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Texas Service Sector Outlook Survey

Report in PDF
August 28, 2012

Texas Service Sector Activity Picks up Pace

Texas service sector activity increased in August, 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 2.4 to 10, with 30 percent of respondents noting revenues increased from July.

Labor market indicators reflected modest labor demand growth, but no change in the workweek. Employment grew at a slower pace in August, with the index falling from 8.6 to 6.3. The hours worked index was 0.8, suggesting little change in workweek length.

Perceptions of general business conditions improved in August. The general business activity index held steady at 8.4. The company outlook index moved up from 2 to 4.7, with 18 percent of respondents reporting their outlooks improved from last month and 13 percent noting they worsened.

Selling prices rose at a faster pace, while wage pressures moderated in August. The selling prices index advanced from 1.1 to 6, while the wages and benefits index fell from 14.2 to 9.4.

Most indexes of future service sector activity rose in August. The future revenue index increased 5 points to 33.1. Expectations regarding future business conditions were slightly more optimistic this month. The index of future general business activity edged up to a reading of 10.9, and the index of future company outlook moved up from 8.9 to 12.

Texas Retail Outlook Survey

August 28, 2012 

Retail Sales Rebound

Retail Sales Rebound

Retail sales increased in August, according to business executives responding to the Texas Retail Outlook Survey. After posting a negative July reading, the sales index rose sharply from -3.6 to 17.7, its highest reading in five months. Inventories rose.

Labor market indicators reflected a slower pace of employment growth and smaller increases in the length of the workweek. The employment index fell from 12.3 in July to 8.1 in August. The hours worked index edged down from 4.5 to 3.4.

Perceptions of general business conditions improved markedly in August. The general business activity index rose sharply from -6.5 to 15.2, its best reading since March. The company outlook index climbed out of negative territory to 3.7. Seventeen percent of respondents noted their company’s outlook had improved from the prior month, compared with 13 percent who reported their outlook had worsened.

Retail prices spiked, while wage growth held steady in August. The selling prices index climbed from -0.7 to 22.4, its highest reading since March. The wages and benefits index was practically unchanged at 5.5, with the great majority of respondents noting no change in labor costs.

Indexes of future retail sector activity generally increased and remained in positive territory in August. Perceptions of future economic conditions also improved. The index of future general business activity was positive and moved up 5 points, while the index of future company outlook rose slightly from 18.7 to 21.1.

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 Aug. 14–22, and 235 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. Data have been seasonally adjusted as necessary.

Next release: September 25, 2012

Texas Service Sector Outlook Survey

August 28, 2012
 

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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
10.0
2.4
+7.6
Increasing
34
30.4
49.1
20.4
Employment
6.3
8.6
-2.3
Increasing
30
18.1
70.1
11.8
Part-time employment
2.2
2.4
-0.2
Increasing
12
10.8
80.6
8.6
0.8
3.5
-2.7
Increasing
18
10.4
80.0
9.6
Wages and benefits
9.4
14.2
-4.8
Increasing
37
14.0
81.4
4.6
Input prices
30.6
21.5
+9.1
Increasing
40
33.4
63.8
2.8
Selling prices
6.0
1.1
+4.9
Increasing
20
14.3
77.4
8.3
Capital expenditures
8.8
14.4
-5.6
Increasing
36
18.3
72.2
9.5
General Business Conditions
Current (versus previous month)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
4.7
2.0
+2.7
Improving
12
18.1
68.5
13.4
General business activity
8.4
8.0
+0.4
Improving
10
23.2
62.0
14.8
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
33.1
28.1
+5.0
Increasing
42
47.6
37.9
14.5
Employment
21.8
21.4
+0.4
Increasing
41
35.5
50.8
13.7
Part-time employment
4.9
10.0
-5.1
Increasing
2
14.0
76.9
9.1
2.9
6.9
-4.0
Increasing
36
10.7
81.5
7.8
Wages and benefits
35.6
30.5
+5.1
Increasing
68
39.6
56.4
4.0
Input prices
45.7
44.4
+1.3
Increasing
68
49.8
46.1
4.1
Selling prices
21.4
14.4
+7.0
Increasing
37
30.0
61.4
8.6
Capital expenditures
20.3
19.4
+0.9
Increasing
41
33.2
54.0
12.9
General Business Conditions
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
12.0
8.9
+3.1
Improving
12
26.4
59.2
14.4
General business activity
10.9
10.1
+0.8
Improving
11
26.1
58.7
15.2

*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 Retail Outlook Survey

August 28, 2012
 

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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
17.7
-3.6
+21.3
Increasing
1
38.5
40.6
20.8
Employment
8.1
12.3
-4.2
Increasing
13
15.3
77.5
7.2
Part-time employment
4.7
3.4
+1.3
Increasing
7
14.1
76.6
9.4
Hours worked
3.4
4.5
-1.1
Increasing
2
17.5
68.4
14.1
Wages and benefits
5.5
5.8
-0.3
Increasing
24
10.7
84.1
5.2
Input prices
30.4
5.2
+25.2
Increasing
25
36.6
57.2
6.2
Selling prices
22.4
-0.7
+23.1
Increasing
1
25.2
72.0
2.8
Capital expenditures
13.5
11.3
+2.2
Increasing
17
28.4
56.7
14.9
Inventories
13.6
14.9
-1.3
Increasing
14
29.8
54.0
16.2
Companywide Retail Activity
Sales
26.3
10.6
+15.7
Increasing
15
39.4
47.6
13.1
Internet sales
21.8
-2.1
+23.9
Increasing
1
26.1
69.6
4.3
Catalog sales
4.9
2.6
+2.3
Increasing
3
12.2
80.5
7.3
General Business Conditions, Retail
Current (versus previous month)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
3.7
-5.6
+9.3
Improving
1
17.1
69.5
13.4
General business activity
15.2
-6.5
+21.7
Improving
1
29.9
55.4
14.7
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
44.5
41.2
+3.3
Increasing
42
58.9
26.7
14.4
Employment
20.6
10.1
+10.5
Increasing
32
33.3
54.0
12.7
Part-time employment
7.8
9.3
-1.5
Increasing
11
14.1
79.6
6.3
Hours worked
8.9
6.1
+2.8
Increasing
35
17.9
73.1
9.0
Wages and benefits
29.9
26.6
+3.3
Increasing
44
35.0
59.9
5.1
Input prices
28.6
33.9
-5.3
Increasing
40
38.1
52.4
9.5
Selling prices
30.2
23.7
+6.5
Increasing
40
36.5
57.1
6.3
Capital expenditures
15.9
11.8
+4.1
Increasing
17
28.6
58.7
12.7
Inventories
18.0
20.5
-2.5
Increasing
33
31.8
54.4
13.8
Companywide Retail Activity
Sales
54.1
41.7
+12.4
Increasing
41
58.3
37.5
4.2
Internet sales
33.4
22.8
+10.6
Increasing
41
37.8
57.8
4.4
Catalog sales
10.2
8.1
+2.1
Increasing
3
17.9
74.4
7.7
General Business Conditions, Retail
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
21.1
18.7
+2.4
Improving
40
32.3
56.5
11.2
General business activity
13.7
8.7
+5.0
Improving
11
29.6
54.5
15.9

*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

August 28, 2012

TSSOS Chart

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

 

Texas Retail Outlook Survey

August 28, 2012

TSSOS Chart

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

Texas Service Sector Outlook Survey

August 28, 2012

Comments from Survey Respondents

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

Publishing Industries (except Internet)

  • In our 11 markets, we are seeing inconsistent results. Some markets are showing spotty general improvement in business activity, while others have declined slightly after showing a small uptick earlier in the year.

Credit Intermediation and Related Activities

  • We note improvement, but it is slight.

Insurance Carriers and Related Activities

  • We are in a cyclical business, and the six-month projection will be at the low point in the annual cycle.
  • We are insurance brokers, so we are seeing the prices from our insurers going up; therefore, our proposals to our clients and prospects are somewhat higher. Our capital expenditure will be a new air handler for our office that must be replaced.

Professional, Scientific and Technical Services

  • Our business is good and active. Improvements are small but steady. We’re guardedly optimistic. Clients and prospects seem cautious but aggressive. Part-time help is down because the interns have left.
  • We see the unknowns about the medical plan as hurting our recovery.
  • Currently, we are continuing to see excellent business activity in both commercial and residential real estate in the Dallas–Fort Worth market. Our income is approaching record levels achieved in 2006, and we continue to hire at a reduced pace. We have had about 20 new hires in recent months, but overall employment growth from the same time last year is up only by 10 employees due to retirements and turnover. We cannot predict the next six months and are showing a negative outlook since there is nothing on the horizon that looks encouraging from either Congress or the executive branch regarding taxes, health insurance and other employee costs.

Management of Companies and Enterprises

  • The regulatory and compliance environment continues to place a heavy burden on our business. Some top-down guidance to field personnel would be helpful.
  • Overregulation is hurting us and our customers.
  • The current regulatory environment is causing increased expenses with no offsetting income.

Ambulatory Health Care Services

  • Uncertainty over health care reform and Medicare is halting any plans to increase business hiring. We believe the same uncertainty is making our patients delay care.

Accommodation

  • We are considering investing around $1 million in the Pecos area. We plan to add hotel rooms and spots to our RV parks.

Food Services and Drinking Places

  • For a restaurant, the profit margins are small and the fixed costs remain the same, so profits are dependent on volume. We think the new health care reform will have a very negative effect on our small business (we have 75 employees). We have decisions to make: Do we reduce the size of the restaurant and keep our staff under 50? Or do we just get out of the business? All other costs are going up as well—cost of food, transportation, utilities, etc.

Animal Production

  • Raw milk prices continue to increase as feed prices rise. The price elasticity of milk demand may soon be tested again by consumers.

Merchant Wholesalers, Durable Goods

  • All "improved" comments are seriously contingent on the November 2012 election.

Merchant Wholesalers, Nondurable Goods

  • We are thinking that six months from now we will have a better handle on how the health care reform and all of its taxes will affect our customers and, therefore, ourselves. Until then, we plan on continuing to aggressively take costs out of our systems so we can determine what we will be able to afford for our employees.
  • We can’t find employees. We have been trying to increase staff by 20 percent but can’t find the manpower.

Motor Vehicle and Parts Dealers

  • Uncertainty regarding federal taxes, spending and the national debt is holding our whole economy hostage. Why would we even consider expanding or investing in new capital assets in this economic environment? We are holding onto every dollar we can.
  • High gas prices are very negative for our business.
  • The auto market remains solid, if not spectacular. The August manufacturer incentives and advertising always create a good month, and this year was no different. We see a highly competitive market for the remainder of the year, with lots of marketing and stimulus programs, and we anticipate 14 million new vehicle sales for the year. Preowned sales are good, but the lack of supply is somewhat constraining. Fixed operations are strong for all dealers as customers lengthen trading cycles, thus, requiring more maintenance.

Building Material and Garden Equipment and Supplies Dealers

  • We are still having problems finding employees with adequate skills.

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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