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Texas Service Sector Outlook Survey

Report in PDF
December 28, 2011

Texas Service Sector Activity Expands but at a Slower Pace

Texas service sector activity increased in December, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, fell from 14 to 9, which is indicative of slower revenue growth.

Labor market indicators reflected stronger hiring and slightly longer workweeks. The employment index moved up from 5.5 to 8.8, its best reading in nine months. The hours worked index edged down to 2.1 in December, suggesting hours worked rose more slowly in December.

Perceptions of general business conditions remained positive in December. The general business activity index was largely unchanged, coming in at 6.7, its second consecutive positive reading. The company outlook index edged up to 11.2 in December, its third consecutive month in positive territory, with 20 percent of respondents reporting their outlooks improved from last month.

Price pressures eased in December while wage pressures held steady. The selling prices index fell sharply from 8.8 to 1.6, its lowest reading in 12 months. The wages and benefits index was largely unchanged at 12.6, and the great majority of respondents noted no change in labor costs.

Indexes of future service sector activity generally improved from last month, and expectations regarding future business conditions were more optimistic. The index of future general business activity advanced from 15.5 to 18.2 in December, its best reading since March, and the index of future company outlook moved further into positive territory from 19.9 to 23.6.

Texas Retail Outlook Survey

December 28, 2011 

Retail Sales Growth Remains Solid

Retail Sales Growth Remains Solid

Retail sales increased in December, according to business executives responding to the Texas Retail Outlook Survey. The volatile sales index edged down from 12.8 to 11 and has seen five consecutive months of sales increases. Inventories rose.

Labor market indicators reflected continued hiring, but little change in the length of the workweek. The employment index ticked up to 8.8. The hours worked index dropped to zero in December, suggesting average workweeks stalled. 

Perceptions of general business conditions improved sharply in December. The general business activity index jumped from 5.2 to 16.4, its third consecutive reading in positive territory. The company outlook index was positive for the fourth month in a row, with a reading of 22.1, up from 13.2. Nearly a third of respondents said their company’s outlook had improved from the prior month, compared with 8 percent who noted their outlook had worsened.

Retail prices and wages continued to climb in December, albeit at a slower pace. The selling prices index fell sharply from 26.4 to 10.9. The wages and benefits index moved down from 14.9 to 9.2, although the majority of respondents continued to note no change in labor costs.

Indexes of future retail sector activity rose further into positive territory in December, while both the index of future general business activity and the index of future company outlook 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 Dec. 13–21, and 208 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: January 31, 2012

Texas Service Sector Outlook Survey

December 28, 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 Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
9.0
14.0
-5.0
Increasing
26
26.2
56.6
17.2
Employment
8.8
5.5
+3.3
Increasing
22
19.9
69.0
11.1
Part-time employment
0.0
0.2
-0.2
Unchanged
1
8.4
83.2
8.4
2.1
2.7
-0.6
Increasing
10
10.1
81.9
8.0
Wages and benefits
12.6
13.3
-0.7
Increasing
27
15.4
81.8
2.8
Input prices
31.5
32.7
-1.2
Increasing
32
33.0
65.5
1.5
Selling prices
1.6
8.8
-7.2
Increasing
12
11.7
78.2
10.1
Capital expenditures
14.8
11.8
+3.0
Increasing
28
23.1
68.6
8.3
General Business Conditions
Current (versus previous month)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.2
10.3
+0.9
Improving
3
20.2
70.8
9.0
General business activity
6.7
7.4
-0.7
Improving
2
20.8
65.1
14.1
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
45.2
36.6
+8.6
Increasing
34
52.9
39.4
7.7
Employment
22.8
16.2
+6.6
Increasing
33
34.2
54.4
11.4
Part-time employment
9.6
7.7
+1.9
Increasing
6
14.6
80.4
5.0
7.1
9.3
-2.2
Increasing
28
12.6
81.9
5.5
Wages and benefits
33.7
32.9
+0.8
Increasing
60
37.0
59.7
3.3
Input prices
51.5
46.7
+4.8
Increasing
60
55.4
40.7
3.9
Selling prices
22.7
26.4
-3.7
Increasing
29
31.7
59.3
9.0
Capital expenditures
27.8
25.6
+2.2
Increasing
33
36.6
54.6
8.8
General Business Conditions
Future (six months ahead)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
23.6
19.9
+3.7
Improving
4
34.1
55.4
10.5
General business activity
18.2
15.5
+2.7
Improving
3
31.0
56.2
12.8

*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

December 28, 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 Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
11.0
12.8
-1.8
Increasing
5
31.3
48.3
20.3
Employment
8.8
8.2
+0.6
Increasing
5
20.0
68.8
11.2
Part-time employment
1.6
-6.2
+7.8
Increasing
1
9.7
82.3
8.1
Hours worked
0.0
7.5
-7.5
No Change
1
15.4
69.2
15.4
Wages and benefits
9.2
14.9
-5.7
Increasing
10
12.3
84.6
3.1
Input prices
29.8
36.6
-6.8
Increasing
17
34.0
61.8
4.2
Selling prices
10.9
26.4
-15.5
Increasing
17
22.5
65.9
11.6
Capital expenditures
4.6
12.1
-7.5
Increasing
9
16.9
70.8
12.3
Inventories
25.3
22.8
+2.5
Increasing
6
31.9
61.5
6.6
Companywide Retail Activity
Sales
16.2
11.5
+4.7
Increasing
7
32.8
50.6
16.6
Internet sales
13.7
2.1
+11.6
Increasing
6
23.5
66.7
9.8
Catalog sales
7.0
-9.3
+16.3
Increasing
1
16.3
74.4
9.3
General Business Conditions, Retail
Current (versus previous month)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
22.1
13.2
+8.9
Improving
4
30.2
61.7
8.1
General business activity
16.4
5.2
+11.2
Improving
3
29.1
58.2
12.7
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
62.6
45.9
+16.7
Increasing
34
62.6
37.4
0.0
Employment
23.8
15.1
+8.7
Increasing
24
34.9
54.0
11.1
Part-time employment
9.1
6.4
+2.7
Increasing
3
13.5
82.1
4.4
Hours worked
10.2
6.3
+3.9
Increasing
3
14.4
81.4
4.2
Wages and benefits
30.2
37.8
-7.6
Increasing
36
31.5
67.2
1.3
Input prices
46.0
46.2
-0.2
Increasing
32
50.8
44.4
4.8
Selling prices
41.2
41.0
+0.2
Increasing
32
46.0
49.2
4.8
Capital expenditures
25.4
25.0
+0.4
Increasing
9
34.9
55.6
9.5
Inventories
16.7
13.8
+2.9
Increasing
3
31.7
53.3
15.0
Companywide Retail Activity
Sales
47.9
50.5
-2.6
Increasing
33
49.7
48.6
1.8
Internet sales
20.8
30.4
-9.6
Increasing
33
27.1
66.7
6.3
Catalog sales
7.7
15.0
-7.3
Increasing
5
15.4
76.9
7.7
General Business Conditions, Retail
Future (six months ahead)
Indicator Dec
Index
Nov
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
46.7
28.5
+18.2
Improving
32
48.9
48.9
2.2
General business activity
36.8
25.4
+11.4
Improving
3
41.0
54.8
4.2

*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

December 28, 2011

Current and future production

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

 

Texas Retail Outlook Survey

December 28, 2011

Current and future production

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

Texas Service Sector Outlook Survey

December 28, 2011

Comments from Survey Respondents

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

Credit Intermediation and Related Activities
Seasonal retail activity increased as expected.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Right now, we're seeing more regulatory problems and across-the-board cost increases.

Insurance Carriers and Related Activities
The gridlock in the U.S. Congress is embarrassing.

Real Estate
Uncertainty continues to keep buyers and sellers of residential real estate on the sidelines.

Rental and Leasing Services
We're struggling to hire enough truck drivers. We have $50,000-a-year jobs with no one to fill them.

Regulatory inefficiencies and expense continue to stifle any recovery in the construction industry. We are trying to add onto our current service facility, but new regulations and their related expense are impeding it.

Professional, Scientific and Technical Services
The commercial part of our business continues to be strong, and it appears it will remain so through the end of the year. The residential part of our business is declining as expected and did not improve over 2010 numbers. We expect that Texas residential sales will be better in 2012 and that commercial real estate will continue strong; therefore, we will hire six months from now, if not sooner.

Our European business remains uncertain based on current turmoil in the European capital markets. Approximately 20 percent of our revenue is originated in Europe.

Election, energy cost, tax doubts, budget deficit, etc. all create doubt, with nothing extremely positive on the horizon to offset the uncertain future.

We are cautiously optimistic. We will have small revenue increases early next year and hopefully can build momentum.

Administrative and Support Services
We think the seasonality of year-end and holidays is slowing business commitments down a bit.

Ambulatory Health Care Services
Banks and investment houses can be bailed out, with the public paying the price. There is no help for the little man.

Nursing and Residential Care Facilities
We expect an increase in the cost of medical coverage. We are medical services providers, and if Medicare fee cuts stay in place, we may have to reduce our workforce.

Accommodations
Our big capital projects will be finished by around April or May 2012.

Food Services and Drinking Places
Our sales softened by an additional 1.2 percent to 1.3 percent last month. Our customer counts confirm that. Cost of goods sold isn't exactly flat, but it has leveled out. Wages and benefits are up, primarily because we have already paid the January premiums. We are beginning to see just a little movement upward in wages for some positions, but, so far, it is very small. The hit on benefits was very substantial and wiped out about a third of the margin gain we got from taking the price increase. The general outlook forecast is backed off from our previous reports based on the recent softening in sales. Additionally, as a normal seasonal pattern, we should be seeing sales rapidly ramping up as we go through this last week before Christmas. So far (although we are early in the week), we are not seeing that happen. The future expectations are backed off from our previous responses because we are running out of reasons to tell ourselves that improvement is just around the corner.

We continue to see steady same-store sales growth, driven in part by increased economic activity, especially in the Permian Basin and the Eagle Ford areas. Also, hot, dry weather has positively impacted sales trends. Traffic in tourism areas is surprisingly soft versus last year, however.

Merchant Wholesalers, Durable Goods
The economy does not seem to be turning around. We were recently turned down for credit by our bank. Times are tough, but so are we. Let's hope we can last long enough to see light at the end of the tunnel.

Inventory and supplies are harder to get. We expect delivery of supplies to get better after the holidays.

Our low growth so far in the year dipped in late November/December, meaning our rate of growth has gone to zero. However, year-over-year growth is probably 8 percent or so. After a slow start in 2012, we believe the second and third quarters should be pretty solid.

Motor Vehicle and Parts Dealers
Year-end sales are strong, which is normal for this time of year.

As a truck dealer, we almost always experience a slowdown in December.

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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