Dallas Fed: Modest expansion continues in Texas service sector

April 25, 2023

DALLAS—Modest growth in Texas service sector activity continued in April, and labor market indicators pointed to an increase in employment and flat workweeks, according to business executives responding to the Texas Service Sector Outlook Survey.

“Input price and wage pressures eased somewhat, while selling price pressures increased,” said Jesus Cañas, Dallas Fed senior business economist. “Perceptions of broader business conditions continued to worsen in April, though pessimism waned slightly.”

Key takeaways from the service sector survey:

• The revenue index edged up just over one point to 6.9, suggesting a slight pickup in activity growth.
• The input prices index ticked down from 38.3 to 35.5, and the selling prices index rose five points to 16.1.
• The wages and benefits index inched down one point to 18.4—still elevated relative to its average reading of 15.7.
• The company outlook index improved from -11.3 to -9.4, while the outlook uncertainty index fell seven points to 16.1—closer to its series average of 13.5.

Texas Retail Sales Tick Up

“April retail sales activity grew after being stagnant in March while retail labor market indicators reflected modest growth in employment but continued shortening of workweeks,” Cañas said. “Retailers’ perceptions of broader business conditions continued to worsen as the general business activity and company outlook indexes remained in deeply negative territory.”

Key takeaways from the retail survey:   

• The sales index ticked up two points to 3.2, suggesting sales increased in April
• The employment index increased eight points to 1.6
• The company outlook index remained flat at -16.1 while the outlook uncertainty index dropped 14 points to 11.8.  

Data were collected April 11–19, and 298 Texas service sector business executives, of which 60 were retailers, responded to the survey.

For this month’s survey, executives in both manufacturing and the service sector responded to special questions on labor market and credit conditions.     

The Dallas Fed conducts the survey monthly to obtain a timely assessment of activity in the state’s service sector, which represents almost 70 percent of the state’s economy and employs about 9.5 million workers.    

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Media contact:
Jon Prior
Federal Reserve Bank of Dallas
Phone: 214-922-6857
Email: jon.prior@dal.frb.org