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Texas Service Sector Outlook Survey

Report in PDF
May 1, 2012

Texas Service Sector Activity Expands at a Slower Pace

Texas service sector activity increased in April, 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 16.5 to 12.6, suggesting growth slowed.

Labor market indicators reflected continued hiring and slightly longer workweeks. The employment index rose to 11.1 in April from 7.7 in March. The hours worked index edged up to 11.1 from 9.

Respondents noted continued improvement in the broader economy but were slightly less optimistic than last month. The general business activity index moved down to 12, its lowest reading in three months. The company outlook index dipped to 10.1 from 11.5, its eighth consecutive month in positive territory, with 22 percent of respondents reporting their outlooks improved from last month.

Upward pressure on selling prices moderated, while wages rose faster in April. The selling prices index fell from 12.4 to 9.7, while the wages and benefits index moved up from 13.8 to 16.8.

Indicators of future service sector activity generally improved from last month. However, the index of future general business activity fell to 18.9 in April from 27.5 in March, and the index of future company outlook moved down from 26 to 24.7.

Texas Retail Outlook Survey

May 1, 2012 

Retail Sales Growth Slows

Retail Sales Growth Slows

Retail sales increased in April, according to business executives responding to the Texas Retail Outlook Survey. The sales index fell sharply from 22 to 10.6, consistent with slower sales growth. Inventories rose.

Labor market indicators reflected continued hiring and slightly longer workweeks. The employment index increased from 13.1 in March to 14.4 in April. The hours worked index edged down from 8.2 to 7.1, suggesting average workweeks rose at about the same pace as last month.

Perceptions of general business conditions were less optimistic in April. The general business activity index came in at 13.9—8 points below its reading last month. The company outlook index was positive for the eighth month in a row but fell sharply from 26.5 to 13.7. Twenty-six percent of respondents noted their company’s outlook had improved from the prior month, compared with 12 percent who reported their outlook had worsened.

Retail price pressures dissipated, and wage growth slowed in April. The selling prices index plunged from 23 to 1.2, its lowest reading since July 2010. The wages and benefits index edged down from 10.7 to 8.4, 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 April, while both the index of future general business activity and the index of future company outlook moved down.

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 Apr. 17–25, and 223 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 30, 2012

Texas Service Sector Outlook Survey

May 1, 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 Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
12.6
16.5
-3.9
Increasing
30
30.6
51.4
18.0
Employment
11.1
7.7
+3.4
Increasing
26
20.5
70.1
9.4
Part-time employment
6.1
6.8
-0.7
Increasing
8
12.2
81.7
6.1
11.1
9.0
+2.1
Increasing
14
15.9
79.3
4.8
Wages and benefits
16.8
13.8
+3.0
Increasing
33
19.5
77.8
2.7
Input prices
28.3
33.8
-5.5
Increasing
36
30.7
66.9
2.4
Selling prices
9.7
12.4
-2.7
Increasing
16
16.5
76.7
6.8
Capital expenditures
20.1
15.3
+4.8
Increasing
32
25.1
69.8
5.0
General Business Conditions
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
10.1
11.5
-1.4
Improving
8
22.0
66.1
11.9
General business activity
12.0
18.9
-6.9
Improving
6
25.3
61.4
13.3
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
46.4
35.2
+11.2
Increasing
38
54.9
36.6
8.5
Employment
22.6
20.9
+1.7
Increasing
37
31.6
59.4
9.0
Part-time employment
8.0
8.8
-0.8
Increasing
10
16.4
75.2
8.4
9.5
5.1
+4.4
Increasing
32
13.6
82.3
4.1
Wages and benefits
37.1
33.2
+3.9
Increasing
64
39.3
58.5
2.2
Input prices
54.4
48.2
+6.2
Increasing
64
56.1
42.1
1.7
Selling prices
26.6
30.7
-4.1
Increasing
33
33.6
59.4
7.0
Capital expenditures
29.8
25.9
+3.9
Increasing
37
37.4
55.0
7.6
General Business Conditions
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
24.7
26.0
-1.3
Improving
8
32.5
59.7
7.8
General business activity
18.9
27.5
-8.6
Improving
7
29.4
60.1
10.5

*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 Retail Outlook Survey

May 1, 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 Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
10.6
22.0
-11.4
Increasing
11
35.6
39.4
25.0
Employment
14.4
13.1
+1.3
Increasing
9
18.3
77.8
3.9
Part-time employment
4.8
4.6
+0.2
Increasing
3
12.7
79.4
7.9
Hours worked
7.1
8.2
-1.1
Increasing
7
15.5
76.1
8.4
Wages and benefits
8.4
10.7
-2.3
Increasing
20
14.0
80.4
5.6
Input prices
18.4
34.9
-16.5
Increasing
21
25.9
66.6
7.5
Selling prices
1.2
23.0
-21.8
Increasing
21
18.3
64.6
17.1
Capital expenditures
10.6
18.9
-8.3
Increasing
13
19.7
71.2
9.1
Inventories
11.0
12.8
-1.8
Increasing
10
23.4
64.2
12.4
Companywide Retail Activity
Sales
17.4
29.3
-11.9
Increasing
11
34.5
48.3
17.1
Internet sales
0.0
15.1
-15.1
No Change
1
14.0
72.0
14.0
Catalog sales
-11.4
7.1
-18.5
Decreasing
1
4.5
79.5
15.9
General Business Conditions, Retail
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.7
26.5
-12.8
Improving
8
25.9
61.9
12.2
General business activity
13.9
21.5
-7.6
Improving
7
29.9
54.1
16.0
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
43.0
41.5
+1.5
Increasing
38
52.4
38.2
9.4
Employment
23.8
24.6
-0.8
Increasing
28
28.6
66.7
4.8
Part-time employment
9.3
6.0
+3.3
Increasing
7
17.3
74.7
8.0
Hours worked
2.3
0.3
+2.0
Increasing
31
9.1
84.1
6.8
Wages and benefits
24.4
30.5
-6.1
Increasing
40
28.0
68.4
3.6
Input prices
40.3
48.5
-8.2
Increasing
36
43.5
53.2
3.2
Selling prices
33.9
41.2
-7.3
Increasing
36
37.1
59.7
3.2
Capital expenditures
38.7
35.8
+2.9
Increasing
13
43.5
51.6
4.8
Inventories
10.0
8.8
+1.2
Increasing
29
22.6
64.8
12.6
Companywide Retail Activity
Sales
38.6
40.4
-1.8
Increasing
37
47.1
44.4
8.5
Internet sales
19.2
15.4
+3.8
Increasing
37
27.7
63.8
8.5
Catalog sales
14.3
2.5
+11.8
Increasing
9
21.4
71.4
7.1
General Business Conditions, Retail
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
25.1
36.6
-11.5
Improving
36
32.5
60.1
7.4
General business activity
26.4
29.6
-3.2
Improving
7
33.2
60.0
6.8

*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

May 1, 2012

TSSOS Chart

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

 

Texas Retail Outlook Survey

May 1, 2012

TSSOS Chart

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

Texas Service Sector Outlook Survey

May 1, 2012

Comments from Survey Respondents

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

Truck Transportation
We have no part-time employees. Our revenues and selling prices are improving, but rising fuel costs prohibit a commensurate increase in operating profits.

Publishing Industries (except Internet)
The biggest concern we have is not knowing what taxes are going to be added. Health insurance is a big concern. How we grow our company will determine the tax burden and insurance we are required to have. We are small now, but we may keep our company just small enough to avoid the health insurance issues. We wish government would get out of the way. We are very concerned about the future.

Credit Intermediation and Related Activities
Six months out? We wish we knew.

Our biggest concern is the regulatory environment.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Costs are large: employee training, changing processes and material components.

Real Estate
Residential sales activity continues to improve on a year-to-year basis as we move into the prime home buying season. Hopefully, regulators have taken pause in their efforts to tighten up mortgage lending requirements and underwriting standards. Commercial activity continues to lag. There are few new retail or industrial entries into the market. Investors remain interested in commercial real estate investments but are hesitant to come off the sidelines until the politicians settle on fiscal and tax policies (not expected to happen in 2012). Likewise, current owners of investment properties are reluctant to market properties for lack of a place to go with their equity.

Rental and Leasing Services
Government regulation continues to kill jobs and the economy. Our company runs profitably without debt, is a blessing to our customers and the communities in which we live and work and raise our families and provides great benefits to our 330 employees and their families.

Professional, Scientific and Technical Services
The increase in energy cost will suck the life out of any business momentum.

We are still optimistic about the increasing level of commercial and residential real estate activity in Texas, although the dramatic increases of the first quarter appear to be moderating and maintaining at increased levels. We are now actively hiring and adding staff, but we have filled most positions and increased hiring will diminish. Looking back, we can see that 2010 and 2011 were much better years than 2009 but not enough better to warrant increases in hiring. 2012 has been a surprise, which we have welcomed with a conservative approach to see if this is a real change in the real estate market. Cautious optimism is our outlook and probably will be until after the national elections.

Our increases in revenue and employment are small.

Management of Companies and Enterprises
We need to have the Dodd–Frank Act eliminated!

Administrative and Support Services
The demand for hiring seems to have cooled to 2010 levels.

Food Services and Drinking Places
We are experiencing upticks on sales during April but also experiencing pressure on rising cost of foods and gas.

Very little has changed this period. Our sales are still up, and costs increases have been very little recently. We are projecting revenue increases in the six-month horizon because we expect to take a price increase in late May or June to offset expected cost increases. We give almost all salaried personnel wage increases at the beginning of the fiscal year—July 1—so unless conditions worsen, there will be a 1.5 to 2 percent increase in our cost.

Merchant Wholesalers, Durable Goods
We have trouble getting raw materials to produce our products. This combined with no ability to get credit is creating a bleak future.

Housing starts have driven our sales the first quarter to an extent, but there is also a lot of upper-end remodeling and home improvement going on. Now, with storm damage all over our five-state market area, there will be revenue increases above plan due to hail and wind damage repairs. We still do not believe housing starts are going to increase nationally much this year—maybe 2.5 to 3 percent—but our sales should increase due to increased remodeling and storm damage repairs. We are happy!

Motor Vehicle and Parts Dealers
We are confident that our business will gradually improve for the remainder of this year.

Overall activity is up. However, consumer traffic is not consistent—it comes and goes reflecting overall hesitation and conservatism from an expending point of view. The economy seems to be moving in the right direction, but company-wise it is difficult to predict six months down the road due to so many unknowns still in the market.

April business is still good on preowned sales and fixed operations but slower on new car sales. We are looking for improvement with new product introductions coming in the next few months.

Building Material and Garden Equipment and Supplies Dealers
Sales are good this month, but estimating activity is poor. This is not a good sign for the upcoming months.

There are still too many mixed signals as far as business activity is concerned—busy one week and slow the next. Some customers are busier than ever, while some are still very slow, but no one seems to be very profitable as margins are tight.

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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