
13.4
13.6
-0.2
Increasing
28
29.2
55.0
15.8
Part-time employment
2.9
-0.2
+3.1
Increasing
1
15.4
72.1
12.5
4.2
1.6
+2.6
Increasing
23
12.3
79.6
8.1
Wages and benefits
31.4
32.6
-1.2
Increasing
55
35.5
60.4
4.1
Input prices
47.9
48.1
-0.2
Increasing
55
52.2
43.5
4.3
Selling prices
16.3
19.7
-3.4
Increasing
24
29.4
57.5
13.1
Capital expenditures
21.4
15.0
+6.4
Increasing
28
32.6
56.2
11.2
General Business Conditions
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
15.0
6.5
+8.5
Improving
28
32.6
49.9
17.6
General business activity
10.1
-1.5
+11.6
Improving
1
27.8
54.5
17.7

*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

July 26, 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 Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
0.0
4.6
-4.6
No Change
1
29.4
41.3
29.4
Employment
-5.6
9.5
-15.1
Decreasing
1
10.0
74.4
15.6
Part-time employment
1.6
1.6
0.0
Increasing
2
11.3
79.0
9.7
Hours worked
-1.6
3.0
-4.6
Decreasing
1
9.2
80.0
10.8
Wages and benefits
10.8
12.2
-1.4
Increasing
5
15.4
80.0
4.6
Input prices
33.1
36.6
-3.5
Increasing
12
39.0
55.1
5.9
Selling prices
20.8
24.5
-3.7
Increasing
12
33.1
54.6
12.3
Capital expenditures
6.3
12.1
-5.8
Increasing
4
17.2
71.9
10.9
Inventories
12.0
-2.3
+14.3
Increasing
1
29.8
52.4
17.8
Companywide Retail Activity
Sales
5.7
12.9
-7.2
Increasing
2
33.9
37.8
28.2
Internet sales
14.5
-2.1
+16.6
Increasing
1
20.8
72.9
6.3
Catalog sales
-2.5
2.3
-4.8
Decreasing
1
7.3
82.9
9.8
General Business Conditions, Retail
Current (versus previous month)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
-6.9
0.0
-6.9
Worsening
1
18.3
56.5
25.2
General business activity
-16.4
-5.8
-10.6
Worsening
4
14.7
54.2
31.1
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
29.1
36.7
-7.6
Increasing
29
46.0
37.1
16.9
Employment
3.0
12.5
-9.5
Increasing
19
21.5
60.0
18.5
Part-time employment
-8.1
-10.4
+2.3
Decreasing
3
8.7
74.5
16.8
Hours worked
2.2
2.3
-0.1
Increasing
12
12.5
77.2
10.3
Wages and benefits
28.4
24.4
+4.0
Increasing
31
33.6
61.2
5.2
Input prices
42.2
48.4
-6.2
Increasing
27
51.6
39.1
9.4
Selling prices
34.9
33.4
+1.5
Increasing
27
47.6
39.7
12.7
Capital expenditures
14.3
12.5
+1.8
Increasing
4.0
28.6
57.1
14.3
Inventories
-1.6
3.1
-4.7
Decreasing
1
23.8
50.8
25.4
Companywide Retail Activity
Sales
26.4
36.2
-9.8
Increasing
28
45.1
36.3
18.7
Internet sales
19.2
19.1
+0.1
Increasing
28
27.7
63.8
8.5
Catalog sales
-2.5
4.6
-7.1
Decreasing
1
10.0
77.5
12.5
General Business Conditions, Retail
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.3
24.2
-12.9
Improving
27
30.3
50.7
19.0
General business activity
10.9
17.7
-6.8
Improving
27
25.6
59.7
14.7

*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

July 26, 2011

Current and future production

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

 

Texas Retail Outlook Survey

July 26, 2011

Current and future production

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

Texas Service Sector Outlook Survey

July 26, 2011

Comments from Survey Respondents

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

Publishing Industries (except Internet)
We have a really good outlook on business. We are extremely busy and are putting together programs that will be more recession-proof than the work that we have now. We wish the government would cut spending and decrease regulations on business, especially energy.

Credit Intermediation and Related Activities
The retail financial services marketplace has continued to slow its pace of consumer lending and mortgage activities.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
We are being cautious at every turn. Expenses, regulations and all kinds of taxes are increasing.

Insurance Carriers and Related Activities
The severe drought throughout southern U.S. is causing increased workload and sharply lower revenues for agriculture insurers in the region.

Rental and Leasing Services
Our business attitude has turned decidedly negative. The amount of time and money we are spending complying with government regulation has increased significantly.

Professional, Scientific and Technical Services
We have seen some revenue increase this month. In terms of employment part-time interns will have to return school by the end of the summer. Business activity and attitudes have improved. There is a lot going on in energy and finance.

The current political climate for business is negative.

What is full employment today with so many jobs being exported overseas and the continued growth of technology that makes the service sector more efficient and requires fewer workers? In 1986, we generated $26 million in premium revenue with over 525 employees. Today, we can easily generate $100 million in premium revenue with 450 employees. At the peak of our business in 2006–07 we generated $127 million in revenue with 525 employees and have grown more efficient since then. This is still a person-to-person business in many respects, so talented employees who can deal with people will always be in demand.

Management of Companies and Enterprises
Regulatory burden continues to deflate the business activity of our bank. We have several business customers who need to plan for expanding facilities and adding staff but have continued to postpone these efforts until they have a better understanding of health insurance costs and EPA regulations.

Animal Production
Raw milk input costs continue to escalate, creating more pressure on sales and testing the consumer’s propensity to spend on dairy products. Our ability to compete with all the choices of drinks available to the consumer is definitely under pressure.

Merchant Wholesalers, Durable Goods
Our outlook didn’t improve from the previous month, and we might change it to pessimistic next month for the first time if Congress and the administration do not reach an acceptable spending plan.

Merchant Wholesalers, Nondurable Goods
Aquaculture has been adversely affected by the high price of commodities. It is definitely a seller’s market as input cost (live fish) are currently 50 percent higher than ever before, and the short-term outlook points to even higher prices.

Building Material and Garden Equipment and Supplies Dealers
The first half of 2011 is almost identical to the first six months of 2010. We have made many cuts and still either break even or experience a small loss. We are not seeing much progress in positive attitudes with people in construction, and we are not sure how much longer many can hold on before the market starts to improve.

Business was steadily building until mid-May, but it rapidly slowed and has remained slow. The quantity of estimates and contracts per month that we currently have is similar to what we had at the end of 2010.

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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