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Texas Service Sector Outlook Survey

Report in PDF
January 29, 2013

Texas Service Sector Activity Expands at a Slower Pace

What's New This Month

This month’s survey data include annual seasonal factor 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 expanded 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, fell from 14.9 to 8.4, suggesting slower growth.

Labor market indicators reflected some employment growth, but no change in workweeks. The employment index edged down from 9.5 to 6.4, and the hours worked index was -0.2, suggesting little change in workweek length.

Perceptions of broader economic conditions were less optimistic in January. The general business activity index fell from 9.7 to 5.8. The company outlook index edged down from 9.3 to 7.5, with 20 percent of respondents reporting that their outlook improved from last month and 12 percent noting they worsened.

Selling prices and wages rose in January. The selling prices index was practically unchanged at 11.7, suggesting prices increased at about the same pace as December. The wages and benefits index dipped from 14.5 to 12.1 with slightly more firms noting compensation declined in January.

Respondents were somewhat more optimistic about expectations regarding future business conditions than last month. The index of future general business activity advanced 3 points to 14.4, and the index of future company outlook edged up from 14.3 to 15. Indexes of future service sector activity, such as future revenue and employment, generally rose in January and remained in solid positive territory.

Texas Retail Outlook Survey

January 29, 2013 

Retail Sales Growth Picks Up

Retail Sales Growth Picks Up

Retail sales picked up pace in January, according to business executives responding to the Texas Retail Outlook Survey. The sales index rose from 6.9 to 14.8, its highest reading in four months. Inventories rose.

Labor market indicators reflected less hiring, but slightly longer workweeks. The employment index moved down from 5.8 to 2.7 in January. The hours worked index held steady at 4.8.

Respondents were more optimistic about the broader economy than last month. The general business activity index remained at 5.3. The company outlook index rose from 5.4 to 11.5 in January, its highest reading in four months. Twenty-one percent of respondents noted an improved company outlook over the prior month, compared with 10 percent who reported that their outlook had worsened.

Retail price pressures eased, while wage pressures continued into January. The selling prices index fell sharply from 19.9 to 9. The wages and benefits index edged up from 14.2 to 15.5, reflecting slightly faster compensation growth, although the great majority of respondents continued to note no change in labor costs.

Perceptions of future broader economic conditions were notably less optimistic. The future general business activity index fell 12 points to 13.7, while the index of future company outlook dropped 17 points to 11.6. Indexes of future retail sector activity remained in positive territory in January.

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.15–23, and 246 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: February 26, 2013

Texas Service Sector Outlook Survey

January 29, 2013
 

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
8.4
14.9
-6.5
Increasing
39
30.2
48.0
21.8
Employment
6.4
9.5
-3.1
Increasing
35
15.5
75.4
9.1
Part-time employment
-0.7
4.5
-5.2
Decreasing
1
7.7
83.9
8.4
-0.2
4.5
-4.7
Decreasing
1
9.1
81.7
9.3
Wages and benefits
12.1
14.5
-2.4
Increasing
44
16.6
78.9
4.5
Input prices
27.1
30.9
-3.8
Increasing
45
30.9
65.3
3.8
Selling prices
11.7
11.1
+0.6
Increasing
26
20.4
70.9
8.7
Capital expenditures
13.8
8.6
+5.2
Increasing
41
24.1
65.6
10.3
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
7.5
9.3
-1.8
Improving
16
19.6
68.3
12.1
General business activity
5.8
9.7
-3.9
Improving
15
20.1
65.6
14.3
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
44.2
38.8
+5.4
Increasing
47
55.3
33.5
11.1
Employment
27.0
24.3
+2.7
Increasing
44
36.1
54.8
9.1
Part-time employment
9.4
8.7
+0.7
Increasing
7
16.4
76.6
7.0
6.4
6.8
-0.4
Increasing
41
13.4
79.6
7.0
Wages and benefits
42.4
35.9
+6.5
Increasing
73
45.0
52.4
2.6
Input prices
48.8
53.1
-4.3
Increasing
73
51.6
45.5
2.8
Selling prices
29.8
32.5
-2.7
Increasing
45
37.4
55.1
7.6
Capital expenditures
19.8
22.8
-3.0
Increasing
46
30.2
59.5
10.4
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
15.0
14.3
+0.7
Improving
17
28.4
58.2
13.4
General business activity
14.4
11.6
+2.8
Improving
16
28.6
57.2
14.2

*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 29, 2013
 

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
14.8
6.9
+7.9
Increasing
6
35.6
43.7
20.8
Employment
2.7
5.8
-3.1
Increasing
18
11.6
79.5
8.9
Part-time employment
-3.0
0.0
-3.0
Decreasing
1
7.6
81.8
10.6
Hours worked
4.8
4.4
+0.4
Increasing
2
12.7
79.4
7.9
Wages and benefits
15.5
14.2
+1.3
Increasing
23
19.9
75.7
4.4
Input prices
24.7
33.3
-8.6
Increasing
43
29.1
66.4
4.4
Selling prices
9.0
19.9
-10.9
Increasing
6
22.0
65.0
13.0
Capital expenditures
4.4
4.8
-0.4
Increasing
2
14.5
75.4
10.1
Inventories
21.6
17.0
+4.6
Increasing
8
34.1
53.4
12.5
Companywide Retail Activity
Sales
20.1
16.2
+3.9
Increasing
20
35.2
49.7
15.1
Internet sales
2.0
14.6
-12.6
Increasing
6
14.0
74.0
12.0
Catalog sales
0.0
10.0
-10.0
No Change
1
6.5
87.0
6.5
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
11.5
5.4
+6.1
Improving
6
21.0
69.5
9.5
General business activity
5.3
5.0
+0.3
Improving
2
17.8
69.7
12.5
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
42.6
46.2
-3.6
Increasing
47
50.9
40.8
8.3
Employment
21.1
25.9
-4.8
Increasing
37
29.1
62.8
8.0
Part-time employment
12.5
8.6
+3.9
Increasing
2
17.3
77.9
4.8
Hours worked
7.9
11.7
-3.8
Increasing
10
16.7
74.5
8.8
Wages and benefits
32.2
37.9
-5.7
Increasing
49
34.3
63.6
2.1
Input prices
44.1
51.7
-7.6
Increasing
45
48.5
47.1
4.4
Selling prices
44.2
48.4
-4.2
Increasing
45
47.1
50.0
2.9
Capital expenditures
26.9
23.0
+3.9
Increasing
22
38.8
49.3
11.9
Inventories
14.9
12.4
+2.5
Increasing
38
30.5
53.9
15.6
Companywide Retail Activity
Sales
42.9
50.0
-7.1
Increasing
46
44.5
53.9
1.6
Internet sales
30.0
14.9
+15.1
Increasing
46
30.0
70.0
0.0
Catalog sales
6.6
12.2
-5.6
Increasing
8
11.3
84.0
4.7
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
11.6
29.0
-17.4
Improving
45
23.7
64.3
12.1
General business activity
13.7
25.9
-12.2
Improving
16
24.6
64.5
10.9

*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 29, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

January 29, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

January 29, 2013

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • Our greatest reason for increased cost to provide services is the pending new regulatory environment.
  • The government needs to address the tax and budget issues to reduce the concerns of the business community.
  • The local economy remains sluggish. We are slowly increasing the number of jobs, but high unemployment remains. Construction trade is very slow, but retail, hospitality and health services are doing okay.

Insurance Carriers and Related Activities

  • Insurance market pricing is firming up. However, the level of general business activity is suspect right now. There is uncertainty about cuts to U.S. military budgets.

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

  • Solid job growth pushes increased retail sales and stronger home sales. Agriculture is slower, but energy is up.

Real Estate

  • Revenues and prices are improving very slightly. There is still some level of uncertainty. I think we will know more in the next 45 days about how consumers really feel about purchasing big ticket items like homes. Overall our outlook is hopeful.

Rental and Leasing Services

  • Year-end 2012 capital goods sales were a company record as customers used what they thought were the last tax advantages and deductions ever to defer government income taxes. As it turned out, some of those deductions are still available in 2013. We cannot tell what the level of business activity is going to be so far into 2013. January is going to be at best 50 percent of December’s level.

Professional, Scientific and Technical Services

  • A major customer's expansion is driving our growth for this period.
  • Residential lot construction is increasing monthly in the northern part of the DFW area. It appears this is driving early stages of exploration and development of shopping centers.

Management of Companies and Enterprises

  • We can't say it enough times: "Too Much Regulation." You can ask anyone in any industry, and they will all tell you that overregulation is hurting them. All of the compliance cost eventually gets passed on to the customer. It is basically a hidden tax on the consumer.

Administrative and Support Services

  • Uncertainty over the cost of health care continues, pending credible and quantifiable information.

Ambulatory Health Care Services

  • The Affordable Care Act brings decreases in reimbursement effective Jan 1 for Medicare patients. Strategies to move away from Medicare patient imaging are being pursued at this time. There appears to be a strategy to move imaging from low-cost outpatient facilities to high-cost hospital providers, which will dramatically increase the costs for nonfederal payers and ultimately the consumer who is paying the insurance premium.

Food Services and Drinking Places

  • We are quite concerned about the upcoming effects of the health care reform on our business as the year progresses and particularly in 2014.
  • We are concerned that business may be impacted by the 2 percent increase in payroll taxes this year. Our customers are very budget wary, and we think the 20 to 40 dollars less per check could result in fewer restaurant visits in early 2013. It’s too soon to tell. The majority of our growth is coming from new restaurant openings.
  • Our sales are down about 2 percent in the first two weeks of this fiscal period. That is the worst performance since early in 2012. Our employee numbers and workweek have stayed the same because operations did not respond to the drop in sales, which led to a high increase in wage and benefit cost. Our cost of goods is stable. In the six-month horizon we have indicated that the number of employees and the average workweek will be down. It won't shift a whole lot, but if sales stay where they are and it seems like that is what is going to happen, we will have to cut back. The average workweek hours will take the largest hit. We expect that we may be forced to cut some positions that are currently full-time to part-time.

Merchant Wholesalers, Durable Goods

  • We are still tied directly to irrigation and rain water received.
  • The increases in wages in January are normal annual cost of living and merit increases. The increases anticipated six months from now are seasonal increases.

Merchant Wholesalers, Nondurable Goods

  • High grain prices are still adversely affecting our ability to sell fish at a profit.

Motor Vehicle and Parts Dealers

  • We are very concerned about the unknowns of the health care reform. We spent a lot of time attending seminars and reading about it instead of working to increase business. We think we are okay but are not totally sure and afraid of the hidden items. We are also worried about the uncontrollable costs, such as the health insurance premium itself. Providers are indicating substantial increases are inevitable.

Building Material and Garden Equipment and Supplies Dealers

  • As we have said in the past, banks are starting to lighten up, but they need to learn not to open full blast then just completely turn off.
  • We never have experienced times like these where you don't have a feel for where your business activity is. We started 2013 with a larger open order file than last year, but January may be one of our worst months in years. We think we have some pent-up demand and 2013 will be better than 2012, but we’re still not sure about inflation, maintaining margins and overhead cost with all that is being talked about. There is not much room for mistakes coming off some tough years, but we still believe better days are ahead.

 

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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