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Texas Service Sector Outlook Survey

Report in PDF
March 27, 2012

Texas Service Sector Activity Expands Further

What's New This Month

For this month's survey, business executives were asked supplemental questions on hiring plans. Nearly half of respondents expect their firm to increase employment over the next six to twelve months. Read Special Questions.

Texas service sector activity increased in March, 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 22.8 to 16.5, which suggests revenue growth slowed slightly.

Labor market indicators also reflected slower growth. The employment index fell to 7.7, its lowest reading in four months. The hours worked index edged down from 12.4 in February to 9 in March.

Respondents noted continued improvement in the broader economy as indexes reflecting general business conditions remained strong but declined slightly. The general business activity index moved down to 18.9, its fifth consecutive positive reading. The company outlook index fell to 11.5, its seventh consecutive month in positive territory, with 22 percent of respondents reporting their outlooks improved from last month.

Upward pressure on selling prices and wages moderated in March. The selling prices index was largely unchanged at a reading of 12.4, and the wages and benefits index edged down from 17.4 to 13.8.

Indexes of future service sector activity remained in positive territory. The index of future general business activity held steady at a reading of 27.5 in March, and the index of future company outlook moved down from 31.8 to 26.

Texas Retail Outlook Survey

March 27, 2012 

Retail Sales Growth Remains Solid

Retail Sales Growth Remains Solid

Retail sales increased in March, according to business executives responding to the Texas Retail Outlook Survey. The sales index rose from 17.5 to 22, marking 10 consecutive months of sales increases. Inventories rose.

Labor market indicators reflected continued hiring and slightly longer workweeks. The employment index increased from 8.6 in February to 13.1 in March. The hours worked index edged down from 10.9 to 8.2 this month, suggesting average workweeks rose at a slower pace.

Perceptions of general business conditions improved again in March. The general business activity index came in at 21.5, its sixth consecutive reading in positive territory. The company outlook index was positive for the seventh month in a row; it came in at 26.5, with 37 percent of respondents noting their company’s outlook had improved from the prior month, compared with 10 percent who reported their outlook had worsened.

Retail prices and wages increased in March. The selling prices index moved up from 17 to 23, suggesting retail price increases were more widespread this month. In contrast, the wages and benefits index fell slightly from 12.1 to 10.7, although the great majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity generally remained in solid positive territory in March, while both the index of future general business activity and the index of future company outlook held steady.

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 Mar. 13–21, and 224 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: May 1, 2012

Texas Service Sector Outlook Survey

March 27, 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
16.5
22.8
-6.3
Increasing
29
32.6
51.3
16.1
Employment
7.7
15.5
-7.8
Increasing
25
17.4
72.9
9.7
Part-time employment
6.8
0.5
+6.3
Increasing
7
10.0
86.8
3.2
9.0
12.4
-3.4
Increasing
13
12.8
83.4
3.8
Wages and benefits
13.8
17.4
-3.6
Increasing
32
14.5
84.8
0.7
Input prices
33.8
31.5
+2.3
Increasing
35
36.1
61.6
2.3
Selling prices
12.4
12.7
-0.3
Increasing
15
18.4
75.6
6.0
Capital expenditures
15.3
15.3
0.0
Increasing
31
21.1
73.1
5.8
General Business Conditions
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.5
22.5
-11.0
Improving
7
21.5
68.5
10.0
General business activity
18.9
24.6
-5.7
Improving
5
26.8
65.3
7.9
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
35.2
44.6
-9.4
Increasing
37
45.6
43.9
10.4
Employment
20.9
32.5
-11.6
Increasing
38
32.7
55.5
11.8
Part-time employment
8.8
8.9
-0.1
Increasing
9
14.3
80.2
5.5
5.1
8.3
-3.2
Increasing
31
10.4
84.3
5.3
Wages and benefits
33.2
36.1
-2.9
Increasing
63
35.2
62.8
2.0
Input prices
48.2
47.0
+1.2
Increasing
63
49.5
49.1
1.3
Selling prices
30.7
31.1
-0.4
Increasing
32
34.8
61.1
4.1
Capital expenditures
25.9
28.1
-2.2
Increasing
36
32.3
61.4
6.4
General Business Conditions
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
26.0
31.8
-5.8
Improving
7
34.5
57.0
8.5
General business activity
27.5
27.1
+0.4
Improving
6
32.6
62.3
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 Retail Outlook Survey

March 27, 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
22.0
17.5
+4.5
Increasing
10
41.6
38.9
19.6
Employment
13.1
8.6
+4.5
Increasing
8
21.9
69.3
8.8
Part-time employment
4.6
3.3
+1.3
Increasing
2
9.1
86.4
4.5
Hours worked
8.2
10.9
-2.7
Increasing
6
16.0
76.2
7.8
Wages and benefits
10.7
12.1
-1.4
Increasing
19
13.4
83.9
2.7
Input prices
34.9
27.8
+7.1
Increasing
20
41.0
52.9
6.1
Selling prices
23.0
17.0
+6.0
Increasing
20
31.9
59.2
8.9
Capital expenditures
18.9
14.3
+4.6
Increasing
12
29.0
60.9
10.1
Inventories
12.8
22.2
-9.4
Increasing
9
27.5
57.8
14.7
Companywide Retail Activity
Sales
29.3
13.9
+15.4
Increasing
10
44.1
41.1
14.8
Internet sales
15.1
6.2
+8.9
Increasing
2
22.6
69.8
7.5
Catalog sales
7.1
2.4
+4.7
Increasing
2
11.9
83.3
4.8
General Business Conditions, Retail
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
26.5
27.6
-1.1
Improving
7
36.6
53.3
10.1
General business activity
21.5
36.9
-15.4
Improving
6
34.5
52.5
13.0
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
41.5
42.8
-1.3
Increasing
37
49.5
42.6
8.0
Employment
24.6
32.8
-8.2
Increasing
27
32.3
60.0
7.7
Part-time employment
6.0
8.3
-2.3
Increasing
6
9.9
86.2
3.9
Hours worked
0.3
11.7
-11.4
Increasing
30
9.9
80.5
9.6
Wages and benefits
30.5
28.2
+2.3
Increasing
39
33.0
64.5
2.5
Input prices
48.5
46.6
+1.9
Increasing
35
50.0
48.5
1.5
Selling prices
41.2
40.0
+1.2
Increasing
35
41.2
58.8
0.0
Capital expenditures
35.8
38.4
-2.6
Increasing
12
43.3
49.3
7.5
Inventories
8.8
16.9
-8.1
Increasing
28
23.2
62.4
14.4
Companywide Retail Activity
Sales
40.4
46.5
-6.1
Increasing
36
46.9
46.6
6.5
Internet sales
15.4
31.1
-15.7
Increasing
36
21.2
73.1
5.8
Catalog sales
2.5
17.9
-15.4
Increasing
8
9.8
82.9
7.3
General Business Conditions, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
36.6
36.4
+0.2
Improving
35
40.2
56.2
3.6
General business activity
29.6
29.0
+0.6
Improving
6
36.1
57.4
6.5

*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

March 27, 2012

TSSOS Chart

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

 

Texas Retail Outlook Survey

March 27, 2012

TSSOS Chart

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

Texas Service Sector Outlook Survey

March 27, 2012

Comments from Survey Respondents

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

Publishing Industries (except Internet)
We are seeing a general up-tick in advertising and marketing expenditures. This appears to be driven by the realization that retail and service-based businesses are operating under a new norm, as opposed to substantive growth in sales.

Credit Intermediation and Related Activities
Our cost will continue to increase because of regulatory requirements. If and when the regulatory agencies get some common sense, we may begin to see some decrease in cost.

Regulatory burden continues to increase on community banks.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Lower crop, cattle, and natural gas prices have reduced optimism. Job growth and retail sales remain good.

We are beginning to feel the impact of inspections from EPA and OSHA, with more regulations from all agencies, it seems, and stiff fines for even minor infractions.

Professional, Scientific and Technical Services
We are working with two new startups that are well funded and aggressive. Startups are a positive sign in the marketplace. We will have about 15 interns this summer from various colleges and universities. That will swell our ranks through the summer. Our permanent hiring is for high-level positions.

There is too much uncertainty in the business environment today to invest. Increasing government regulation and related compliance costs, higher energy costs and higher taxes increase the risks of investment.

We are hiring again and have two new positions to be filled in addition to the three that are pending. This is against a backdrop of an employee base of over 450 employees. Residential orders have moderated but are still running higher than the same period last year. We believe this is industry wide throughout this region. Our national office confirms the same story. We had mandatory overtime in February for several days to handle the dramatic increase in residential orders (88 percent) over the same period last year. Commercial orders are good but do not show the same jump as the residential side of the business. We have initiated a large change in our computer systems that requires a capital expenditure for additional terminals. We have opened two new offices in new locations to replace a single office that we closed, but no new staffing was required. We are anticipating better business volumes with this move. Overall, we continue to be cautiously optimistic for the short term but remain concerned for the longer term as the uncertainty related to state, local and national government debt continues to be a drag on a concentrated business expansion on our part.

Management of Companies and Enterprises
The level of regulatory changes makes it difficult to predict the future. Things like interest rates, cost of expenses and the level of employees etc. are making it more difficult. We do not need any more regulations. We need a break to catch up.

Administrative and Support Services
Fuel pricing is causing a negative impact to otherwise positive sales results. The increase in cost of goods sold—without the ability (due to market pressures) to increase consumer pricing—is beginning to have an impact on bottom line, so while top line revenues are increasing, the productivity machine is having to create more to stand still.

Nursing and Residential Care Facilities
The cuts to Medicaid and Medicare spending are affecting our revenues and therefore our ability to serve others.

Accommodation
Possible new EPA emission standards could be in place in April. This could create a big what if.

Food Services and Drinking Places
We have experienced an up-tick on top-line sales at the same time we are experiencing margin pressure due to the rising cost of gasoline and commodity prices.

Very little has changed over the last month in our results or our outlook. We continue to run up in sales but by less than the percentage of price increases we have taken. Our costs have been quite stable in both the cost of goods and labor. We don't see anything significant that warrants changing our outlook for the next six months.

Merchant Wholesalers, Durable Goods
We have tried to get additional funding but have been turned down by two banks. We have one last option that should help us pull through. We currently have a Department of Labor audit. Let's hope the Department of Labor doesn't put the final nail in our coffin.

Input prices are now at a level low enough to sustain growth.

Motor Vehicle and Parts Dealers
Sales traffic is improving on new and used vehicles. Margins are declining on new and holding on used.

While our business has improved slightly it is nothing to write home about. Margins continue to be under pressure, limiting what we are willing to do in the way of additional employee commitment.

Building Material and Garden Equipment and Supplies Dealers
Still getting mixed signals in our sector (construction) as we are a building materials supplier. Sales are still about the same as last year, although we are doing better just because of cuts made. It seems to me the economy is moving in the right direction but just very slowly.

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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