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Texas Service Sector Outlook Survey

Report in PDF
November 26, 2013

Texas Service Sector Activity Strengthens

Texas service sector activity picked up further in November, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, advanced 6 points to 11.4.

Labor market indicators were mixed. The employment index edged down from 5.5 to 3.9 this month, indicating the pace of hiring slowed slightly. The hours worked index was similar to October at -1.6, suggesting shorter workweeks.

Perceptions of broader economic conditions reflected more optimism in November. The general business activity index rose from 6.4 to 10.3. The company outlook index inched up from 4.9 to 5.5, with 17 percent of respondents reporting that their outlook improved from last month and 11 percent noting it worsened.

Price pressures remained steady, while wage pressures increased in November. The selling prices index was unchanged at 7.2. The wages and benefits index moved up from 8.7 to 13.5, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions continued to reflect optimism this month. The index of future general business activity rose from 14.5 to 21.1. The index of future company outlook remained in solid positive territory but fell 2 points to 18.5. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory.

Texas Retail Outlook Survey

November 26, 2013 

Retail Sales Growth Picks Up

Retail Sales Growth Picks Up

Retail sales spiked in November, according to business executives responding to the Texas Retail Outlook Survey. The sales index jumped more than 12 points to 20.3, its highest reading in three months. Inventories rose.

Labor market indicators were mixed. The employment index rose slightly from 6.2 to 9.1, indicating hiring picked up pace. The hours worked index fell from -1.8 to -7.5, suggesting workweeks continued to shorten this month.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in November. The general business activity index remained positive but dipped 2 points to 14.6. The company outlook index rose from 13.3 to 17.6, with 22 percent of respondents noting an improved company outlook over the prior month, compared with 4 percent reporting their outlook had worsened.

Retail price pressures eased, while wage pressures were largely unchanged in November. The selling prices index plunged from 16.8 to 3.5, its lowest reading since July 2012, suggesting prices rose at a slower pace than in October. The wages and benefits index ticked up from 5.9 to 6.5, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected a bit more optimism in November. The future general business activity index edged up from 29.2 to 31.7, while the index of future company outlook rose from 28.9 to 32.7. Indexes of future retail sector activity remained in solid positive territory this month.

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 Nov. 12–20, and 215 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: December 31, 2013

Texas Service Sector Outlook Survey

November 26, 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 Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
11.4
5.3
+6.1
Increasing
49
28.6
54.2
17.2
Employment
3.9
5.5
-1.6
Increasing
45
16.5
70.9
12.6
Part-time employment
4.4
0.0
+4.4
Increasing
1
11.2
82.0
6.8
-1.6
-2.3
+0.7
Decreasing
2
5.5
87.4
7.1
Wages and benefits
13.5
8.7
+4.8
Increasing
54
17.2
79.1
3.7
Input prices
27.4
28.6
-1.2
Increasing
55
29.7
68.0
2.3
Selling prices
7.2
7.4
-0.2
Increasing
36
13.3
80.6
6.1
Capital expenditures
11.6
8.2
+3.4
Increasing
51
19.0
73.5
7.4
General Business Conditions
Current (versus previous month)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
5.5
4.9
+0.6
Improving
26
16.5
72.5
11.0
General business activity
10.3
6.4
+3.9
Improving
25
21.0
68.3
10.7
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
39.7
39.5
+0.2
Increasing
57
51.3
37.1
11.6
Employment
20.9
25.1
-4.2
Increasing
54
30.8
59.3
9.9
Part-time employment
10.3
9.2
+1.1
Increasing
17
17.1
76.1
6.8
-2.0
-2.5
+0.5
Decreasing
2
7.3
83.4
9.3
Wages and benefits
32.7
34.4
-1.7
Increasing
83
35.9
60.8
3.2
Input prices
45.2
46.2
-1.0
Increasing
83
47.6
50.0
2.4
Selling prices
26.3
25.7
+0.6
Increasing
55
32.6
61.1
6.3
Capital expenditures
23.0
24.6
-1.6
Increasing
56
30.3
62.3
7.3
General Business Conditions
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
18.5
20.5
-2.0
Improving
27
29.9
58.7
11.4
General business activity
21.1
14.5
+6.6
Improving
26
30.1
60.9
9.0

*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

November 26, 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 Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
20.3
7.9
+12.4
Increasing
5
33.6
53.1
13.3
Employment
9.1
6.2
+2.9
Increasing
28
15.4
78.3
6.3
Part-time employment
0.0
-3.9
+3.9
No Change
1
8.0
84.0
8.0
Hours worked
-7.5
-1.8
-5.7
Decreasing
2
3.1
86.3
10.6
Wages and benefits
6.5
5.9
+0.6
Increasing
33
12.4
81.7
5.9
Input prices
16.9
20.1
-3.2
Increasing
53
21.4
74.1
4.5
Selling prices
3.5
16.8
-13.3
Increasing
16
10.5
82.5
7.0
Capital expenditures
13.3
-3.8
+17.1
Increasing
1
20.8
71.7
7.5
Inventories
10.6
4.9
+5.7
Increasing
18
25.6
59.4
15.0
Companywide Retail Activity
Sales
26.6
6.1
+20.5
Increasing
30
36.4
53.8
9.8
Internet sales
0.0
0.0
0.0
No Change
2
13.2
73.7
13.2
Catalog sales
-5.4
-8.5
+3.1
Decreasing
3
2.7
89.2
8.1
General Business Conditions, Retail
Current (versus previous month)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
17.6
13.3
+4.3
Improving
7
21.8
74.0
4.2
General business activity
14.6
16.9
-2.3
Improving
7
26.0
62.6
11.4
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
54.4
45.8
+8.6
Increasing
57
56.8
40.8
2.4
Employment
24.1
24.8
-0.7
Increasing
47
25.2
73.7
1.1
Part-time employment
8.3
17.0
-8.7
Increasing
5
11.9
84.5
3.6
Hours worked
2.2
2.9
-0.7
Increasing
6
8.7
84.8
6.5
Wages and benefits
32.5
27.0
+5.5
Increasing
59
33.1
66.3
0.6
Input prices
27.5
34.7
-7.2
Increasing
55
31.4
64.7
3.9
Selling prices
36.0
34.7
+1.3
Increasing
55
40.0
56.0
4.0
Capital expenditures
21.6
19.6
+2.0
Increasing
32
25.5
70.6
3.9
Inventories
28.4
26.7
+1.7
Increasing
48
32.7
63.0
4.3
Companywide Retail Activity
Sales
55.6
35.0
+20.6
Increasing
56
56.0
43.6
0.4
Internet sales
27.0
11.4
+15.6
Increasing
56
27.0
73.0
0.0
Catalog sales
10.5
-3.5
+14.0
Increasing
1
12.1
86.3
1.6
General Business Conditions, Retail
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
32.7
28.9
+3.8
Improving
55
37.4
57.9
4.7
General business activity
31.7
29.2
+2.5
Improving
26
41.6
48.6
9.9

*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

November 26, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

November 26, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

November 26, 2013

Comments from Survey Respondents

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

Credit Intermediation and Related Services

  • We anticipate an increase in economic activity both in Houston and elsewhere in the broader United States in 2014. The shutdown didn't affect us at all.

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

  • Vehicle sales remain good throughout West Texas. Retail sales are higher than they were six months ago.
  • Demand is softening, but costs keep increasing. These increases are generally triggered by government regulations, i.e., inspections, testing and certifications for products and services. Additional requirements for OSHA, EEOC, immigration and EPA are constant. We are OK with health insurance for now, but we expect a significant increase in insurance premiums at midyear when our contract is up for renewal.

Funds, Trusts, and Other Financial Vehicles

  • We are very concerned about the future outlook for the economy and the country. We cannot continue with the increase in debt because it could cause a major financial calamity and a devaluation of the dollar in the future.

Real Estate

  • Absent the Affordable Care Act and continued implementation of Dodd–Frank Act, we would be very optimistic about economic prospects for 2014. The qualified residential mortgage, QRM, has the possibility to negatively impact the housing recovery, causing us to see 2014 as remaining the same at best. Mortgage loan experts predict that QRM will eliminate roughly 20 percent of home buyers who would have qualified for mortgage loans in 2012 and 2013.

Rental and Leasing Services

  • Any optimism we share regarding the future relates to our continued expansion and acquisition of failed companies; it is not due to the economy or policies of the government today. We are estimating next year to be flat to up 5 percent. Our cost of doing business will continue to increase, as it has for the last six years, without an ability to pass very much of that increased cost onto the consumer. We believe, even without an inverted yield curve, we are headed for a major correction or another recession within 18 months.
  • We have closed our long-haul trucking business.

Professional, Scientific, and Technical Services

  • We are concerned about debt ceiling and budget issues in D.C. in January. A shutdown could dramatically impact businesses across the board, including legal. We are concerned about economic growth in 2014, so we are approaching next year with a careful eye toward planning for downside market risk.
  • We see the trend in business activity as slowly improving. Our clients are still cautious. The Affordable Care Act is still a concern, and our hope is that enrollment will be extended for another year.
  • Health care issues are going to hurt everyone. We are renewing early to protect our plan, but the costs are much higher. Competitive rates are lower than ever before. It is hard to make profits.
  • The Texas real estate market remains strong in spite of a sluggish national economy. We are very fortunate to be in Texas. Our revenue for October, as compared with October 2012, increased 24.3 percent, and for the year our total revenue has increased by 27 percent. The overall mood of the market remains positive, and we feel 2014 should be another good year.
  • The Affordable Care Act is having a serious negative impact on our insurance renewals, which hurts our profitability and ability to recruit employees.

Management of Companies and Enterprises

  • The impact of the Affordable Care Act continues to weigh heavy on our customer base as well as our bank.
  • Increased regulations are running up our costs to do business, and others in the industry feel the same.

Administrative and Support Services

  • We laid off 20 percent of our workforce due to increased government regulation of financial services companies. Over 100 people are now unemployed, and the outlook continues to worsen.
  • The introduction of a new product is responsible for our favorable forward outlook.
  • We have not seen an acceptable level of consumer buying confidence since the government shutdown.

Ambulatory Health Care Services

  • Downward pressure on doctor reimbursements and projected increases in employer medical benefits costs may have a double impact on medical practices this spring.

Food Services and Drinking Places

  • Sales are down more than 10 percent compared with this time last year, reflecting the fact that Thanksgiving occurred on the earliest day possible last year and will occur on the latest day possible this year. There is very little chance that we will recoup those sales later in the holiday season. Hourly labor schedules have not been increased as a result of the lower sales. The cost of benefits has not jumped as expected because of the delay of the employer health care mandate and will remain similar to benefits costs this year. All of our hourly restaurant employees lost their coverage through the company because the insurer can no longer sell the mini-med product we offered. We feel there are going to be problems by having employees go to the health insurance exchange for one year and then back to coverage through the company, which might be more expensive but still affordable under the terms of the Affordable Care Act. Cost of goods sold are down by 0.3 percent this month over last month, but we really don't expect that to continue. We have already been notified of major price increases for beef right after the first of the year, and we expect other proteins to also trend up quite sharply as we have to renew contracts. We will be increasing prices about 1 percent in probably two weeks. Our capital expenditures are up because we remodeled one unit in October. This month should be the last of those expenditures.

Merchant Wholesalers, Durable Goods

  • Increases in sales six months from now and decreases in inventories from October to November are seasonal changes. We anticipate annual salary and wage increases on Jan. 1, 2014.
  • The Affordable Care Act is starting to really affect peoples’ behavior and decision-making.

Motor Vehicle and Parts Dealers

  • We are extremely concerned about the Affordable Care Act. We are in a good area of the state and country, but what happens throughout the country regarding the Affordable Care Act can hurt us here, including higher premiums and cutbacks from full-time to part-time employment.

Food and Beverage Stores

  • Most of our sales are from motor fuel. Prices have dropped, causing sales to drop, but margins are up.
  • Our hourly employees are tremendously concerned about losing access to health care as our mini-med, which is a relatively generous plan, will become unlawful on Jan. 1. We believe the Affordable Care Act is going to have a very negative impact on consumer confidence for those making less than $60,000 per year. Our other concern is that there are now low-cost homes under construction, but local bankers say that access to mortgage credit for low- to middle-income folks has not loosened at all. We hear that auto loans are easier to get today.

 

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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