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Texas Service Sector Outlook Survey

Report in PDF
May 28, 2014

Texas Service Sector Activity Increases at a Slower Pace

What's New This Month

For this month's survey, firms were asked supplemental questions on employment expectations and the labor market. Read Special Questions.

Texas service sector activity continued to reflect expansion in May, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, remained positive but fell from 18.5 to 13.1.

Labor market indicators suggested continued positive but somewhat slower growth. The employment index dipped from 16.4 to 13.8 in May, indicating employment rose at a slower pace than in April. The hours worked index remained positive but ticked down a point to 4.9.

Perceptions of broader economic conditions continued to reflect optimism in May. The general business activity index inched down 1 point to 10.3. The company outlook index was unchanged at 8.7, with 21 percent of respondents reporting that their outlook improved from last month and 12 percent noting it worsened.

Price pressures remained the same, while wage pressures eased this month. The selling prices index was similar to last month at 8, indicating prices rose at the same pace as in April. The wages and benefits index fell slightly from 22.1 to 17, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions continued to reflect optimism in May. The index of future general business activity was unchanged at 24.2. The index of future company outlook held steady at 22.9. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory this month.

Texas Retail Outlook Survey

May 28, 2014 

Retail Sales Growth Slows

Retail Sales Growth Slows

Retail sales increased for the eleventh consecutive month in May, albeit at a slower pace than last month, according to business executives responding to the Texas Retail Outlook Survey. The sales index edged down from 18.3 to 16.4. Inventories rose at the same pace as last month.

Labor market indicators were mixed this month. The employment index remained positive but dropped 10 points to 8.2, indicating retail jobs grew at a slower pace than in April. After spiking last month, the hours worked index plunged into negative territory to -5.4, suggesting shorter workweeks, although the great majority of firms continued to note no change.

Retailers’ perceptions of broader economic conditions reflected less optimism in May. The general business activity index remained positive but dipped from 13.5 to 10.7. The company outlook index fell from 14.5 to 11.3, with 21 percent of respondents noting an improved company outlook over the prior month, compared with 10 percent reporting their outlook had worsened.

Retail price pressures increased, while wage pressures eased this month. The selling prices index jumped from 7.5 to a five-month high of 19.6. The wages and benefits index dropped 10 points to 12, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions continued to reflect optimism in May. The future general business activity index remained positive but inched down to 25.6. The index of future company outlook ticked up to 29.4. 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 May 13–21, and 227 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: July 1, 2014

Texas Service Sector Outlook Survey

May 28, 2014
 

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 May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
13.1
18.5
-5.4
Increasing
55
29.4
54.3
16.3
Employment
13.8
16.4
-2.6
Increasing
51
19.9
74.0
6.1
Part-time employment
3.4
6.9
-3.5
Increasing
7
8.0
87.4
4.6
4.9
6.0
-1.1
Increasing
4
7.9
89.1
3.0
Wages and benefits
17.0
22.1
-5.1
Increasing
60
18.7
79.6
1.7
Input prices
29.6
25.2
+4.4
Increasing
61
31.0
67.6
1.4
Selling prices
8.0
7.1
+0.9
Increasing
42
12.8
82.4
4.8
Capital expenditures
16.3
15.7
+0.6
Increasing
57
20.7
74.8
4.4
General Business Conditions
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
8.7
8.8
-0.1
Improving
33
20.6
67.4
11.9
General business activity
10.3
11.3
-1.0
Improving
31
21.5
67.3
11.2
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
44.7
46.0
-1.3
Increasing
63
53.7
37.3
9.0
Employment
33.5
27.7
+5.8
Increasing
62
38.0
57.5
4.5
Part-time employment
12.0
14.8
-2.8
Increasing
23
16.2
79.6
4.2
9.3
9.5
-0.2
Increasing
6
12.3
84.7
3.0
Wages and benefits
38.7
41.1
-2.4
Increasing
89
40.8
57.1
2.1
Input prices
43.8
44.8
-1.0
Increasing
89
45.2
53.4
1.4
Selling prices
23.4
29.4
-6.0
Increasing
61
29.9
63.6
6.5
Capital expenditures
27.9
28.3
-0.4
Increasing
62
35.0
58.0
7.1
General Business Conditions
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
22.9
23.3
-0.4
Improving
33
34.5
53.9
11.6
General business activity
24.2
24.0
+0.2
Improving
32
33.4
57.4
9.2

*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

May 28, 2014
 

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 May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
16.4
18.3
-1.9
Increasing
11
33.8
48.8
17.4
Employment
8.2
18.5
-10.3
Increasing
34
16.0
76.2
7.8
Part-time employment
4.1
5.6
-1.5
Increasing
6
8.3
87.5
4.2
Hours worked
-5.4
12.2
-17.6
Decreasing
1
1.4
91.8
6.8
Wages and benefits
12.0
22.0
-10.0
Increasing
39
13.9
84.2
1.9
Input prices
24.8
15.6
+9.2
Increasing
46
25.6
73.6
0.8
Selling prices
19.6
7.5
+12.1
Increasing
22
21.3
77.0
1.7
Capital expenditures
15.7
14.3
+1.4
Increasing
7
19.6
76.5
3.9
Inventories
19.8
20.0
-0.2
Increasing
28
31.1
57.6
11.3
Companywide Retail Activity
Sales
11.5
29.1
-17.6
Increasing
36
28.0
55.5
16.5
Internet sales
7.9
10.0
-2.1
Increasing
4
15.8
76.3
7.9
Catalog sales
-6.3
2.8
-9.1
Decreasing
1
3.1
87.5
9.4
General Business Conditions, Retail
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.3
14.5
-3.2
Improving
13
21.2
68.9
9.9
General business activity
10.7
13.5
-2.8
Improving
13
21.7
67.3
11.0
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
41.2
39.6
+1.6
Increasing
63
49.4
42.5
8.2
Employment
10.9
14.1
-3.2
Increasing
53
19.6
71.6
8.7
Part-time employment
10.2
10.3
-0.1
Increasing
11
14.5
81.2
4.3
Hours worked
11.3
13.4
-2.1
Increasing
26
13.6
84.1
2.3
Wages and benefits
34.2
38.4
-4.2
Increasing
65
36.6
61.0
2.4
Input prices
34.1
40.7
-6.6
Increasing
61
36.2
61.7
2.1
Selling prices
34.8
43.4
-8.6
Increasing
61
37.0
60.9
2.2
Capital expenditures
24.0
22.2
+1.8
Increasing
38
28.3
67.4
4.3
Inventories
15.8
22.7
-6.9
Increasing
54
30.5
54.8
14.7
Companywide Retail Activity
Sales
37.2
40.6
-3.4
Increasing
62
44.9
47.4
7.7
Internet sales
28.5
21.6
+6.9
Increasing
62
31.4
65.7
2.9
Catalog sales
21.1
11.6
+9.5
Increasing
7
22.5
76.1
1.4
General Business Conditions, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
29.4
27.1
+2.3
Improving
62
35.2
59.0
5.8
General business activity
25.6
27.0
-1.4
Improving
32
35.3
55.0
9.7

*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 28, 2014

TSSOS Chart

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

 

Texas Retail Outlook Survey

May 28, 2014

TSSOS Chart

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

Texas Service Sector Outlook Survey

May 28, 2014

Comments from Survey Respondents

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

Credit Intermediation and Related Services

  • The biggest deterrent to the economy in our area is the impact drought has on the country, resulting in huge economic effects on agriculture and the threatening lack of potable water in several metropolitan areas, such as San Antonio, Austin, Midland–Odessa and San Angelo. We did get 1 inch of rain here in the Heart of Texas yesterday, and the temperatures are very pleasant. The energy industry is a big driver in the economy in central, west and south Texas. This exuberant industry is putting a strain on the infrastructure of the areas that have attracted the most laborers as well as on transportation due to the huge increase in traffic.
  • Activity in the Houston market is brisk. Big ticket consumer, home improvement, mortgage and business loans are in demand.

Publishing Industries (except Internet)

  • We serve the upstream oil and gas industry by providing drilling data. Our served market is strong and stable. Our growth in revenue, employment and investment is driven by new products and larger market share as much as by increases in overall demand.

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

  • We are unsure about the federal tax situation that affects capital expenditures that previously were expensed against revenue. Domestic drilling in shale is soft, based on current prices. New regulations keep coming from all directions. Business is soft.

Professional, Scientific and Technical Services

  • Suddenly, sentiment has changed from optimistic to cautious. We are not sure why, other than health care costs and continued government overregulation wearing people down.
  • Everyone wants a raise, but they do not seem to be leaving for higher paying jobs. We just don't think there are a lot of better jobs out there.
  • DFW is still the place to be if you are in the real estate business. Our numbers, both residentially and commercially, continue to improve in 2014. We have remained cautious about hiring and capital expenditures due to two major factors. We are concerned that Texas and a few other markets are the only markets that seem to be thriving. We still have way too many people unemployed, but if other parts of the country begin showing signs of recovery, we feel hiring and capital expenditures will increase dramatically. The other major factor, of course, is interest rates. We know they are going to rise at some point, and if they rise too quickly, it could slow down the recovery significantly.
  • The existing positive outlook for our company is anticipated to remain strong through the end of year.
  • We have seven positions open at the moment and not a lot of candidates. We are working hard and looking elsewhere for qualified people. We'll add 15 interns in June. Business attitudes are positive.

Management of Companies and Enterprises

  • Too much government regulation is hurting our ability to help our customers.
  • Regulatory and compliance issues in this country are choking any thoughts of a recovery.

Administrative and Support Services

  • Demand for full-time employees in DFW has been stronger in the last three months than in the previous several years. Contract employee demand continues to be below 2009–13.
  • We have seen a general pickup of activity. It is very difficult to hire people. The applicants are unskilled.
  • Worries continue about the long-term impact of the Affordable Care Act.
  • We see good potential business activity, but there is currently no flexibility in pricing.

Hospitals

  • May has seen a decrease over a very impressive April. Costs continue to rise as regulation pressures continue to increase. Requirements for “meaningful use” are taking a ton of resources, both financial and people.

Food Services and Drinking Places

  • We took a small price increase in April to offset high cheese prices. We don't anticipate another price change until 2015.

Merchant Wholesalers, Durable Goods

  • Changes are seasonal.

Motor Vehicle and Parts Dealers

  • The overall industry we are a part of is growing. We are not participating due to a manufacturer issue. We see the outlook as great.
  • Business is back to 2006 levels. Demand is strong, and financing at attractive rates is readily available.

Food and Beverage Stores

  • The economy is getting better slowly, with no inflation, but we need immigration reform, and it is hard to find employees. We face intense retail competition. It is hard to grow same-store sales.

 

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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