Texas service sector activity remains solid; retail sales expand in December, says Dallas Fed survey
For Immediate Release: December 27, 2017
DALLAS—Texas service sector activity continued its strong pace of growth and other service sector indexes picked up to multi-year highs in December, according to the Federal Reserve Bank of Dallas’ Texas Service Sector Outlook Survey (TSSOS).
The revenue index, a key measure of state service sector conditions, was unchanged at 24.4, suggesting growth in the service sector continued at the same pace as in November.
“Hiring picked up to its fastest pace since June 2014 in December,” said Dallas Fed Assistant Economist Amy Jordan. “Wage pressures persisted, with the wages and benefits index rising to its highest reading since February 2016. Notably, price pressures increased, with the selling prices index advancing to its highest level in over 10 years.”
Here are some key takeaways from this month’s report:
Perceptions of broader economic conditions continued to reflect optimism. The general business activity index edged down two points to 18.1. The company outlook index moved up to 19.6—its highest reading this year.
Labor market indicators reflected faster employment growth this month. The employment index rose from 9.8 to 15.3.
Respondents were slightly more optimistic about future business conditions. The index of future general business activity rose from 33.0 to 35.0. The index of future company outlook rose slightly from 32.0 to 33.5. Indexes of future service sector activity, such as future revenue and employment, also reflected more optimism this month.
Retail Sales Increase at Slower Pace
TSSOS also includes a component called the Texas Retail Outlook Survey (TROS), which uses information from respondents in the retail and wholesale sectors only.
“Strength in retail continued despite a slightly slower pace of sales growth than in November, and retail hiring picked up to its fastest pace since August 2014,” said Jordan.
Key takeaways from this month’s TROS report include:
Retail sales increased in December. The sales index fell from 30.4 in November to 25.6 in December. The general business activity index fell from 25.4 to 20.9.
Retailers indicated faster employment growth this month. The employment index jumped 11 points to 13.1. The hours worked index rose sharply from 5.6 to 15.8, its highest reading in over 10 years.
Retailers were more optimistic about future economic conditions. The index of future general business activity jumped 10 points to 31.5. The index of future company outlook advanced from 24.6 to 33.4. Indexes of future retail sector activity also reflected more optimism this month.
The survey is conducted monthly by the Dallas Fed to obtain a timely assessment of activity in the state’s service sector, which represents almost 70 percent of the state economy and employs about 8.5 million workers. Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.
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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org