Texas Service Sector Outlook Survey

Report in PDF

November 27, 2012

Texas Service Sector Activity Expands but at a Slower Pace

Texas Retail Outlook Survey

November 27, 2012 

Retail Sales Growth Slows Further

Retail Sales Growth Slows Further

Next release: January 2, 2013

Texas Service Sector Outlook Survey

November 27, 2012

*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 27, 2012

*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 27, 2012

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

Texas Retail Outlook Survey

November 27, 2012

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

Texas Service Sector Outlook Survey

November 27, 2012

Comments from Survey Respondents

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

Pipeline Transportation

• The major change for our company during this period is a strategic redirection away from more volatile businesses toward more stable businesses. Therefore, overall revenue declines, but profitability increases. We are also increasing capital spending on the more stable business lines.

Support Activities for Transportation

• Declining international trade continues to depress business activity.

Publishing Industries (except Internet)

• The results of the election—nationally and statewide—do not create any cause for caution. However, what the Congress does with the fiscal cliff creates some reservations right now.

Credit Intermediation and Related Activities

• Regulation burden will hamper growth. We will be spending valuable resources and much personnel time to attempt to understand and implement the regulations. This will take away from being able to serve our customers. Also, the additional lending regulations will discourage customers from borrowing.
• Banking regulatory demands are overwhelming.
• We see slow improvement in the local economy. Deposit volume is down, improving loan-to-deposit ratios. Loan and investment return rates continue to slowly decline, squeezing profit margins.

Securities, Commodity Contracts, and Other Financial Investments and Related Activities

• We are getting slower at the moment. The outlook is now turning negative.
• The fall harvest is below average, and agricultural income is down. Local employment remains strong, but levels are flattening.

Funds, Trusts, and Other Financial Vehicles

• Company revenues are highly dependent on security markets, which drive cost decisions. Although little change was seen between October and November, we anticipate better months ahead, although this does not necessarily lead to more hiring. Most of the cost increases are from normal compensation increases, our largest cost component, as well as inflation-indexed cost increases in purchased services. We have positioned ourselves in this quarter to grow in a cautious way over the next several years.

Real Estate

• We see signs of slowing down. We are concerned about Dodd–Frank impacts and new health care reform.
• We're seeing an increase in business postelection, possibly due to clients wanting to make real estate investment decisions prior to Jan. 1 and the looming fiscal cliff. We expect a slowdown in the first half of 2013 due to the fiscal cliff. Until there is clear direction that deficit spending and the debt will be addressed without massive tax increases, we see the economy remaining sluggish due to consumer caution.

Rental and Leasing Services

• We are seeing some definite year-end capital expenditures to capture the last business tax advantages this generation will see. Then we think the economy will come to an abrupt halt as we enter another severe long-term recession.

Professional, Scientific and Technical Services

• The fiscal cliff and unfriendly business climate of the current administration causes us great concern.
• It's hard to plan when you have no idea what the federal government is going to do about its financial issues, taxes, etc.
• We are not optimistic about the business climate after the U.S. election. We also continue to be very concerned about economic issues globally. Uncertainty in the current environment is causing our clients, and target clients, to table deals that were scheduled to take place, thus impacting our short- and medium-term plans for expansion, staffing, etc. We hope the environment changes around March 2013 but currently are not that optimistic about it. We will prepare for the worst, and hope things are better.
• We continue to see increasing real estate activity in both residential and commercial markets, especially those in North Texas, so the outlook for the rest of this year is good. Commercial real estate activity, however, appears to be driven by capital gains considerations and the anticipation of an increase in federal income taxes on all levels of income next year. Residential activity locally appears to be the result of an increase in job formation, pent-up demand and a decrease in inventory. We believe there may be a state-mandated increase in the rates we charge for our product, which will result in an increase of revenues next year, if and only if, business levels of activity do not fall off as a result of fiscal policy changes.
• We are concerned about rising costs for small business.
• The future depends on the government managing the economy wisely. We can't predict wages, expenses and capital improvements right now.
• Now that the election is over, we believe that business will improve if we can get beyond the fiscal cliff.
• Despite the national fiscal uncertainty, we remain bullish on prospects for growth in the next 6–12 months. This, of course, is subject to rapid change as the White House and Congress reveal whether or not they can work to a rational, compromising resolution to their past stalemate.
• Design and construction activity within the North Texas region is steadily increasing, requiring addition of employees. Much of the capital expenditure is associated with replacement of outdated equipment and computers.

Management of Companies and Enterprises

• Overregulation is hurting our business and driving up our expenses, which are going to drive up the costs to our customers. Someone needs to insert some common sense on regulations.

Administrative and Support Services

• Any business that can be moved offshore will be moved offshore. The federal government has created a very hostile environment for employers. The risks associated with having even one employee outweigh any potential returns.
• Federal regulation has increased, and we expect that to continue.

Ambulatory Health Care Services

• Health care service providers are exposed to the federal government focus on deficit reduction and health reform implementation. Significant but unknown factors are expected to be coming through in the next 12 months at a rapid pace for small and medium business service health care providers. This uncertainty is causing a holdback on all capital and business growth investments. Once the federal government and Congress resolve the deficit and health care reform initiatives, service providers will be able to focus on regrouping to align with the changes in business models.
• We see about a 10 percent drop in business occurring around the time of election. It was more than seasonally expected.
• We are 80 percent Medicare and 10 percent Medicaid. We are certain that there will be payment cuts coming through as a result of fiscal cliff negotiations.

Social Assistance

• We have seen our retail store sales (same stores) decline significantly in the last six weeks. We are reviewing our operations to determine if it is an internal problem or external.

Food Services and Drinking Places

• We will have to assess the impact of providing insurance for our employees and make cuts accordingly. The restaurant business has low margins; adding the cost of insurance will wipe out these margins. Hence, we will have to cut down our staff from 75 to 49, which also means we will have to cut down on the business itself. We are hoping there might be some relief for restaurants with over 50 employees. We need it.
• We are seeing a slow but steady increase in our trend line as we move into the holiday season. It is a little too early to be certain, but it looks like we may have turned a corner and will have the first holiday season showing incremental growth above our price increases in the last three years. We have not increased enough yet to make a difference in our number of employees. We are more likely to increase hours than add employees, which will be our last choice given the expense of adding employees. Our benefit increase that will be effective in January was less than we anticipated. It was around 2 percent for the medical insurance. We expect cost of goods to increase over the six-month horizon, and we will increase prices around mid-December to compensate.
• We have over 50 employees, and we are going to put most onto part time. We can't afford a $2,500 per employee penalty, and we surely can't afford the insurance. The future looks grim.
• We are in a growth stage right now, currently adding new restaurants, so will continue to have an increase in spending, revenues and personnel for the foreseeable future.

Merchant Wholesalers, Durable Goods

• We are still very concerned about water supply. Mexico is not holding up to the water agreement as they did before when the water supply is low.
• Our business is improving, but we really can't enjoy it much due to concerns and uncertainties about what tax policy is going to be, how health care changes will affect our finances, how inflation will put a lid on future prospects and what the effect of inflation may be on an already weak dollar. We live in uncertain times, yet the American public seems content with allowing public policy to remain status quo.
• Our company was hit with a major medical insurance increase of 50 percent for 2013. We are forced to pass on 100 percent of the increase to employees. In addition, our company will no longer match 401K contributions or offer profit sharing, and the company will no longer pay any portion of dependent medical care for employees.
• Increase in revenues for November relates to our customers responding to the cleanup after Hurricane Sandy. There is pessimism after the election and concern about the impact the current administration will have on business activity.
• Prior to the election, the general feeling about business opportunities among our glazing contractor customers was on a positive track. There was optimism about the improvement in the Texas regional and national economies. The election result neutralized these feelings. Next week, next month, next year(s) may be better … it’s a wild guess at this time.

Motor Vehicle and Parts Dealers

• Our business is still a bit fragile until Washington figures out what to do, but it is going well based on faith and market stimuli.
• There are too many unknowns, too much regulation.
• We are extremely worried about the fiscal cliff, the national debt and the unforeseen future costs associated with health care. We will be very cautious about any expense that does not lead directly to income.

Building Material and Garden Equipment and Supplies Dealers

• October 2012 was our busiest month ever (56 years).

General Merchandise Stores

• The uncertainty of U.S. fiscal policy continues to inhibit consumer demand.
  

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			Unadjusted
Seasonally adjusted			Seasonally adjusted

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			Unadjusted
Seasonally adjusted			Seasonally adjusted