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Texas Service Sector Outlook Survey

Report in PDF
November 29, 2011

Texas Service Sector Activity Continues to Grow

Texas service sector activity increased in November, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, rose sharply from 4.7 to 14, with 31 percent of respondents noting revenue increased from October.

Labor market indicators reflect modest hiring and slightly longer workweeks. The employment index edged up from 4.7 to 5.5, its best reading in seven months, although the great majority of respondents noted no change in employment. The hours worked index dipped to 2.7 in November, which is consistent with slightly longer workweeks.

Perceptions of general business conditions improved markedly in November. The general business activity index jumped to 7.4, its first positive reading in seven months. The company outlook index moved up to 10.3 in November, its second consecutive month in positive territory, with 21 percent of respondents reporting their outlooks improved from last month.

Price and wage pressures changed little in November. The selling prices index edged up from 6.3 to 8.8. The wages and benefits index rose slightly from 12.1 to 13.3, although the great majority of respondents noted no change in labor costs.

Indexes of future service sector activity were not much changed from last month, although expectations regarding future business conditions were more optimistic. The index of future general business activity advanced from 6 to 15.5 in November, its best reading since April, and the index of future company outlook moved further into positive territory from 16.9 to 19.9.

Texas Retail Outlook Survey

November 29, 2011 

Retail Sales Pick Up

Retail Sales Pick Up

Retail sales increased in November, according to business executives responding to the Texas Retail Outlook Survey. The volatile sales index rose from 9.2 to 12.8, marking four consecutive months of sales increases. Inventories rose sharply.

Labor market indicators reflected continued hiring, albeit at a slower pace, and longer workweeks. The employment index fell from 16 to 8.2, which is indicative of slower employment growth. The hours worked index rose from 1.6 to 7.5.

Perceptions of general business conditions improved again in November. The general business activity index came in at 5.2, its second consecutive reading in positive territory. The company outlook index was positive for the third month in a row, with a reading of 13.2. Nearly a quarter of respondents said their company’s outlook had improved from the prior month, compared with 10 percent who noted their outlook had worsened.

Retail prices and wages continued to climb in November. The selling prices index rose from 19.9 to 26.4. The wages and benefits index was not much changed, ticking down from 15.6 to 14.9, although the majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity remained in solid positive territory in November, while the future general business activity index improved sharply.

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 Nov. 15–22, and 224 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.

Next release: December 28, 2011

Texas Service Sector Outlook Survey

November 29, 2011
 

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 Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
14.0
4.7
+9.3
Increasing
25
30.8
52.4
16.8
Employment
5.5
4.7
+0.8
Increasing
21
17.2
71.1
11.7
Part-time employment
0.2
0.5
-0.3
Increasing
3
7.9
84.4
7.7
2.7
5.2
-2.5
Increasing
9
10.6
81.5
7.9
Wages and benefits
13.3
12.1
+1.2
Increasing
26
16.1
81.1
2.8
Input prices
32.7
29.2
+3.5
Increasing
31
34.6
63.5
1.9
Selling prices
8.8
6.3
+2.5
Increasing
11
16.5
75.8
7.7
Capital expenditures
11.8
12.4
-0.6
Increasing
27
17.8
76.2
6.0
General Business Conditions
Current (versus previous month)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
10.3
5.7
+4.6
Improving
2
21.1
68.1
10.8
General business activity
7.4
-5.1
+12.5
Improving
1
18.4
70.6
11.0
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
36.6
36.5
+0.1
Increasing
33
46.6
43.5
10.0
Employment
16.2
21.4
-5.2
Increasing
32
28.3
59.6
12.1
Part-time employment
7.7
11.2
-3.5
Increasing
5
13.4
80.9
5.7
9.3
3.6
+5.7
Increasing
27
13.1
83.1
3.8
Wages and benefits
32.9
30.2
+2.7
Increasing
59
34.9
63.1
2.0
Input prices
46.7
45.8
+0.9
Increasing
59
49.0
48.7
2.3
Selling prices
26.4
25.3
+1.1
Increasing
28
33.0
60.4
6.6
Capital expenditures
25.6
17.9
+7.7
Increasing
32
32.1
61.6
6.5
General Business Conditions
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
19.9
16.9
+3.0
Improving
3
29.9
60.1
10.0
General business activity
15.5
6.0
+9.5
Improving
2
25.2
65.1
9.7

*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

November 29, 2011
 

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 Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
12.8
9.2
+3.6
Increasing
4
33.2
46.4
20.4
Employment
8.2
16.0
-7.8
Increasing
4
20.4
67.4
12.2
Part-time employment
-6.2
-1.6
-4.6
Decreasing
4
6.3
81.3
12.5
Hours worked
7.5
1.6
+5.9
Increasing
2
17.9
71.6
10.4
Wages and benefits
14.9
15.6
-0.7
Increasing
9
17.9
79.1
3.0
Input prices
36.6
30.0
+6.6
Increasing
16
40.6
55.4
4.0
Selling prices
26.4
19.9
+6.5
Increasing
16
32.9
60.6
6.5
Capital expenditures
12.1
17.2
-5.1
Increasing
8
21.2
69.7
9.1
Inventories
22.8
12.9
+9.9
Increasing
5
30.7
61.4
7.9
Companywide Retail Activity
Sales
11.5
9.9
+1.6
Increasing
6
32.9
45.8
21.4
Internet sales
2.1
2.4
-0.3
Increasing
5
14.6
72.9
12.5
Catalog sales
-9.3
-2.6
-6.7
Decreasing
3
9.3
72.1
18.6
General Business Conditions, Retail
Current (versus previous month)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.2
16.9
-3.7
Improving
3
22.7
67.8
9.5
General business activity
5.2
0.8
+4.4
Improving
2
19.9
65.4
14.7
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
45.9
46.7
-0.8
Increasing
33
50.7
44.5
4.8
Employment
15.1
15.9
-0.8
Increasing
23
24.2
66.7
9.1
Part-time employment
6.4
17.7
-11.3
Increasing
2
13.0
80.4
6.6
Hours worked
6.3
0.6
+5.7
Increasing
2
13.7
78.9
7.4
Wages and benefits
37.8
24.6
+13.2
Increasing
35
37.8
62.2
0.0
Input prices
46.2
39.6
+6.6
Increasing
31
47.7
50.8
1.5
Selling prices
41.0
34.9
+6.1
Increasing
31
45.5
50.0
4.5
Capital expenditures
25.0
25.4
-0.4
Increasing
8
31.3
62.5
6.3
Inventories
13.8
6.3
+7.5
Increasing
2
29.2
55.4
15.4
Companywide Retail Activity
Sales
50.5
47.0
+3.5
Increasing
32
55.5
39.5
5.0
Internet sales
30.4
28.2
+2.2
Increasing
32
32.6
65.2
2.2
Catalog sales
15.0
11.7
+3.3
Increasing
4
22.5
70.0
7.5
General Business Conditions, Retail
Future (six months ahead)
Indicator Nov
Index
Oct
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
28.5
28.7
-0.2
Improving
31
36.9
54.7
8.4
General business activity
25.4
11.1
+14.3
Improving
2
34.1
57.2
8.7

*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

November 29, 2011

Current and future production

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

 

Texas Retail Outlook Survey

November 29, 2011

Current and future production

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

Texas Service Sector Outlook Survey

November 29, 2011

Comments from Survey Respondents

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

Animal Production
Raw milk costs have declined slightly and seem to be leveling off. Other supplies and ingredients have leveled off as well.

Publishing Industries (except Internet)
We have a business venture that will start within the next six months; we expect business to grow.

Accommodation
Demand is low due to the holiday season.  However, we are in the process of completing our RV park and will add 28 rooms to our hotels over the next five months.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Retails sales remain strong. Employment is up slightly. Drought continues to hurt agribusiness.

We continue to see cost increases coming from every direction, with employee benefits (insurance) and regulatory type cost increases leading the groups. We managed small price increases, although our pricing has not significantly increased over several years.

Insurance Carriers and Related Activities
A large variable for our business is the new Home Affordable Refinance Program (HARP) being discussed. If that program works as intended, the mortgage lending and real estate market in general will improve.

Real Estate
Local real estate market is holding steady, with little or no improvement, but likewise little or no deterioration. We are just treading water until taxation policy certainty, spending restraint and the November elections. We are looking forward to 2013.

Rental and Leasing Services
Access to capital is no problem. However, overregulation by government has become ridiculous.

Professional, Scientific and Technical Services
We are using interns for part-time employees. Employment is increasing slightly but growing nonetheless. We have not initiated an across-the-board salary increase in three years, but we anticipate doing that for 2012. We expect the economic activity to improve slightly next year.

We continue to see a dysfunctional government with the latest failure of the supercommittee.

We finally are seeing the seasonal downturn in closing volume and orders and expect that the revenue this month will decline and continue to decline through the end of the year for residential transactions. Although the decline is seasonal, it makes us all nervous. The good news is that the residential seasonal decline, which usually starts in August, was late this year. Commercial activity remains strong and is much better than 2010. Overall, we expect residential volume to match 2010.

The contagion from Europe, when combined with more domestic economic concerns, has completely shut down commercial real estate capital market activities.

Health insurance renewal came in. We had a 24 percent increase for the same plan compared with last year.  Ouch.

Management of Companies and Enterprises
Fees from the Federal Deposit Insurance Corporation (FDIC) and Texas banks have taken a toll on our income.

Administrative and Support Services
As long as interest rates stay low, we believe our consumers will continue to purchase.

The uncertain political and economic climate continues to dampen hiring full-time employees. There has been what appears to be a temporary increase in contract hiring to move forward on projects that just couldn't wait any longer, but it appears that period has passed.

Ambulatory Health Care Services
The failure of the supercommittee will severely impact the medical services community. If Congress does not act to stop the 30 percent Medicare cut due on Jan. 1, 2012, doctors may cut back services to Medicare enrollees, resulting in a significant drop in revenues and probable staff layoffs. The drop in doctors accepting Medicare will drive patients to emergency rooms, driving up costs to a point that will likely exceed the savings from the 30 percent fee cut.

Nursing and Residential Care Facilities
Reductions in Medicaid and Medicare reimbursements affect revenue in all health care related businesses.

Food Services and Drinking Places
We took a price increase of 1.85 percent last week, which we expect to net us about 1.35 percent after menu shifting. Our cost of goods has gone up so much that we were forced to take last week’s price increase. We wanted to wait at least six months after the June increase but could not do so. We were also forced to lay off a few people last month. Our issue now is how much sales will react to the new price increase. The customer counts have declined steadily and went negative two periods ago. Bottom line, we are still not seeing any real recovery in sales. However, we see some indications that the economy, particularly for our city—San Antonio—is on the verge of improving, so we still have an optimistic view of six months from now. We already know that we have a huge increase in the cost of medical insurance facing us Jan. 1. It will take back a major chunk of what we have just gained with the lay-offs and price increase.  The increase in cost of goods has not come to a stop but has significantly slowed down in the last few weeks. Overall, our business is still up but at a much slower pace.

Merchant Wholesalers, Durable Goods
A few segments of our business show strength, and therefore, capital spending will increase in the next six months.  We also will increase temporary employment. Construction still lags.

Very dry conditions continue in our market area indicating water shortages for 2012. There is a lot of uncertainty in buying processes currently

Input prices have quadrupled since the beginning of the year. Additionally, available raw goods have become scarce. Things are looking very bleak. We hope we can hold on.

General business is in a malaise, but our firm is moving forward. We feel commercial activity will be poor in 2012, but residential activity will improve in 2012. We have decided that if the new health care law takes effect in 2014, our firm will no longer offer medical insurance. We will start informing our employees in second quarter 2012. In addition we will no longer match 401(k) contributions in the future.

Our sales are down 3 percent compared with a year ago. We will need to continue to reduce costs and improve efficiency to keep the bottom line in the proper place. We are spending money on technology to increase service level to our customers as well as reduce overall labor cost.

Retail activity has increased, though most has been driven by the drought; ranchers have been forced to purchase feed instead of relying on natural forage. Could this spell trouble in the future? Those who remain in business will reap better prices.

Motor Vehicle and Parts Dealers
The shale oil find in Texas has positively impacted our business.

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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