Research & Data

Texas Service Sector Outlook Survey

Special Questions

March 27, 2012
1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to twelve months?
    Mar. '12
(percent)
Jan. '11
(percent)
  Increase 49.0 47.7
  Leave Unchanged 40.7 44.4
  Decrease 10.3 7.9

2. If your firm is planning to increase employment, what are the three most important factors behind this decision? Please rank the three factors in order from most important to third most important.
    Most important
(percent)
Second most important
(percent)
Third most important
(percent)
  Expected growth of sales or revenue is high 59.8 15.6 12.9
  Current staff are overworked 9.3 26.7 23.5
  Need skills not possessed by current staff 10.3 21.1 16.5
  Labor costs have fallen 0.0 0.0 1.2
  Decreased economic or financial uncertainity 2.1 12.2 23.5
  Firm's financial position has improved 2.1 20.0 12.9
  Other factors 16.5 4.4 9.4

3. What are the three most important factors, if any, restraining your hiring plans? Please rank the three factors in order from most important to third most important.
    Most important
(percent)
Second most important
(percent)
Third most important
(percent)
  Expected growth of sales is low 27.7 15.5 10.5
  Current staff are underutilized/working reduced hours 8.1 9.3 7.9
  Cannot find qualified workers 14.9 9.3 10.5
  Labor costs are high 4.1 16.3 13.2
  Uncertainity about the cost of health insurance 10.1 17.1 22.8
  Uncertainity about other regulations or gov't policies 20.9 20.2 16.7
  Firm's financial position has deteriorated 2.7 4.7 9.6
  Other factors 11.5 7.8 8.8


Texas Retail Outlook Survey

Texas Retail Outlook Survey

Special Questions

March 27, 2012
1. Do you expect your firm to increase employment, leave employment unchanged, or decrease employment over the next six to twelve months?
    March '12
(percent)
Jan. '11
(percent)
  Increase 50.9 49.2
  Leave Unchanged 43.9 44.4
  Decrease 5.3 6.3

2. If your firm is planning to increase employment, what are the three most important factors behind this decision? Please rank the three factors in order from most important to third most important.
    Most important
(percent)
Second most important
(percent)
Third most important
(percent)
  Expected growth of sales or revenue is high 70.0 8.0 16.7
  Current staff are overworked 0.0 40.0 20.8
  Need skills not possessed by current staff 13.3 32.0 12.5
  Labor costs have fallen 0.0 0.0 0.0
  Decreased economic or financial uncertainity 0.0 16.0 25.0
  Firm's financial position has improved 0.0 4.0 12.5
  Other factors 16.7 0.0 12.5

3. What are the three most important factors, if any, restraining your hiring plans? Please rank the three factors in order from most important to third most important.
    Most important
(percent)
Second most important
(percent)
Third most important
(percent)
  Expected growth of sales is low 31.7 14.7 15.6
  Current staff are underutilized/working reduced hours 12.2 2.9 9.4
  Cannot find qualified workers 19.5 14.7 12.5
  Labor costs are high 0.0 11.8 9.4
  Uncertainity about the cost of health insurance 12.2 17.6 31.3
  Uncertainity about other regulations or gov't policies 7.3 26.5 21.9
  Firm's financial position has deteriorated 0.0 5.9 0.0
  Other factors 17.1 5.9 0.0

Survey Collection period : 03/06/2012–03/09/2012

Special Questions Comments

Special Questions Comments

These comments have been edited for publication.

Truck Transportation
Our continuing concern is that the uncertainty of the political season, the unsettled issues in Europe, a pending bursting bubble in China, and a general unwillingness to significantly invest in Americans lies between a robust and growing economy.

Broadcasting (except Internet)
We are very slow to add staff, wanting to be certain we can sustain each added position. We are located in West Texas, and there is a lot of business activity right now; however, we believe this boom may only last two to four more years. While the best opportunity to prosper is right now, we somewhat restrict our capital investment and employment growth with the thought of what happens if the drilling boom ends in 12 months.

Credit Intermediation and Related Activities
Loan demand is weak. Current lenders and lending assistants are carrying lighter loads than normal. We direct more time to addressing the increased government regulations than to seeking additional business.

Insurance Carriers and Related Activities
Our business is largely affected by the construction industry, and the lack of a robust construction industry has affected our revenue growth the past three years.

Uncertainty in the economic environment will continue to play a role in business decisions. However, we are committed to move forward with our growth plans.

Funds, Trusts, and Other Financial Vehicles
The continued stability of the financial markets along with improving economic conditions drives our desire to increase investments, which lead to expanding employment.

Real Estate
Uncertainty about federal tax and regulatory policies is the factor most disrupting the local real estate markets, both commercial and residential. Recently we've seen increased confidence on the part of buyers, only to face an increasingly unrealistic financial qualification environment. It appears to be bureaucracy run amok.

Rental and Leasing Services
We do not see us hiring any more people and we suspect significant layoffs are within the year.

Professional, Scientific, and Technical Services
We see more positive energy in our client group. Several major business startups have retained us for brand development and launch marketing. One of these is high tech, the other oil field and business services. Both have major potential, adequate funding and class A management teams. We are cautiously optimistic.

We are currently looking for three new positions as well as replacements for turnover. We did not replace in 2010, but did so throughout 2011. Workload has increased beyond our capacity, thus new hiring. Three new employees is not a big percentage of our overall number of employees, which is currently over 460, down from a peak in 2008 of 530. We did not lay off, but stopped replacing, and retirement and turnover did the rest over the last three years to reduce total employment.

Main potential for slowing our growth is media/public speculation about more or longer recession.

Excessive government regulation, fees and red tape are weights too heavy for business expansion.

Management of Companies and Enterprises
With increased focus on fair lending compliance and other regulations, the negative effects on revenue (fee income) and increased cost to be compliant has and will continue to negatively affect additional hiring.

Ambulatory Health Care Services
We are medical providers, and the ongoing issues with implementing the health care act along with the continuing question of Medicare reimbursement is preventing expansion. Also, we expect large increases in Medicaid enrollment combined with reductions in payments from Medicaid.

We are managing our resources with the demands we are seeing in the market place. With those resources, we want to be as diligent as possible.

Nursing and Residential Care Facilities
Our sales are cratering, and usually we see sales increases in a recovery before other businesses. Our customers are spending less and using us less frequently.

Food Services and Drinking Places
We will have more employees this summer because our volume is always up in the summer, but we do not expect to increase permanent employment this year. We just aren't making any moves to add positions, new programs, etc. until we see what happens with the health insurance. We are considering the possibility that we might have to go to a dramatically different business format if the health insurance mandate comes into effect. We cannot afford either the cost of the coverage that will be required or the penalties involved. The most obvious thing we could do is move away from traditional table service—eliminate all the tipped positions—and thereby reduce our staff to about 60 percent of our current level (1,000 dropping to about 600). This would move us away from the traditional family restaurant format to the newer (and growing very fast) fast casual service segment of the industry where the customer places his/her own order and picks it up. We would have a few people to refill drinks, bus tables, etc. but nothing like our current staff. We currently offer traditional health insurance for about 300 of our 1,000 employees, but only a little over 100 of them sign up for it. The remainder is eligible for a mini-med plan. The employees pay the premium. Switching to having to pay the cost of traditional insurance for the remaining 900 employees would totally swamp the company. I think you will see thousands of restaurants having to consider similar approaches if the health mandate is upheld. The unemployment caused in our industry will be immense.

Animal Production
Reduction of work force is partially due to greater equipment efficiency as a result of equipment installations over the next several months. However, the most important ranked reason for not hiring permanent employees is increasing government regulation.

Merchant Wholesalers, Durable Goods
The cloud of the European sovereign debt crisis hangs over the world economy; the failure of U.S. policymakers to take any meaningful action to reduce spending and debt continues to erode chances for a stronger U.S. recovery; and our country has too many people on welfare and/or no longer looking for work. Lastly, banks are restricted to convenience lending—to businesses that don’t need money. Businesses that do need continued lending support are faced with growing “reserves” that banks create in attempts to restrict availability. These actions are evidenced by lengthening accounts receivable days-outstanding, from a trickle-down of responsible customers who have paid more promptly in decades past. These actions restrict both the recovery and job creation.

We have a difficult time finding and keeping employees who pass our required drug test.

Our business would greatly prosper if construction recovers; it is the one leg of our business plan not currently expanding. National steel manufacturing is doing well, and international oil is better than it has ever been.

Motor Vehicle and Parts Dealers
Our number one concern is uncertainty about how the regulations of the new Consumer Financial Protection Bureau of the Dodd–Frank Act will impact the ability of banks and financial firms to buy our retail installment sales contracts.

There is still uncertainty about the economy. We are agriculture and the drought has hurt us. The rise in fuel has been a real problem.

It is still difficult to predict the direction of the overall economy. Accordingly, we are operating on a status quo mode.

Sporting Goods, Hobby, Book, and Music Stores
We continue to have increased sales but will not be adding headcount but rather doing more with less.

 

Questions regarding the Texas Service Sector Outlook Survey can be addressed to Amy Jordan at amy.jordan@dal.frb.org.

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