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Texas Service Sector Outlook Survey

Report in PDF
April 1, 2014

Texas Service Sector Growth Picks Up

Texas service sector activity climbed in March, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, advanced from 9.8 to 16.5.

Labor market indicators improved this month. The employment index held steady at 11.2 in March, indicating employment rose at the same pace as in February. The hours worked index rose 4 points to 6.6, suggesting longer workweeks.

Perceptions of broader economic conditions continued to reflect optimism in March. The general business activity index rose slightly from 6.8 to 10.1. The company outlook index remained positive but dipped from 10.7 to 8.2, with 19 percent of respondents reporting that their outlook improved from last month and 11 percent noting it worsened.

Price and wage pressures increased this month. The selling prices index ticked up from 9.7 to 11.5. The wages and benefits index moved up 5 points to 21.5, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected more optimism in March. The index of future general business activity edged up to 24.1. The index of future company outlook rose 3 points to 24.8. Indexes of future service sector activity, such as future revenue and employment, also reflected more optimism this month.

Texas Retail Outlook Survey

April 1, 2014 

Retail Activity Strengthens

Retail Activity Strengthens

Retail sales increased for the ninth consecutive month in March, according to business executives responding to the Texas Retail Outlook Survey. The sales index jumped more than 10 points to 15.6, indicating sales grew at a stronger pace than in February. Inventories rose.

Labor market indicators suggest continued positive but somewhat slower growth. The employment index remained positive but dipped 3 points to 13.4, indicating retail jobs grew at a slower pace than in February. The hours worked index also ticked down from 2.3 to 1.2.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in March. The general business activity index moved up from 15.7 to 19.9. The company outlook index was relatively unchanged at 14.1, with 23 percent of respondents noting an improved company outlook over the prior month, compared with 9 percent reporting their outlook had worsened.

Retail price pressures increased, while wage pressures eased this month. The selling prices index rose 5 points to 17. The wages and benefits index fell slightly from 19.2 to 15.3, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions continued to reflect optimism in March. The future general business activity index edged up from 27.2 to 31. The index of future company outlook ticked down to 30. Indexes of future retail sector activity reflected less optimism but 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 Mar. 18–26, and 233 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: April 29, 2014

Texas Service Sector Outlook Survey

April 1, 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
16.5
9.8
+6.7
Increasing
53
34.7
47.1
18.2
Employment
11.2
11.1
+0.1
Increasing
49
22.1
66.9
10.9
Part-time employment
8.8
4.2
+4.6
Increasing
5
13.0
82.8
4.2
6.6
2.8
+3.8
Increasing
2
11.6
83.4
5.0
Wages and benefits
21.5
16.7
+4.8
Increasing
58
23.4
74.7
1.9
Input prices
30.8
26.4
+4.4
Increasing
59
32.9
65.0
2.1
Selling prices
11.5
9.7
+1.8
Increasing
40
17.4
76.7
5.9
Capital expenditures
15.0
12.4
+2.6
Increasing
55
23.3
68.4
8.3
General Business Conditions
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
8.2
10.7
-2.5
Improving
31
18.8
70.6
10.6
General business activity
10.1
6.8
+3.3
Improving
29
20.8
68.5
10.7
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
46.2
43.6
+2.6
Increasing
61
53.5
39.2
7.3
Employment
33.5
30.2
+3.3
Increasing
60
37.1
59.3
3.6
Part-time employment
12.8
13.0
-0.2
Increasing
21
18.4
76.0
5.6
10.8
7.7
+3.1
Increasing
4
15.7
79.4
4.9
Wages and benefits
41.0
41.8
-0.8
Increasing
87
42.9
55.2
1.9
Input prices
51.2
46.8
+4.4
Increasing
87
52.0
47.2
0.8
Selling prices
29.3
31.3
-2.0
Increasing
59
34.9
59.5
5.6
Capital expenditures
31.5
28.2
+3.3
Increasing
60
38.3
55.0
6.8
General Business Conditions
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
24.8
21.7
+3.1
Improving
31
32.9
59.0
8.1
General business activity
24.1
21.3
+2.8
Improving
30
32.7
58.7
8.6

*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 Retail Outlook Survey

April 1, 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
15.6
5.0
+10.6
Increasing
9
35.3
45.1
19.7
Employment
13.4
16.3
-2.9
Increasing
32
21.9
69.6
8.5
Part-time employment
10.9
3.6
+7.3
Increasing
4
16.4
78.2
5.5
Hours worked
1.2
2.3
-1.1
Increasing
4
9.0
83.2
7.8
Wages and benefits
15.3
19.2
-3.9
Increasing
37
18.3
78.7
3.0
Input prices
23.5
20.7
+2.8
Increasing
44
25.7
72.1
2.2
Selling prices
17.0
12.0
+5.0
Increasing
20
23.9
69.2
6.9
Capital expenditures
12.0
8.6
+3.4
Increasing
5
24.1
63.8
12.1
Inventories
22.5
5.6
+16.9
Increasing
26
36.1
50.3
13.6
Companywide Retail Activity
Sales
20.4
9.6
+10.8
Increasing
34
38.4
43.6
18.0
Internet sales
28.2
4.9
+23.3
Increasing
2
28.2
71.8
0.0
Catalog sales
14.3
8.6
+5.7
Increasing
2
14.3
85.7
0.0
General Business Conditions, Retail
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
14.1
14.9
-0.8
Improving
11
23.2
67.7
9.1
General business activity
19.9
15.7
+4.2
Improving
11
30.0
59.9
10.1
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
38.6
47.6
-9.0
Increasing
61
49.2
40.3
10.6
Employment
22.0
32.8
-10.8
Increasing
51
29.0
64.0
7.0
Part-time employment
7.0
18.6
-11.6
Increasing
9
14.5
78.0
7.5
Hours worked
13.5
14.2
-0.7
Increasing
24
22.0
69.5
8.5
Wages and benefits
34.9
39.9
-5.0
Increasing
63
37.2
60.5
2.3
Input prices
39.3
49.1
-9.8
Increasing
59
42.9
53.6
3.6
Selling prices
38.2
45.5
-7.3
Increasing
59
40.0
58.2
1.8
Capital expenditures
19.7
36.4
-16.7
Increasing
36
28.6
62.5
8.9
Inventories
18.4
22.9
-4.5
Increasing
52
37.0
44.3
18.6
Companywide Retail Activity
Sales
37.4
42.9
-5.5
Increasing
60
47.6
42.3
10.2
Internet sales
27.0
21.1
+5.9
Increasing
60
29.7
67.6
2.7
Catalog sales
11.8
2.1
+9.7
Increasing
5
14.9
82.0
3.1
General Business Conditions, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
30.0
32.4
-2.4
Improving
60
34.4
61.2
4.4
General business activity
31.0
27.2
+3.8
Improving
30
36.2
58.6
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 Service Sector Outlook Survey

April 1, 2014

TSSOS Chart

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

 

Texas Retail Outlook Survey

April 1, 2014

TSSOS Chart

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

Texas Service Sector Outlook Survey

April 1, 2014

Comments from Survey Respondents

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

Credit Intermediation and Related Services

  • The increase in cost is related to technology updates and the cost of trying to comply with new banking regulations. The compounding of regulations creates additional burdens for banks to operate in a rural market effectively and to meet the needs of a community. The mega banks are making a large profit by working around the less stringent application of the new regulations and creating additional risk to the economic recovery. Complication of regulations creates inefficiency and hesitancy on the part of small businesses.
  • After several months of brisk activity in consumer lending, the pace seems to have slowed somewhat. While it is too early to tell if this is a trend, it will be interesting to see what happens over the next quarter.
  • Federal regulatory burdens continue to increase for community banks.

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

  • There are too many uncertainties. The main concern right now is the possible nonrenewal of Section 179 and Section 166 of the tax code dealing with the expensing of capital equipment. This will be a major tax increase for a business our size. All of the other uncertainties continue, so we are backing up and just trying to hold on for now.

Professional, Scientific and Technical Services

  • Government spending cuts and confusion continue to be major issues in getting committed contracts.
  • The real estate market continues to improve through the first quarter of 2014. Our gross revenue is up 22.7 percent over last year, and we expect this trend to continue throughout the year. The volume and dollar amount of the transactions that we are seeing continue to increase, which should increase our gross revenue significantly over 2013. The real estate industry has finally improved to a point where we feel comfortable hiring additional staff.
  • Business activity has remained fairly flat, with a slight drop off starting at the beginning of year. The biggest killer to our business is the increase in taxes.
  • Business is improving, and barring increased government involvement, the economy should improve.
  • Insufficient availability of qualified labor is slowing expansion. The construction market is very hot and expanding rapidly.

Management of Companies and Enterprises

  • Too much government regulation is hurting our ability to help our customers and driving up our cost of doing business.
  • Margins continue to be tight in the banking industry; however, we are seeing an uptick in demand. There is still no relief in pricing; the upward interest rate movement we saw in late 2013 and early 2014 has moderated on the volatility in the markets with Ukraine and slowing in China.
  • The extremely large cost of federal regulatory compliance and enhanced operation costs are greatly impacting our return on assets.

Administrative and Support Services

  • There has been a noticeable increase in demand for and hiring of full-time positions and a decrease in demand for contract staff during the last 60 days.
  • The outlook for our company comes from the credibility and reputation we work hard to maintain, which is allowing us to bid for new types of work and maintain our current customers. It is not a result of the economy or any government intervention.
  • There has been a slow acceleration in confidence growing from the third quarter of last year, and it seems to indicate a cautious but sustainable momentum in business growth in the financial sector.

Ambulatory Health Care Services

  • We are facing decreased working capital and increased taxes.
  • The shift to statewide managed care has been touted as a cost savings; however, that is not necessarily playing out to be true. The reality is that the cost savings are to the state, which is able to offload risk by paying a set fee per member per month. The impact on the health care system is that providers actually bear the burden. The demand for health care services is increasing, and the funding available to the system to serve those needs is diminishing. Add to this the increased administrative burden placed on the provider for having to bill multiple payers and it quickly becomes evident that provider sustainability is at risk.
  • Gross revenues in March decreased from February as a business unit under the company umbrella was discontinued. As a result, net revenue and assets have increased.
  • We are medical providers with a large percentage of Medicare patients, so our revenue will be severely impacted if federal legislation to stop the 24 percent cut in Medicare fees is not enacted by April 1. This failure will be catastrophic across the medical field, forcing a reduction in workforce, lowering patients' opportunities to receive medical care and possibly impacting research and development by drug and medical durable goods manufacturers. This will create a cascading effect of lost revenues and jobs nationwide. If it stays in place, it is likely a large number of doctors will either retire or stop seeing Medicare patients.

Food Services and Drinking Places

  • This has been a wild month. We had an extremely good spring break—up more than 5 percent in one week—but settled right back down to virtually flat with last year after it. It is a good sign that people seemed to feel free to spend money for the holiday-like period of spring break, and that might bode well for the summer. However, the sharp drop back to flat sales throws in a large word of caution. We have the same number of employees (full and part time) despite sales increases in the six-month horizon because we can handle more sales with the people we already have working. During the heart of the spring break, we actually had to add hours to the schedule but, at this point, that looks like an anomaly, not a new normal.
  • Commodity prices are extremely high right now. Cheese prices have soared to an all-time high. We will most likely have to raise prices again to cover this cost. The Affordable Care Act and newly proposed overtime rules are going to raise costs as well. All of these items spell higher prices, but we aren't sure if the market will bear the higher prices. Of course, everyone in our industry is going to be in the same boat.

Merchant Wholesalers, Durable Goods

  • We increased our inventories in March in anticipation of price increases and to prepare for the seasonal increases in the summer months.

Motor Vehicle and Parts Dealers

  • Our sales have improved. Input prices increased. We are now in discussions with our managers to determine how we can reduce inventories this year without compromising net profits. These decisions are being made in an effort to prepare managers for the effect of the inevitable higher interest rates.
  • Our experience does not reflect the general market, which is up although we are down. Our situation is the result of our particular franchisor’s issues. Overall the business situation in our market is very strong.
  • The future of medical benefits is still unknown, which is a potential problem.

Food and Beverage Stores

  • The competitive retail climate is very aggressive. The weather has negatively impacted sales.

General Merchandise Stores

  • The disruption to our business due to weather this year has made it difficult to gauge the mood of our customers. This has made us think cautiously until we can understand better the mood of our customers.

 

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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