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Texas Service Sector Outlook Survey

Report in PDF
January 2, 2013

Texas Service Sector Activity Strengthens

Texas service sector activity expanded 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, rose from 11.1 to 14, with 36 percent of respondents noting revenues increased from November.

Labor market indicators reflected slightly stronger labor demand growth, including longer workweeks. The employment index edged up from 8.2 to 10.1. The hours worked index increased from 0.7 to 5.3.

Perceptions of broader economic conditions improved in December. The general business activity index advanced from 7.1 to 11.6, its highest reading since April. The company outlook index rose from 5.8 to 8.7, with 21 percent of respondents reporting that their outlook improved from last month and 12 percent noting they worsened.

Selling prices and wages rose faster in December. The selling prices index edged up from 6 to 7.4. The wages and benefits index moved up from 10.1 to 15.8.

Respondents were markedly more optimistic about expectations regarding future business conditions than last month. The index of future general business activity advanced 5 points to 11.7, and the index of future company outlook rose sharply from 1.4 to 16.8, its highest reading in three months. Indexes of future service sector activity, such as future revenue and employment, rose in December and remained in solid positive territory.

Texas Retail Outlook Survey

January 2, 2013 

Retail Sales Growth Holds Steady

Retail Sales Growth Holds Steady

Retail sales increased in December, according to business executives responding to the Texas Retail Outlook Survey. The sales index came in at 7.6, similar to last month, suggesting the pace of growth was unchanged. Inventories rose.

Labor market indicators reflected continued employment growth and longer workweeks. The employment index edged up from 6.7 to 7.1 in December. The hours worked index advanced from 0.7 to 7.7.

Respondents were more optimistic about the broader economy than last month. The general business activity index rose from 7.8 to 12.3. Similarly, the company outlook index edged up from 3.2 to 5.9 in December. Twenty-six percent of respondents noted an improved company outlook over the prior month, compared with 20 percent who reported that their outlook had worsened.

Retail prices and wages increased in December. The selling prices index held steady at a reading of 20.9. The wages and benefits index rose from 8.6 to 13, reflecting faster compensation growth, although the great majority of respondents continued to note no change in labor costs.

Perceptions of future broader economic conditions were notably more optimistic. The future general business activity index surged 16 points to 26.5, its highest reading since March, while the index of future company outlook jumped 18 points to 30.8. Indexes of future retail sector activity advanced further into positive territory in December.

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. 18–26, and 240 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: January 29, 2013

Texas Service Sector Outlook Survey

January 2, 2013
 

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
14.0
11.1
+2.9
Increasing
38
35.7
42.6
21.7
Employment
10.1
8.2
+1.9
Increasing
34
17.8
74.5
7.7
Part-time employment
5.1
4.2
+0.9
Increasing
16
10.6
83.9
5.5
5.3
0.7
+4.6
Increasing
22
12.8
79.7
7.5
Wages and benefits
15.8
10.1
+5.7
Increasing
41
18.3
79.2
2.5
Input prices
31.9
28.4
+3.5
Increasing
44
32.0
67.9
0.1
Selling prices
7.4
6.0
+1.4
Increasing
24
13.8
79.8
6.4
Capital expenditures
8.6
6.9
+1.7
Increasing
40
19.5
69.6
10.9
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
8.7
5.8
+2.9
Improving
16
20.6
67.5
11.9
General business activity
11.6
7.1
+4.5
Improving
14
24.4
62.8
12.8
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
37.6
28.4
+9.2
Increasing
46
49.2
39.3
11.6
Employment
24.4
21.6
+2.8
Increasing
45
35.8
52.8
11.4
Part-time employment
8.6
8.0
+0.6
Increasing
6
13.6
81.4
5.0
6.0
1.0
+5.0
Increasing
40
11.7
82.6
5.7
Wages and benefits
37.5
33.3
+4.2
Increasing
72
40.1
57.3
2.6
Input prices
53.1
48.7
+4.4
Increasing
72
54.7
43.7
1.6
Selling prices
33.5
24.0
+9.5
Increasing
41
38.5
56.5
5.0
Capital expenditures
22.8
17.1
+5.7
Increasing
45
33.5
55.8
10.7
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
16.8
1.4
+15.4
Improving
16
32.0
52.8
15.2
General business activity
11.7
6.9
+4.8
Improving
15
27.7
56.3
16.0

*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

January 2, 2013
 

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
7.6
6.8
+0.8
Increasing
5
35.1
37.3
27.5
Employment
7.1
6.7
+0.4
Increasing
17
15.4
76.3
8.3
Part-time employment
0.0
1.5
-1.5
No Change
1
10.0
80.0
10.0
Hours worked
7.7
0.7
+7.0
Increasing
6
15.7
76.3
8.0
Wages and benefits
13.0
8.6
+4.4
Increasing
28
15.7
81.6
2.7
Input prices
32.6
25.5
+7.1
Increasing
29
34.6
63.4
2.0
Selling prices
20.9
20.2
+0.7
Increasing
5
28.4
64.1
7.5
Capital expenditures
4.8
-1.5
+6.3
Increasing
1
17.7
69.4
12.9
Inventories
15.9
14.7
+1.2
Increasing
18
31.8
52.3
15.9
Companywide Retail Activity
Sales
20.8
10.5
+10.3
Increasing
19
35.3
50.2
14.5
Internet sales
14.6
8.4
+6.2
Increasing
5
18.8
77.1
4.2
Catalog sales
10.0
-10.9
+20.9
Increasing
1
15.0
80.0
5.0
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
5.9
3.2
+2.7
Improving
5
25.7
54.5
19.8
General business activity
12.3
7.8
+4.5
Improving
5
31.4
49.6
19.1
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
47.3
42.1
+5.2
Increasing
46
56.9
33.5
9.6
Employment
24.2
18.8
+5.4
Increasing
36
37.1
50.0
12.9
Part-time employment
8.8
-1.5
+10.3
Increasing
1
13.2
82.4
4.4
Hours worked
8.9
8.4
+0.5
Increasing
39
18.1
72.7
9.2
Wages and benefits
37.6
29.7
+7.9
Increasing
48
40.0
57.6
2.4
Input prices
51.7
52.3
-0.6
Increasing
44
56.5
38.7
4.8
Selling prices
48.4
38.5
+9.9
Increasing
44
51.7
45.0
3.3
Capital expenditures
23.0
13.8
+9.2
Increasing
21
36.1
50.8
13.1
Inventories
10.8
13.1
-2.3
Increasing
37
26.4
58.0
15.6
Companywide Retail Activity
Sales
51.6
42.1
+9.5
Increasing
45
57.2
37.2
5.6
Internet sales
14.9
31.1
-16.2
Increasing
45
23.4
68.1
8.5
Catalog sales
5.0
13.9
-8.9
Increasing
3
12.5
80.0
7.5
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
30.8
12.9
+17.9
Improving
44
44.0
42.7
13.2
General business activity
26.5
10.2
+16.3
Improving
15
40.8
44.9
14.3

*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

January 2, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

January 2, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

January 2, 2013

Comments from Survey Respondents

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

Pipeline Transportation

  • In the energy industry, particularly South Texas, West Texas and the Rockies, costs for service and supplies are generally flat with a slight upward bias. However, labor costs, particularly skilled field labor (truck drivers, gaugers, pipeline workers, welders, etc.) are increasing as the supply of such skilled labor is limited.

Insurance Carriers and Related Activities

  • Low interest rates are a drag on investment income and earnings.

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

  • The oil industry is up, but farming and cattle business are down. Local employment levels and retail sales are up about 3 percent.
  • We continue to see slowness in our economy. Expenses (cost of goods and services) continue to rise, especially expenses connected with governmental regulations. Materials and supplies are increasing at every turn. Government regulation—OSHA, EPA and now health care insurance—decrease productivity. Negative results regarding tax regulation will not only hurt, but really cut deep in the way we run the business.

Real Estate

  • Since the election, our residential market has experienced an unforeseen increase in buyer activity, both in interest and actual sales transactions. It appears the removal of political uncertainty has been the catalyst for this recent activity. We hope sellers are equally motivated after the first of the year as resale inventory is at extremely low levels.
  • Our overall outlook will be dependent on how the consumer perceives the effectiveness of how Congress handles the resolution of fiscal issues. If consumer confidence remains high, that will bode well for residential real estate sales.

Professional, Scientific and Technical Services

  • Right now you can't have an opinion on business activity until Congress and the president make some sensible decisions. So here we sit, unable to make business and budget plans for 2013.
  • December revenues are down only because this is traditionally a slow time in our business. It does not reflect an overall trend, as our backlog for 2013 exceeds that for this time in 2012.
  • It is very difficult to determine what our business outlook will be over the next six months due to the uncertainty of the fiscal cliff issues that we may be facing. A big factor of the direction of the real estate industry will be determined by the amount of increases to the capital gains rates and taxes on businesses and regulation. We feel that the outlook for the real estate industry has improved significantly over the past year, but this could all change if some type of compromise is not reached on Capitol Hill.

Management of Companies and Enterprises

  • We are way overregulated. A large part of the regulations make customers mad and don't accomplish anything. Overregulation has hurt our ability to help our customers and driven up the cost to our customers. At some point someone needs to realize that overregulation hurts the average consumer.

Administrative and Support Services

  • We deal with all commercial groups, and there is a sense of uneasiness in general. This applies to real estate, manufacturing, retail and general business. People are hesitant to make forward commitments or even make changes that may help their bottom line. We continue to add to our service and product offerings.
  • Health care costs continue to rise. New regulations prompt reduced workweek for some workers at the hourly level. Potential tax changes are likely to discourage investment. Washington has lost its connection to reality.
  • Clients are putting off hiring decisions.

Ambulatory Health Care Services

  • Like everyone else, we remain concerned about the fiscal cliff. The sequestration cuts will hurt us if they occur, and the expiration of the tax cuts will seriously impact all of our employees.

Nursing and Residential Care Facilities

  • Health care providers are faced with significant negative regulatory and reimbursement pressure, related to the relative instability of the overall economy, growth in numbers of Medicare beneficiaries and the fiscal cliff.

Accommodation

  • We are in the process of completing a million dollar capital improvement project as of December 2012. We hope business conditions will be good in 2013.

Food Services and Drinking Places

  • We think restaurants with over 50 employees will suffer dramatically. Profit margins for restaurants are not big enough to sustain the health reform program. Our goal will be to reduce the 40-hour workweek into part-time jobs to avoid projected penalties. Prices for food will go up. Fewer people will go out to eat
  • Sales have not managed to show the normal, holiday-season increase. We are up somewhat from last month but nowhere near the normal increase for this point in the holiday season. We are down from last year by more than 2 percent without even adjusting for the price increases. This holiday season has been significantly worse than last year. We are being optimistic to say things will be about the same in the six-month horizon.
  • We have seen a slight 2 percent increase in sales 2012 versus 2011; however, we anticipate that 2013 could have a very negative impact on our business with costs increasing in every product and service, not to mention the tax impact.

Merchant Wholesalers, Durable Goods

  • Affordable Care Act hit us hard! Fiscal cliff has all everyone anxious about capital.
  • The outlook past January is nerve-rackingly questionable. Finding an agreement between President Obama and Speaker Boehner that doesn't throw ice on the economy will be a challenge. Business needs government to go on a spending diet; citizens are already starting to learn about the effects that health reform is going to have on their daily lives.
  • Sales changes and the increase in hours are due to seasonality. Wage changes are normal annual increases that will take effect in January 2013. The decline in capital expenditures is primarily due to the large amount of capital we have already spent in 2012; we will not need to continue to spend at that level for the next two years.

Merchant Wholesalers, Nondurable Goods

  • Now that the election cycle has passed, we believe regulation will increase, and we will have to do more with less—less people, less capital and less business. We have made arrangements to relocate two of our three locations to lower our fixed costs. We renewed some truck leases but will operate with fewer vehicles than in the past to lower our fixed costs moving forward. We are looking at options to reduce health care coverage for our employees, as we fear it will become unaffordable for our company in the next 24 months. We are not looking forward to improved conditions in the next 24 months but will manage with the current demand level present.

Motor Vehicle and Parts Dealers

  • Our level of business is not improving, and in fact it is deteriorating somewhat. This could be due to the political situation and maybe also the drought situation.
  • We are impacted by our manufacturer’s issues. Thus our results may not mirror results generally.
  • We are very disappointed in the news that the White House has been unable to come to a compromise on fiscal cliff issues. December sales have declined. Companies that typically buy in December are expressing concerns over future conditions related to the so-called fiscal cliff. Our salespeople and management are concerned that we may experience reduced sales in the first quarter related to declines in the rate of income tax return speed to our retail consumers.

Building Material and Garden Equipment and Supplies Dealers

  • We are looking at the glass of water as half full and not half empty, but there is still so much uncertainty on the direction the economy is moving that business is shaky. December is always an off month for us, but our open orders moving into January are better than they have been in the last few years.
  • It was the busiest December we have ever had, and on the heels of two other record months.

 

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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