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Texas Service Sector Outlook Survey

Report in PDF
October 30, 2012

Texas Service Sector Activity Expands at a Modest Pace

What's New This Month

For this month's survey, business executives were asked supplemental questions on credit availability. Read Special Questions.

Texas service sector activity expanded in October, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, edged down from 15 to 13.5, suggesting growth slowed slightly from September.

Labor market indicators reflected slower employment growth but increased workweeks. The employment index fell from 9.8 to 7.5 due to an increased share of employers reporting that payrolls fell. The hours worked index edged up from 2.6 to 4.3.

Perceptions of broader economic conditions didn’t change much in October. The general business activity index fell less than 1 point from 10.1 to 9.3. Similarly, the company outlook index fell slightly from 9.1 to 7.2, with 20 percent of respondents reporting that their outlook improved from last month and 13 percent noting they worsened.

Selling prices and wages held steady in October. The selling prices index was unchanged at 8.3. The wages and benefits index came in at a reading of 14.5, similar to September’s.

After rising in September, indexes of future service sector activity were more mixed in October. Expectations regarding future business conditions were slightly less optimistic than last month. The index of future general business activity fell about 1 point to 13.2, and the index of future company outlook moved down from 17.7 to 13.

Texas Retail Outlook Survey

October 30, 2012 

Retail Sales Growth Slows

Retail Sales Growth Slows

Retail sales increased at a significantly slower pace in October, according to business executives responding to the Texas Retail Outlook Survey. The sales index fell from 22.3 to 11.3. Inventories rose.

Labor market indicators reflected slower job growth and shorter workweeks. The employment index fell from 11.9 to 3.5 in October, its lowest reading since September 2011. The hours worked index declined 3 points to 4.4.

Respondents were markedly less optimistic about the broader economy than last month. The general business activity index fell from 21.7 to 13.2. The company outlook index moved down from 15.7 to 8.5 in October. Twenty-one percent of respondents noted an improved company outlook over the prior month, compared with 13 percent who reported that their outlook had worsened.

Retail price and wage pressures eased in October. The selling prices index fell sharply to 6.2 from 20.9. The wages and benefits index edged down from 7.1 to 5.7, although the great majority of respondents noted no change in labor costs.

Indexes of future retail sector activity remained in positive territory but fell in October. Perceptions of future broader economic conditions were also less optimistic. The future general business activity index edged down from 23.4 to 22, while the index of future company outlook moved down nearly 6 points to 24.3.

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 Oct. 16–24, and 261 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. Data have been seasonally adjusted as necessary.

Next release: November 27, 2012

Texas Service Sector Outlook Survey

October 30, 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
13.5
15.0
-1.5
Increasing
36
33.5
46.6
20.0
Employment
7.5
9.8
-2.3
Increasing
32
18.7
70.0
11.2
Part-time employment
4.4
2.2
+2.2
Increasing
14
11.3
81.8
6.9
4.3
2.6
+1.7
Increasing
20
10.7
82.9
6.4
Wages and benefits
14.5
13.6
+0.9
Increasing
39
17.8
78.9
3.3
Input prices
31.7
27.9
+3.8
Increasing
42
33.7
64.3
2.0
Selling prices
8.3
8.3
0.0
Increasing
22
18.1
72.1
9.8
Capital expenditures
13.4
14.5
-1.1
Increasing
38
22.2
68.9
8.8
General Business Conditions
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
7.2
9.1
-1.9
Improving
14
19.9
67.4
12.7
General business activity
9.3
10.1
-0.8
Improving
12
23.8
61.7
14.5
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
36.7
36.4
+0.3
Increasing
44
48.8
39.0
12.1
Employment
21.9
25.8
-3.9
Increasing
43
35.9
50.1
14.0
Part-time employment
10.3
6.4
+3.9
Increasing
4
18.4
73.5
8.1
8.0
7.1
+0.9
Increasing
38
14.1
79.8
6.1
Wages and benefits
40.4
39.4
+1.0
Increasing
70
43.7
53.0
3.3
Input prices
54.3
48.3
+6.0
Increasing
70
57.8
38.7
3.5
Selling prices
26.9
29.1
-2.2
Increasing
39
36.3
54.3
9.4
Capital expenditures
23.5
27.8
-4.3
Increasing
43
33.2
57.1
9.7
General Business Conditions
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.0
17.7
-4.7
Improving
14
26.9
59.2
13.9
General business activity
13.2
14.3
-1.1
Improving
13
26.7
59.8
13.5

*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

October 30, 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
11.3
22.3
-11.0
Increasing
3
35.4
40.4
24.1
Employment
3.5
11.9
-8.4
Increasing
15
12.8
77.9
9.3
Part-time employment
-2.9
-1.6
-1.3
Decreasing
2
7.5
82.1
10.4
Hours worked
4.4
7.5
-3.1
Increasing
4
14.7
75.0
10.3
Wages and benefits
5.7
7.1
-1.4
Increasing
26
13.1
79.5
7.4
Input prices
16.8
13.6
+3.2
Increasing
27
24.5
67.8
7.7
Selling prices
6.2
20.9
-14.7
Increasing
3
18.2
69.8
12.0
Capital expenditures
12.8
13.7
-0.9
Increasing
19
21.4
70.0
8.6
Inventories
18.6
22.9
-4.3
Increasing
16
31.2
56.2
12.6
Companywide Retail Activity
Sales
13.8
29.6
-15.8
Increasing
17
33.0
47.9
19.2
Internet sales
8.0
10.4
-2.4
Increasing
3
18.0
72.0
10.0
Catalog sales
-2.3
4.8
-7.1
Decreasing
1
9.1
79.5
11.4
General Business Conditions, Retail
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
8.5
15.7
-7.2
Improving
3
21.2
66.1
12.7
General business activity
13.2
21.7
-8.5
Improving
3
29.2
54.8
16.0
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
45.3
51.7
-6.4
Increasing
44
52.5
40.3
7.2
Employment
21.6
30.6
-9.0
Increasing
34
30.8
60.0
9.2
Part-time employment
2.8
6.1
-3.3
Increasing
13
11.5
79.8
8.7
Hours worked
5.8
6.7
-0.9
Increasing
37
13.6
78.6
7.8
Wages and benefits
33.2
28.7
+4.5
Increasing
46
38.3
56.6
5.1
Input prices
40.0
41.0
-1.0
Increasing
42
46.2
47.7
6.2
Selling prices
32.3
46.8
-14.5
Increasing
42
40.0
52.3
7.7
Capital expenditures
8.1
19.7
-11.6
Increasing
19
21.0
66.1
12.9
Inventories
19.4
21.2
-1.8
Increasing
35
31.4
56.6
12.0
Companywide Retail Activity
Sales
39.5
47.0
-7.5
Increasing
43
50.5
38.5
11.0
Internet sales
21.8
22.2
-0.4
Increasing
43
26.1
69.6
4.3
Catalog sales
20.0
0.0
+20.0
Increasing
1
22.5
75.0
2.5
General Business Conditions, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
24.3
29.9
-5.6
Improving
42
34.0
56.3
9.7
General business activity
22.0
23.4
-1.4
Improving
13
33.6
54.8
11.6

*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

October 30, 2012

TSSOS Chart

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

 

Texas Retail Outlook Survey

October 30, 2012

TSSOS Chart

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

Texas Service Sector Outlook Survey

October 30, 2012

Comments from Survey Respondents

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

Merchant Wholesalers, Durable Goods

  • Water shortage will negatively affect business due to uncertainty.
  • We are seeing and feeling softness. Clear up the uncertainty surrounding the elections, both presidential and congressional, and we will see what direction things head. We have reason to believe that there is good growth ahead, assuming Congress and the White House do not throw too many road blocks in the way.
  • The decrease in inventories is seasonal. We continue to make capital expenditures to improve productivity, but we are very cautious about the future due to the upcoming elections and the financial uncertainty created by the politicians.

Merchant Wholesalers, Nondurable Goods

  • Sales for October will be better than September, because we will have 23 selling days in October versus 19 selling days in September. Sales per day are the same.

Motor Vehicle and Parts Dealers

  • We are negatively impacted by our franchisors product/monetary problems. This is not necessarily true of the industry.

Building Material and Garden Equipment and Supplies Dealers

  • Things could change based on the election. We see the economy is moving slowly, but at least it is moving and in the right direction.
  • We are experiencing lack of demand.

Food and Beverage Stores

  • There is a seasonal decline in sales.

Truck Transportation

  • We are cautiously investing in noncapital infrastructure, such as paint, carpet, expendable equipment renewal in preparation for a firming marketplace. While we are seeing an increase in business opportunity, volume continues to wander from month to month. We are in the midst of what we would call "survival pricing" from weakened competitors.

Support Activities for Transportation

  • Declining international trade (both imports and exports) is expected to continue negatively impacting business.

Internet Service Providers, Web Search Portals, and Data Processing Services

  • We remain concerned about the uncertainty associated with the fiscal cliff and lack of direction from our political leaders. Our company is doing its part. We are growing and creating jobs. We also remain concerned about our business in Europe and how the weakness there can infect the U.S. economy and mindset.

Credit Intermediation and Related Activities

  • Our bank has been able to convert some nonearning assets (repossessed property) to earning assets (selling some of that property).

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

  • Business has been slow the last couple of months with pressure on prices. Outlook for the future is good, specifically, oil and gas, with the elections leaning toward expansion of the U.S. resources—drilling and pipelines. Costs are continuing to rise with health care, skilled labor, taxes, etc.

Insurance Carriers and Related Activities

  • We are going into the fall seasonal decline in real estate activity, but in an improved real estate market.
  • Low interest rates continue to be a drag on our business and on senior-aged policyholders.
  • The overall business climate is unchanged, but the cost of increased regulation is now becoming evident. We look for this to slow everything over the next 24 months unless some regulation is reversed.

Real Estate

  • We are entering the seasonal slowdown for residential sales. Until we see the results of the November elections, we are hesitant to look too far out into the future.

Rental and Leasing Services

  • There is nothing happening out here! People are scared, cautious and not turning loose of any money.

Professional, Scientific, and Technical Services

  • Commercial real estate activity continues to heat up—both leasing and new construction. By the end of the year we will likely have several new 20-plus-story office building designs starting with significant levels of preleasing accomplished.
  • Everything is locked up until the election. Not much movement on any front. There are too many variables to ponder.
  • Planning and construction activity for single-family housing continues to increase. New projects for multifamily are slowing with developers anticipating oversupply within the DFW area. Significant new buildings for industrial/warehouse use are in the advanced planning stages, with construction to begin in late fall to early spring. However, planning and construction in the retail sector are still very light.
  • Plans and decisions for future expansion are muted and on hold until the impact of federal tax on states and the amount of small businesses pass-through tax are determined, along with the cost increase for employee medical insurance. This raises the question, "How much will we have left to invest and expand business and hire additional employees?”
  • Six months from now depends on the election, not only for president, but also for Congress. We continue to look short term, and the short term looks pretty good. But we cannot make any plans until after the election, and after we have seen the impact of coming regulations from the Consumer Financial Protection Bureau, which greatly impacts our residential business. The strong commercial real estate market in Texas appears to be tied to anticipated capital gains tax increases that will automatically become law on Jan. 1, 2013.
  • The economy is clearly improving, and our European business is finally starting to come out of hibernation.
  • The overregulation on banking is creating severe issues for us.

Management of Companies and Enterprises

  • Overregulation is driving up the cost of doing business. It is hurting our customers and our economy. Some regulations are needed, but the amount we have now is uncalled for.

Administrative and Support Services

  • The economy is sputtering, and there are indications from my customers of cutbacks and tightening budgets.
  • The "cliff" is killing any possibility of advanced planning.
  • Forecasting for the next six months is just a guess with the pending election and a somewhat pessimistic view of Washington's ability to come to a constructive agreement on taxes and spending.

Ambulatory Health Care Services

  • In September our company posted the first loss in company history (eight years). We are working to reduce costs as business/revenue has fallen more than 20 percent over the past year due to increased government regulation and reduced government payments. We had a reduction in force and closed two offices in October. In January, we are eliminating the match on our 401K. We are projecting losses for the next three months until our cost-cutting measures are complete and we are fully converted to electronic medical records. We are worried about the fiscal cliff—if Medicare/Medicaid reimbursement is cut (and the estimates we have read are around 10 to 11 percent), our bottom line would go from a small profit to a large loss and we don't think we could cut enough expenses to make it up. We would see a lot of health care providers go out of business, and many physicians would close their practices to Medicare patients, making already difficult access for patients almost impossible. Those patients would then show up in the emergency rooms, stressing them even further.
  • Uncertainty is what is killing any intentions to build the business with the looming election and both parties’ very divergent priorities. We are unable to invest in capital or people since we are in health care services and our reimbursement is up in the air.

Nursing and Residential Care Facilities

  • As an acute care hospital in a "Medicare rich" environment, we are experiencing significant turbulence in the health care economy, only partly evidenced by reduced Medicare reimbursements and increasing regulatory activity. The upcoming "fiscal cliff" (with additional reductions in federal spending) combined with political pressure at the state level to contain/reduce spending on health care creates a bleak outlook for physicians and hospitals.

Social Assistance

  • We have experienced a 5 to 6 percent decline in same-store-sales during the last two weeks of September and the first two weeks of October. The decline in customer traffic appears to be the issue.

Accommodation

  • We are seeing increases in food prices and health insurance cost increases for next year.

Food Services and Drinking Places

  • Sales were soft last fiscal period. We were definitely down more than in the past few months. Cost of goods sold was up about 0.4 percent over the previous fiscal period. Outlook seems to be gradually getting a little more negative. We just started a new fiscal period and have begun this period with fairly slow sales.
  • Health reform will negatively affect our business. We think any restaurant with over 50 employees will have a hard time surviving. Our margins are not such that we will be able to afford the additional expense of insuring every individual. Therefore, we will see a further deterioration of employment numbers.
  • Small business owners are simply waiting for the outcome of this election and also waiting to see how the health care reform is going to affect us after January 2013. We are silently hoping we can still survive regulations, or we’ll have to decide if we will have to sell or close our businesses.

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
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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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