FRB Dallas Home » Research & Data » Texas Business Outlook Surveys » Texas Service Sector Outlook Survey
 
 

Research & Data

  • Current Report
  • Results Table
  • Revenue/Sales Charts
  • Comments
  • Historical Data

Texas Service Sector Outlook Survey

Report in PDF
October 28, 2014

Texas Service Sector Activity Increases at a Slower Pace

What's New This Month

For this month’s survey, Texas business executives were asked supplemental questions on credit availability. Results for these questions from the Texas Manufacturing Outlook Survey (TMOS), Texas Service Sector Outlook Survey (TSSOS) and Texas Retail Outlook Survey (TROS) have been released together. Read Special Questions results.

Texas service sector activity continued to expand in October, according to business executives responding to the Texas Service Sector Outlook Survey. However, the revenue index, a key measure of state service sector conditions, declined from 26.9 to 14.

Labor market indicators reflected continued hiring and longer workweeks. The employment index held steady at 12.3 in October. The hours worked index inched down from 6.9 to 4.1 this month.

Perceptions of broader economic conditions reflected less optimism in October. The general business activity index dropped from 27.5 to 18. The company outlook index moved down from 21.5 to 15.9, with 23 percent of respondents reporting that their outlook improved from last month and 7 percent noting it worsened.

Price and wage pressures eased this month. The selling prices index fell slightly from 8 to 6.6. The wages and benefits index dipped 2 points to 18, suggesting labor costs increased at a slower pace than last month, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected less optimism in October. The index of future general business activity retreated from 36.3 to 23.4. The index of future company outlook moved down from 34.3 to 29. Indexes of future service sector activity, such as future revenue and employment, fell but remained in solid positive territory this month.

Texas Retail Outlook Survey

October 28, 2014 

Retail Sales Growth Slows

Retail Sales Growth Slows

Retail sales grew in October, but at a slower pace, according to business executives responding to the Texas Retail Outlook Survey. After surging last month, the sales index plunged from 35.5 to 16.7. Inventories increased at a slower pace than last month.

Labor market indicators reflected slower employment growth and shorter workweeks. The employment index declined from 10.8 to 2.9, indicating retail jobs increased at a slower pace than in September. The hours worked index retreated into negative territory at -1.3, suggesting shorter workweeks, although the great majority of firms continued to note no change.

Retailers’ perceptions of broader economic conditions reflected more optimism in October. The general business activity index rose from 25.9 to 29.8. The company outlook index held steady at 26.8, with 28 percent of respondents noting an improved company outlook over the prior month, compared with 1 percent reporting their outlook had worsened.

Retail price and wage pressures eased this month. The selling prices index fell from 19.5 to 13. The wages and benefits index declined from 20.8 to 11.6, although the majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected slightly less optimism in October. The future general business activity index inched down from 35.7 to 33.9. The index of future company outlook ticked down from 35.7 to 34.9. 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 Oct. 14–22, 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: November 25, 2014

Texas Service Sector Outlook Survey

October 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
14.0
26.9
-12.9
Increasing
60
31.1
51.8
17.1
Employment
12.3
11.9
+0.4
Increasing
56
19.6
73.1
7.3
Part-time employment
6.3
7.4
-1.1
Increasing
12
9.7
86.9
3.4
4.1
6.9
-2.8
Increasing
9
8.8
86.5
4.7
Wages and benefits
18.0
19.9
-1.9
Increasing
65
20.0
78.0
2.0
Input prices
22.9
27.8
-4.9
Increasing
66
27.7
67.5
4.8
Selling prices
6.6
8.0
-1.4
Increasing
47
13.6
79.4
7.0
Capital expenditures
11.1
14.5
-3.4
Increasing
62
18.5
74.1
7.4
General Business Conditions
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
15.9
21.5
-5.6
Improving
38
22.8
70.3
6.9
General business activity
18.0
27.5
-9.5
Improving
36
24.1
69.8
6.1
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
47.6
53.0
-5.4
Increasing
68
55.6
36.4
8.0
Employment
33.0
36.3
-3.3
Increasing
67
37.4
58.2
4.4
Part-time employment
13.7
14.5
-0.8
Increasing
28
17.7
78.3
4.0
5.6
7.8
-2.2
Increasing
11
9.2
87.2
3.6
Wages and benefits
41.5
47.3
-5.8
Increasing
94
41.8
57.9
0.3
Input prices
45.5
50.1
-4.6
Increasing
94
49.3
47.0
3.8
Selling prices
29.0
29.8
-0.8
Increasing
66
34.7
59.6
5.7
Capital expenditures
29.9
33.0
-3.1
Increasing
67
36.7
56.4
6.8
General Business Conditions
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
29.0
34.3
-5.3
Improving
38
34.7
59.6
5.7
General business activity
23.4
36.3
-12.9
Improving
37
30.4
62.6
7.0

*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

October 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
16.7
35.5
-18.8
Increasing
16
39.0
38.7
22.3
Employment
2.9
10.8
-7.9
Increasing
3
12.1
78.7
9.2
Part-time employment
3.5
0.0
+3.5
Increasing
1
8.8
86.0
5.3
Hours worked
-1.3
3.2
-4.5
Decreasing
1
7.9
82.9
9.2
Wages and benefits
11.6
20.8
-9.2
Increasing
44
17.5
76.6
5.9
Input prices
13.1
17.9
-4.8
Increasing
51
22.1
68.9
9.0
Selling prices
13.0
19.5
-6.5
Increasing
27
24.7
63.6
11.7
Capital expenditures
6.8
21.0
-14.2
Increasing
12
13.6
79.7
6.8
Inventories
15.1
22.6
-7.5
Increasing
33
32.0
51.1
16.9
Companywide Retail Activity
Sales
15.8
30.4
-14.6
Increasing
41
32.8
50.2
17.0
Internet sales
11.7
5.1
+6.6
Increasing
9
14.0
83.7
2.3
Catalog sales
0.0
3.0
-3.0
No Change
1
2.7
94.6
2.7
General Business Conditions, Retail
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
26.8
26.6
+0.2
Improving
18
27.5
71.8
0.7
General business activity
29.8
25.9
+3.9
Improving
18
33.3
63.2
3.5
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
56.3
51.8
+4.5
Increasing
68
62.8
30.7
6.5
Employment
27.1
30.4
-3.3
Increasing
58
33.4
60.3
6.3
Part-time employment
10.7
3.2
+7.5
Increasing
16
17.2
76.3
6.5
Hours worked
8.5
3.0
+5.5
Increasing
31
13.7
81.1
5.2
Wages and benefits
39.1
46.7
-7.6
Increasing
70
41.7
55.6
2.6
Input prices
31.6
40.4
-8.8
Increasing
66
38.6
54.4
7.0
Selling prices
38.6
46.1
-7.5
Increasing
66
43.9
50.9
5.3
Capital expenditures
25.0
32.0
-7.0
Increasing
43
33.9
57.1
8.9
Inventories
20.9
27.2
-6.3
Increasing
59
32.2
56.5
11.3
Companywide Retail Activity
Sales
47.9
53.4
-5.5
Increasing
67
53.6
40.7
5.7
Internet sales
26.2
23.5
+2.7
Increasing
67
26.2
73.8
0.0
Catalog sales
7.6
7.9
-0.3
Increasing
12
8.0
91.6
0.4
General Business Conditions, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
34.9
35.7
-0.8
Improving
67
38.0
58.9
3.1
General business activity
33.9
35.7
-1.8
Improving
37
40.3
53.3
6.4

*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

October 28, 2014

TSSOS Chart

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

 

Texas Retail Outlook Survey

October 28, 2014

TSSOS Chart

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

Texas Service Sector Outlook Survey

October 28, 2014

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • Market rates are irrational at present, and this makes it very difficult to see down the road far. Business levels are great right now, but upheavals in equity and bond markets could really put a damper on activity.
  • Housing availability in a thriving rural environment has become a big problem. It is good if you have a house for sale but bad if you cannot find a suitable one.

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

  • Slowing growth may reduce asset values in oil, farming and real estate. Job growth and farm income are down slightly.
  • There are no significant changes because the base causes of concern, such as an increase in government regulation and taxes and immigration policies, have not been fixed.

Insurance Carriers and Related Activities

  • We suspect ISIS and Ebola are causing uncertainty in the economy. There are a number of people taking a cautious approach right now until the news reports become less sensational. Medical personnel and fire fighters are all watching for the next Ebola scare to surface, and we find that discomforting.

Real Estate

  • The residential real estate market has continued to perform at record levels through September. The market has plateaued over the past several months. The question is whether declining oil prices will impact job creation over the coming months.
  • It appears that the economy, and specifically housing demand, is coasting to the end of the year. Hopefully recent job growth, household wealth increases and getting the election behind us will jumpstart 2015 activity.

Rental and Leasing Services

  • The U.S. economy is a house of cards.

Professional, Scientific and Technical Services

  • We will watch the coming months very closely. While we remain optimistic that the U.S. economy will continue to improve, weakening energy prices are impacting our business some, although we are not completely sure yet to what degree. We will likely see the impact a few months out in softening demand for services. Volatility in U.S. and foreign stock markets, along with global economic issues in Europe and China, weigh on us as well. Continued geopolitical risk is very concerning. We are adopting a “wait and see” attitude for now.
  • Ebola did not help the stock market or optimism. That was a disaster for Dallas. Hopefully, the recovery and readjustment process will solidify our reputation.
  • In spite of strong growth in most of our markets, we are concerned about the sustainability of the current economy.
  • Business has slowed dramatically. Usually we are very busy at this time of year, but now we are considering layoffs. We are not sure why things slowed down.
  • We are very fortunate to work in Texas. The real estate market is as hot as it has ever been and for a good reason. The amount of jobs being created is fueling a tremendous amount of development, and it seems that we are having trouble meeting the demands for housing and office space. We are very excited about the foreseeable future for this market.
  • The prices of crude oil and natural gas and the slowdown in the oil and gas market are issues for our business.

Administrative and Support Services

  • Market resistance to price increases makes it hard to pass along product cost increases.
  • Health care space is booming. The free market is trying to correct for recent regulations.
  • Health insurance rates have skyrocketed.
  • Our increase in revenue is not retail growth due to economic improvement, but instead is due to our ability to capture work from other providers.

Educational Services

  • There are more opportunities to submit proposals. Prices are able to move up slowly.
  • We have not received our updated health insurance quotes for 2015. Hopefully, there will not be too much of an increase.

Ambulatory Health Care Services

  • Eighty percent of our revenue comes from the federal government in the form of Medicare. Unfortunately, the government does not see the value in our segment of the health care market and continues to cut our reimbursement every January. January 2015 is no exception. We will have to increase our patient load to counteract the rate cut. This is not an easy task in most of our markets as competition is fierce. That being said, we have another line of business in the post-acute care segment of the health care market that is beginning to bear fruit. As a result, our overall outlook is positive.
  • Anticipated decreases will be due to an expected decline in Medicare reimbursement. We are seeing some payroll pressure due to the tight labor market. We expect health care coverage costs to rise again in 2015.

Hospitals

  • We have seen a decrease in volumes in October. Costs continue to increase as regulatory requirements continue to increase. Rural hospitals are required to maintain the same reporting requirements as larger systems.

Nursing and Residential Care Facilities

  • The overall environment for health care providers in Texas remains challenging. Increasing charity and bad debt costs, lower Medicare reimbursements, higher-deductible commercial plans, risk of losing supplemental Medicaid payments and lower levels of physician productivity all combine to make a bleak outlook.

Food Services and Drinking Places

  • Relative to September, sales in October have slowed down, although sales are still higher than last year and remain greater than our price increases. However, our input costs are up; so, on net, there is little change in revenue. In the next six months, we expect sales to continue to increase more than the percentage of price increases. We also expect our wage and benefits costs to rise as medical coverage costs increase sharply on Jan. 1, 2015. We may have to change to another health insurance carrier and take a decrease in benefits, which would result in a lower cost increase but fewer benefits for our employees. We could also pass on increased costs to the customer. However, that can be very counterproductive; we estimate that a price increase of 1 to 2 percent can be accepted by customers without a detrimental impact on sales.
  • Government regulations are harming small business profits and hiring.
  • We feel that concerns about the Ebola situation have affected the retail economy.

Religious, Grantmaking, Civic, Professional and Similar Organizations

  • Our business depends on the health of the oil and gas exploration and production industry, and we are concerned that the fall in oil prices will be sustained over many months, leading to a reduction in activity.

Merchant Wholesalers, Nondurable Goods

  • We are going to do more with less.
  • Our firm is increasing the number of part-time workers in place of full-time workers in anticipation of higher health care costs in 2015 for full-time workers. Business activity in Texas remains very strong, and activity in the remainder of the U.S. is stable.

Motor Vehicle and Parts Dealers

  • As long as we continue thinking that the stock market is the barometer on how well the economy is doing, things will not end well. Low interest rates have been feeding speculation, not investment in productive capacity or real growth. Internet activity is based on advertising revenues, which will dry up whenever companies pull back. We see interesting times to come in the near future.
  • Our industry and the overall economy are strong, but we are limited by issues with our major supplier.

Building Material and Garden Equipment and Supplies Dealers

  • September sales were very high, which makes October sales relatively lower, although October will still be a good month for sales.

Nonstore Retailers

  • Our vending business grows as new businesses come to Texas, as well as when our existing customers increase headcount. One concern we have is whether the drop in oil prices will impact the growth of fracking in Texas, which in turn could slow the Texas economy. The recent news of Ebola in Texas has already caused us to discuss potential impacts on our business if it spreads. We think businesses will have employees work from home when possible in order to slow the spread of disease, which would reduce our sales since we only sell to businesses with sizable workforces. For now, however, our forecast remains rosy.

Truck Transportation

  • We are having a big problem recruiting truck drivers for a long-haul operation. We have 20 openings now, and we are advertising across the country with no results.

 

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.

Sign up for our free email alert to be automatically notified as soon as the latest Texas Service Sector Outlook Survey is released on the web.

 

Federal Reserve Bank of Dallas Seal
Federal Reserve Bank of Dallas

2200 N. Pearl St., Dallas, Texas 75201 | 214.922.6000 or 800.333.4460
Disclaimer / Privacy Policy

Federal Reserve Centennial