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Texas Service Sector Outlook Survey

Report in PDF
July 30, 2013

Texas Service Sector Growth Strengthens

Texas service sector activity expanded in July, 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 6.8 to 12.7, indicating activity picked up pace this month.

Labor market indicators were mixed. The employment index moved up from 4 to 9.7, suggesting hiring increased. With more staff on hand, average workweeks shrunk. The hours worked index dipped from -0.6 to -2.7.

Perceptions of broader economic conditions reflected more optimism in July. The general business activity index rose from 12.2 to 15.3. The company outlook index advanced from 3.4 to 10.8, with 18 percent of respondents reporting that their outlook improved from last month and 8 percent noting it worsened.

Price pressures increased, while wage pressures held steady in July. The selling prices index moved up from 5.5 to 10.3, its highest reading since February. The wages and benefits index was similar to June with a reading of 15, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected more optimism this month. The index of future general business activity advanced from 20 to 29.7, and the index of future company outlook rose 6 points to 28.9. Indexes of future service sector activity, such as future revenue and employment, rose further into positive territory.

Texas Retail Outlook Survey

July 30, 2013 

Retail Sales Rebound

Retail Sales Rebound

Retail sales improved notably in July, according to business executives responding to the Texas Retail Outlook Survey. The sales index jumped back into positive territory to 12.6, its highest reading since January. Inventories increased.

Labor market indicators were mixed. The employment index advanced from 4 to 12.5, indicating hiring increased. The hours worked index rose 7 points but remained in negative territory at -2.2, suggesting shorter workweeks.

Retailers’ perceptions of broader economic conditions reflected more optimism in July. The general business activity index rose sharply from 4.8 to 17.9. The company outlook index surged 17 points to 21.3, with 27 percent of respondents noting an improved company outlook over the prior month, compared with 6 percent reporting their outlook had worsened.

Retail price and wage pressures increased. The selling prices index jumped from 8.2 to 21, its highest level in 11 months. The wages and benefits index rose from 17.2 to 22.6, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions were more optimistic in July. Both the future general business activity and company outlook indexes shot up about 20 points to readings of 36.8. Indexes of future retail sector activity increased and remained in solid positive territory in July.

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 July 16–24, and 226 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: August 27, 2013

Texas Service Sector Outlook Survey

July 30, 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 Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
12.7
6.8
+5.9
Increasing
45
29.1
54.5
16.4
Employment
9.7
4.0
+5.7
Increasing
41
18.8
72.1
9.1
Part-time employment
7.5
2.1
+5.4
Increasing
6
12.6
82.3
5.1
-2.7
-0.6
-2.1
Decreasing
2
8.7
79.9
11.4
Wages and benefits
15.0
15.7
-0.7
Increasing
50
18.6
77.8
3.6
Input prices
25.1
21.8
+3.3
Increasing
51
26.9
71.3
1.8
Selling prices
10.3
5.5
+4.8
Increasing
32
17.2
75.9
6.9
Capital expenditures
6.7
7.5
-0.8
Increasing
47
16.1
74.6
9.4
General Business Conditions
Current (versus previous month)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
10.8
3.4
+7.4
Improving
22
18.3
74.2
7.5
General business activity
15.3
12.2
+3.1
Improving
21
22.9
69.4
7.6
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
42.0
37.9
+4.1
Increasing
53
51.1
39.8
9.1
Employment
26.0
17.6
+8.4
Increasing
50
33.1
59.8
7.1
Part-time employment
11.3
7.1
+4.2
Increasing
13
17.3
76.7
6.0
6.6
5.7
+0.9
Increasing
47
13.9
78.8
7.3
Wages and benefits
35.7
37.1
-1.4
Increasing
79
37.6
60.5
1.9
Input prices
43.7
44.1
-0.4
Increasing
79
47.2
49.2
3.5
Selling prices
23.2
25.4
-2.2
Increasing
51
30.8
61.6
7.6
Capital expenditures
17.5
13.6
+3.9
Increasing
52
27.8
61.9
10.3
General Business Conditions
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
28.9
22.9
+6.0
Improving
23
35.8
57.3
6.9
General business activity
29.7
20.0
+9.7
Improving
22
34.9
59.9
5.2

*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

July 30, 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 Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
12.6
-4.1
16.7
Increasing
1
32.7
47.1
20.1
Employment
12.5
4
8.5
Increasing
24
21
70.5
8.5
Part-time employment
1.7
-1.8
3.5
Increasing
1
10.3
81
8.6
Hours worked
-2.2
-9.2
7
Decreasing
4
8.5
80.8
10.7
Wages and benefits
22.6
17.2
5.4
Increasing
29
25.4
71.8
2.8
Input prices
16.3
13.3
3
Increasing
49
23.1
70.1
6.8
Selling prices
21
8.2
12.8
Increasing
12
27.1
66.8
6.1
Capital expenditures
8.2
-1.7
9.9
Increasing
1
19.7
68.9
11.5
Inventories
4
2.5
1.5
Increasing
14
26.1
51.8
22.1
Companywide Retail Activity
Sales
22.3
2.5
19.8
Increasing
26
34.7
52.9
12.4
Internet sales
19
2.5
16.5
Increasing
3
21.4
76.2
2.4
Catalog sales
2.5
-13.2
15.7
Increasing
1
5.1
92.3
2.6
General Business Conditions, Retail
Current (versus previous month)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
21.3
4.3
17
Improving
3
26.8
67.7
5.5
General business activity
17.9
4.8
13.1
Improving
3
24.8
68.3
6.9
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
45.3
35.9
9.4
Increasing
53
53.3
38.7
8
Employment
22.1
16.8
5.3
Increasing
43
31.1
59.9
9
Part-time employment
2.1
-2.7
4.8
Increasing
1
13.1
75.9
11
Hours worked
5.2
9.6
-4.4
Increasing
2
15.7
73.8
10.5
Wages and benefits
34.6
29.8
4.8
Increasing
55
35.4
63.7
0.8
Input prices
34.5
41.1
-6.6
Increasing
51
41.4
51.7
6.9
Selling prices
30.5
30.4
0.1
Increasing
51
35.6
59.3
5.1
Capital expenditures
15.8
1.8
14
Increasing
28
28.1
59.6
12.3
Inventories
22.1
23
-0.9
Increasing
44
41
40
18.9
Companywide Retail Activity
Sales
39.7
32.3
7.4
Increasing
52
46.2
47.3
6.5
Internet sales
21
22.5
-1.5
Increasing
52
26.3
68.4
5.3
Catalog sales
7.6
11.5
-3.9
Increasing
14
13.2
81.2
5.6
General Business Conditions, Retail
Future (six months ahead)
Indicator Jul
Index
Jun
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
36.8
16.5
20.3
Improving
51
45.2
46.5
8.4
General business activity
36.8
18.3
18.5
Improving
22
44.4
48
7.6

*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

July 30, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

July 30, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

July 30, 2013

Comments from Survey Respondents

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

Publishing Industries (except Internet)

  • July's forecast is based purely on the standard cycle for the industry. Nothing about the economy worsened July's forecast.

Credit Intermediation and Related Activities

  • We expect a merger with another bank in the October to November timeframe.

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

  • The oil and gas industry area of our business is beginning to move upward. Oil and gas gathering, transportation, drilling and production are moving up strongly. Still, there are multiple regulatory issues that are expensive to deal with. All business costs are increasing significantly. It is hard to get these increases translated into price increases for our goods and services.

Insurance Carriers and Related Activities

  • Far northeast Texas is seeing flat activity due to federal furloughs and some uncertainty after the takeover of a company that employs 1,900 people locally.

Professional, Scientific, and Technical Services

  • The real estate industry has remained strong since June 2012, and the level of residential and commercial transactions has steadily increased. Our outlook through the end of 2013 remains strong, and the general mood of the real estate industry is very positive. Although we have increased our work force by 4 to 6 percent over the past year, we have no plans to continue hiring until we get a better read on the economy.
  • There is still uncertainty and a sense the current energy industry regulations may become more aggressive. Refiners are already feeling the issues with the Renewable Fuel Standard program, and there is not the same sense of optimism in the upstream sector—not bearish—but we are certainly concerned.
  • Larger projects are decreasing with smaller projects increasing.
  • Insurance costs and higher taxes are killing our net profit. Our business volume has increased 10 percent over last year, yet our profit has declined by 10 percent. Our revenue is up, profit is down and cost of benefits to our employees is increasing dramatically.

Management of Companies and Enterprises

  • Increased regulatory costs—in dollars, in manpower and in frustration with the sheer volume of new regulations—are beginning to be a problem.
  • Too much government regulation is running our costs up. Customers get mad when we have to do things a certain way to be in compliance with regulations. The worst part about some of these regulations is that they seem to be hurting the low-income people more than any other income class.

Administrative and Support Services

  • The delay in the Affordable Care Act implementation relieved a lot of stress on the business community.
  • Regardless of the positive jobs report, full-time hiring of even highly skilled information technology professionals is very slow.

Ambulatory Health Care Services

  • Revenue and selling prices will be lowered by the government mandate on Medicare reimbursement levels starting January 2014. Depending on the amount of cuts, employment levels may drop to lower the costs in face of lower revenue.
  • Year over year, we are seeing a mild decrease in patient volume for late June and early July. We are seeing continued aggressive acquisition of physician practices by a large hospital system with referrals being directed to the in-hospital imaging service. This typically costs the patient about double what they would pay in an outpatient diagnostic facility, and they continue to self-refer to us to decrease out-of-pocket expenses.

Water Transportation

  • Business continues to improve, pulled by a tight supply/demand vessel situation.

Food Services and Drinking Places

  • We are flat with last year, despite a 0.5 percent price increase earlier in the year. We had hoped for a true rebound this summer, but we are now midway through our fourth consecutive summer of very disappointing results. We see no reason to expect that the remainder of the summer season will be any better. Cost of goods sold is up, but only by a couple of tenths over the last couple of months. We still expect increases in cost of goods sold later in the year, as well as in wages and benefits. With the delay in the Affordable Care Act employer mandate, we no longer expect as big an increase because the number of people we will have to insure in 2014 will not change by much. However, we still expect to see quite a bit of increase in the premium we have to pay for our existing medical coverage because of the elimination of preexisting conditions, annual limits and other changes in the terms of coverage that are still mandated to begin in 2014.

Merchant Wholesalers, Durable Goods

  • We are still short of moisture or irrigation water for farmers.
  • Changes are mostly seasonal.
  • Our growth rate through the warehouse is slowing. Our three-month growth rate has dropped into negative territory, showing us that annual growth will be slowing.

Building Material and Garden Equipment Supplies Dealers

  • Business is slowing fast, and we cannot figure out why.

 

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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