Texas service sector activity continues to expand in February; retail sales decline for second straight month, Says Dallas Fed survey
For Immediate Release: February 27, 2018
DALLAS—Texas service sector activity continued to increase in February, 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, came in at 13.2, similar to January. However, perceptions of broader economic conditions were less optimistic. The general business activity index fell five points to 17.5. The company outlook index moved down eight points to 12.9.
“The Texas private service sector continued to grow in February, with both employment and wage growth picking up—the wages and benefits index rose to its highest level in more than 10 years,” said Amy Jordan, Dallas Fed assistant economist. “Despite the increase in service activity, optimism waned in February, and retail sales declined for the second consecutive month. This is the first two-month consecutive decline in retail sales since the beginning of 2016.”
Here are some additional takeaways from this month’s report:
Wage and price pressures increased. The selling prices index moved up from 12.4 to 16.6. The wages and benefits index rose seven points to 22.2, although the majority of firms continued to note no change in compensation costs.
Respondents were slightly less optimistic about future business conditions. The index of future general business activity fell from 36.0 to 30.5. The index of future company outlook moved down from 34.5 to 25.7.
TSSOS also includes a component called the Texas Retail Outlook Survey (TROS), which uses information from respondents in the retail and wholesale sectors only.
Key takeaways from this month’s TROS report include:
Retail sales fell for the second consecutive month. The sales index fell from –3.2 in January to –9.4 in February.
Retail employment grew at a faster pace. The employment index jumped from 1.6 to 12.1. The hours worked index rose four points to 5.5.
Retailers were less optimistic about future conditions. The index of future general business activity dropped 20 points to 7.1. The index of future company outlook plunged from 24.5 to 3.7.
For this month’s Texas Business Outlook Surveys, respondents were also asked special questions on employment expectations and the labor market.
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.
-30-
Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org