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Texas Service Sector Outlook Survey

Report in PDF
January 31, 2012

Texas Service Sector Activity Strengthens

What's New This Month

This month’s survey data include annual seasonal revisions. In January of each year, the Federal Reserve Bank of Dallas revises the historical data for the Texas Service Sector Outlook Survey after calculating new seasonal adjustment factors. Annual seasonal revisions result in slight changes in the seasonally adjusted series. Read more information on seasonal adjustment.seasonal adjustment at www.dallasfed.org/microsites/research/surveys/tssos/seasonal.cfm.

Texas service sector activity increased in January, 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 9.8 to 13.7, with 32 percent of respondents noting revenue increased from December.  

Labor market indicators reflect stronger hiring and slightly longer workweeks. The employment index moved up from 8.8 to 12.4, its best reading in 10 months. The hours worked index edged down to 1.6 in January, suggesting hours worked rose more slowly in January.

Perceptions of general business conditions improved markedly in January. The general business activity index jumped to 18.3, its best reading since December 2010. The company outlook index moved up to 16.9 in January, its fifth consecutive month in positive territory, with 26 percent of respondents reporting their outlooks improved from last month.

Selling prices rose at a faster clip in January while wage pressures held steady. The selling prices index moved up from 2.1 to 8.7. The wages and benefits index was largely unchanged at 13.9, as the great majority of respondents continued to report no change in labor costs.

Indexes of future service sector activity generally improved from last month, and expectations regarding future business conditions were more optimistic. The index of future general business activity advanced from 18.7 to 22.8 in January, its best reading since February 2011, and the index of future company outlook also moved further into positive territory.

Texas Retail Outlook Survey

January 31, 2012 

Retail Sales Growth Remains Solid

Retail Sales Growth Remains Solid

Retail sales increased in January, according to business executives responding to the Texas Retail Outlook Survey. The sales index edged down from 13.7 to 12.1, marking eight consecutive months of sales increases. Inventories rose albeit at the slowest pace in seven months.

Labor market indicators reflected continued hiring and slightly longer workweeks. The employment index was largely unchanged at 5.6. The hours worked index fell slightly to 2.2 in January, suggesting average workweeks grew but at a slower pace.   

Perceptions of general business conditions improved again in January.  The general business activity index came in at 17.9, its fourth consecutive reading in positive territory. The company outlook index was positive for the fifth month in a row, with a reading of 23. Nearly a third of respondents said their company’s outlook had improved from the prior month, compared with 8 percent who noted their outlook had worsened.

Retail prices rose faster in January, while wage pressures subsided slightly. The selling prices index rose from 13.7 to 21.2. The wages and benefits index moved down from 13.2 to 7.9, although the great majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity remained in solid positive territory in January, while both the index of future general business activity and the index of future company outlook were largely unchanged.

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 Jan. 17–25, and 211 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: February 28, 2012

Texas Service Sector Outlook Survey

January 31, 2012
 

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 Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
13.7
9.8
+3.9
Increasing
27
32.1
49.6
18.4
Employment
12.4
8.8
+3.6
Increasing
23
21.9
68.5
9.5
Part-time employment
0.3
2.2
-1.9
Increasing
5
7.5
85.3
7.2
1.6
3.1
-1.5
Increasing
11
10.2
81.2
8.6
Wages and benefits
13.9
14.6
-0.7
Increasing
30
17.9
78.1
4.0
Input prices
29.6
31.2
-1.6
Increasing
33
32.8
64.0
3.2
Selling prices
8.7
2.1
+6.6
Increasing
13
16.0
76.7
7.3
Capital expenditures
13.6
14.8
-1.2
Increasing
29
22.9
67.7
9.3
General Business Conditions
Current (versus previous month)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
16.9
11.4
+5.5
Improving
5
26.3
64.4
9.4
General business activity
18.3
8.6
+9.7
Improving
3
25.5
67.3
7.2
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
46.9
44.5
+2.4
Increasing
35
53.9
39.1
7.0
Employment
27.4
25.0
+2.4
Increasing
34
36.5
54.4
9.1
Part-time employment
6.8
9.5
-2.7
Increasing
7
13.8
79.3
7.0
7.2
8.0
-0.8
Increasing
29
11.0
85.2
3.8
Wages and benefits
39.7
34.4
+5.3
Increasing
61
41.6
56.5
1.9
Input prices
50.7
51.5
-0.8
Increasing
61
51.6
47.5
0.9
Selling prices
30.5
22.7
+7.8
Increasing
30
37.4
55.8
6.9
Capital expenditures
27.2
27.8
-0.6
Increasing
34
35.2
56.8
8.0
General Business Conditions
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
29.6
24.6
+5.0
Improving
5
38.2
53.2
8.6
General business activity
22.8
18.7
+4.1
Improving
4
31.0
60.8
8.2

*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

January 31, 2012
 

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 Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
12.1
13.7
-1.6
Increasing
8
38.1
35.9
26.0
Employment
5.6
5.9
-0.3
Increasing
6
14.3
77.0
8.7
Part-time employment
-4.7
1.6
-6.3
Decreasing
1
1.6
92.1
6.3
Hours worked
2.2
4.4
-2.2
Increasing
4
11.7
78.8
9.5
Wages and benefits
7.9
13.2
-5.3
Increasing
17
12.9
82.1
5.0
Input prices
27.3
28.5
-1.2
Increasing
18
30.3
66.6
3.0
Selling prices
21.2
13.7
+7.5
Increasing
18
27.6
66.0
6.4
Capital expenditures
15.1
4.6
+10.5
Increasing
10
21.2
72.7
6.1
Inventories
2.4
20.8
-18.4
Increasing
7
25.5
51.4
23.1
Companywide Retail Activity
Sales
23.3
23.2
+0.1
Increasing
8
42.7
37.9
19.4
Internet sales
-4.1
13.7
-17.8
Decreasing
1
14.3
67.3
18.4
Catalog sales
-9.1
7.0
-16.1
Decreasing
1
9.1
72.7
18.2
General Business Conditions, Retail
Current (versus previous month)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
23.0
24.8
-1.8
Improving
5
31.3
60.4
8.3
General business activity
17.9
17.8
+0.1
Improving
4
27.2
63.6
9.3
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
59.4
61.4
-2.0
Increasing
35
62.1
35.2
2.7
Employment
34.9
23.8
+11.1
Increasing
25
37.9
59.1
3.0
Part-time employment
6.0
9.3
-3.3
Increasing
4
9.7
86.6
3.7
Hours worked
10.2
13.2
-3.0
Increasing
28
12.9
84.4
2.7
Wages and benefits
27.4
29.6
-2.2
Increasing
37
27.7
72.0
0.3
Input prices
48.5
46.0
+2.5
Increasing
33
50.0
48.5
1.5
Selling prices
47.0
41.2
+5.8
Increasing
33
50.0
47.0
3.0
Capital expenditures
32.3
25.4
+6.9
Increasing
10
36.9
58.5
4.6
Inventories
26.6
19.9
+6.7
Increasing
26
34.6
57.5
8.0
Companywide Retail Activity
Sales
56.4
47.5
+8.9
Increasing
34
58.5
39.5
2.1
Internet sales
36.2
20.8
+15.4
Increasing
34
36.2
63.8
0.0
Catalog sales
15.9
7.7
+8.2
Increasing
6
18.2
79.5
2.3
General Business Conditions, Retail
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
43.5
43.9
-0.4
Improving
33
45.6
52.3
2.1
General business activity
31.9
33.1
-1.2
Improving
4
37.0
58.0
5.1

*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

January 31, 2012

TSSOS Chart

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

 

Texas Retail Outlook Survey

January 31, 2012

TSSOS Chart

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

Texas Service Sector Outlook Survey

January 31, 2012

Comments from Survey Respondents

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

Publishing Industries (except Internet)
Further growth and development of Internet retail activities and social media continue to fragment the advertising, promotion and marketing sectors for both small and large retail and service businesses.

Credit Intermediation and Related Activities
We have a temporary increase in business. Beyond that, I wish I knew.

Real Estate
The Consumer Financial Protection Bureau is creating a great deal of uncertainty, which is not conducive to business.

All local housing market conditions are favorable (job creation, interest rates, inventory levels). The unknowns remain drought, Europe and further tightening of underwriting criteria.

Professional, Scientific and Technical Services
The energy sector is providing the opportunity for our business to grow. New pipeline construction is booming.

December 2011 was our best month commercially since we started in 1991. Our overall year ended way up based solely on the increase in commercial real estate business. The residential market was the same as 2010 and also modestly profitable. January has started out with very low volumes both commercially and residentially, but this is not a surprise and repeats the beginning of 2010. We will know if our prediction of an increase in the residential market is correct after February's order counts. Our hope is that volumes will increase employment, but efficiencies are high and we saw no breakdown in our ability to deliver, even at high volumes. It will take several months of continued higher volumes to cause us to add staff, but we are hopeful we will see this in 2012.

Our clients are more active and more aggressive in their planning and budgets. However, they are still cautious. We are seeing more new business opportunities from clients seeking certain skills and capabilities. We're guardedly optimistic, too.

We have seen several sectors slow and need to reduce temporary help. This is sad as these people counted on jobs. But the first quarter projections are not good, and budgets continue to be tight and margins very low.

Financing of projects continues to be the bane of our industry.

The design side of the business continues to improve. We are seeing more projects on the drawing board and anticipate construction to follow suit within three to six months.

The current regulatory environment for community banks continues to be a concern for us. Despite 60 years of stable, profitable operation and a focus on being a good corporate citizen in our community, we find some examiners and regulators more intent on finding problems than on recognizing our health. Unless the overall burden is lifted, it will continue to be difficult for us to operate responsibly and profitably and in doing so, to provide benefit to our city and the community at large.

Management of Companies and Enterprises
Regulatory burden continues to be the biggest obstacle for our business and that of our customers.

Food Services and Drinking Places
On a same-store basis there is very little difference in our operations from December to January. We are up about 1.5 percent over last year on a same-store basis. We continue to hold a moderate, cautious outlook for 2012. We are being very cautious about spending, making every effort to avoid or delay expenses. We have allowed a few contracts for services to lapse rather than renew them for this year. An example of this type of expense is a software package with advanced analysis capabilities—nice to have and we've used it, but some old fashion spreadsheet work by the office staff will replace the slick software package this year, which obviously nets out to a loss of business for someone else.

Merchant Wholesalers, Durable Goods
While we are forecasting a stronger next six months after the holidays slowdown in our segment, there's a general feeling that the economy is still very unpredictable. Given the instability in Europe, coupled with the U.S. presidential election that could still go either way, these reservations are justified. Unpredictability must be removed for business owners to have the confidence to invest and put people back to work

We supply residential shelter products, dependent on new home and apartment construction (slightly up); storm repair (still at highly increased levels); and repair, restore, remodel activities (slightly up). The summer hail storm reroof business will be over in about three months, which will decrease our revenues. We believe the nonstorm activity business will be up only slightly this year, maybe 2 percent.

Building Material and Garden Equipment and Supplies Dealers
Demand is sluggish. There is enough work to keep everyone working 40 hours a week but not enough to plan on growth in the near future.

Motor Vehicle and Parts Dealers
Customer confidence is definitely improved.

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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