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Texas Service Sector Outlook Survey

Report in PDF
February 26, 2013

Texas Service Sector Growth Picks Up

Texas service sector activity expanded in February, 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 8.4 to 14.2, with 34 percent of respondents noting revenues increased from January.

Labor market indicators reflected more hiring and longer workweeks. The employment index advanced 7 points to 13.4, its highest reading in 12 months. The hours worked index moved up to 3.4 after coming in close to zero last month.

Perceptions of broader economic conditions improved again in February. The general business activity index held steady at a reading of 5.2. The company outlook index edged down from 7.5 to 6.3, with 19 percent of respondents reporting that their outlook improved from last month and 12 percent noting it worsened.

Selling prices and wages rose at about the same pace as last month. The selling prices index was practically unchanged at 11. The wages and benefits index held steady at 12.3.

Expectations regarding future business conditions remained optimistic. The index of future general business activity edged up 1 point to 15.4, and the index of future company outlook came in at 9.6, down from 15. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory in February.

Texas Retail Outlook Survey

February 26, 2013 

Retail Sales Rise

Retail Sales Rise

Retail sales posted their seventh consecutive month of growth in February, according to business executives responding to the Texas Retail Outlook Survey. The sales index was positive but edged down from 14.8 to 12.4, suggesting growth slowed slightly. Inventories rose.

Labor market indicators reflected a big jump in hiring and longer workweeks. The employment index rose sharply from 2.7 to 21.7 in February, its highest reading since early 2007. The hours worked index moved up to 8.5 from 4.8.

Perceptions of general economic conditions improved in February. The general business activity index rose from 5.3 to 10.3. The company outlook index climbed significantly from 11.5 to 22.1, its highest reading in 12 months. Thirty percent of respondents noted an improved company outlook over the prior month, compared with 8 percent who reported that their outlook had worsened.

Retail prices spiked, while wage growth slowed in February. The selling prices index jumped from 9 to 20.3. The wages and benefits index fell from 15.5 to 7.5, although the great majority of respondents continued to note no change in labor costs.

Perceptions of future business conditions were more optimistic. The future general business activity index advanced 5 points to 18.8, while the index of future company outlook rose 11 points to 23. Indexes of future retail sector activity were not much changed and remained in solid positive territory in February.

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 Feb.12–20, and 238 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: March 26, 2013

Texas Service Sector Outlook Survey

February 26, 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 Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
14.2
8.4
+5.8
Increasing
40
33.5
47.2
19.3
Employment
13.4
6.4
+7.0
Increasing
36
21.6
70.2
8.2
Part-time employment
3.8
-0.7
+4.5
Increasing
1
10.1
83.6
6.3
3.4
-0.2
+3.6
Increasing
1
10.5
82.4
7.1
Wages and benefits
12.3
12.1
+0.2
Increasing
45
17.4
77.5
5.1
Input prices
28.9
27.1
+1.8
Increasing
46
31.0
66.9
2.1
Selling prices
11.0
11.7
-0.7
Increasing
27
18.7
73.6
7.7
Capital expenditures
12.5
13.8
-1.3
Increasing
42
18.3
75.8
5.8
General Business Conditions
Current (versus previous month)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
6.3
7.5
-1.2
Improving
17
18.7
68.9
12.4
General business activity
5.2
5.8
-0.6
Improving
16
18.7
67.8
13.5
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
39.0
44.2
-5.2
Increasing
48
50.5
38.0
11.5
Employment
23.8
27.0
-3.2
Increasing
45
34.5
54.9
10.7
Part-time employment
11.7
9.4
+2.3
Increasing
8
17.9
75.9
6.2
8.4
6.4
+2.0
Increasing
42
13.4
81.6
5.0
Wages and benefits
37.6
42.4
-4.8
Increasing
74
42.4
52.8
4.8
Input prices
46.5
48.8
-2.3
Increasing
74
49.9
46.7
3.4
Selling prices
31.0
29.8
+1.2
Increasing
46
38.4
54.2
7.4
Capital expenditures
21.1
19.8
+1.3
Increasing
47
28.7
63.7
7.6
General Business Conditions
Future (six months ahead)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
9.6
15.0
-5.4
Improving
18
24.7
60.2
15.1
General business activity
15.4
14.4
+1.0
Improving
17
28.2
59.0
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

February 26, 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 Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
12.4
14.8
-2.4
Increasing
7
35.3
41.8
22.9
Employment
21.7
2.7
+19.0
Increasing
19
27.3
67.1
5.6
Part-time employment
6.3
-3.0
+9.3
Increasing
1
14.1
78.1
7.8
Hours worked
8.5
4.8
+3.7
Increasing
3
14.0
80.5
5.5
Wages and benefits
7.5
15.5
-8.0
Increasing
24
12.7
82.1
5.2
Input prices
21.7
24.7
-3.0
Increasing
44
26.9
67.9
5.2
Selling prices
20.3
9.0
+11.3
Increasing
7
24.3
71.7
4.0
Capital expenditures
14.9
4.4
+10.5
Increasing
3
20.9
73.1
6.0
Inventories
13.2
21.6
-8.4
Increasing
9
30.8
51.6
17.6
Companywide Retail Activity
Sales
23.1
20.1
+3.0
Increasing
21
40.6
41.9
17.5
Internet sales
9.6
2.0
+7.6
Increasing
7
19.2
71.2
9.6
Catalog sales
-2.1
0.0
-2.1
Decreasing
1
8.5
80.9
10.6
General Business Conditions, Retail
Current (versus previous month)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
22.1
11.5
+10.6
Improving
7
30.3
61.5
8.2
General business activity
10.3
5.3
+5.0
Improving
3
26.5
57.3
16.2
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
39.8
42.6
-2.8
Increasing
48
50.9
38.0
11.1
Employment
25.6
21.1
+4.5
Increasing
38
31.9
61.7
6.3
Part-time employment
9.9
12.5
-2.6
Increasing
3
16.5
76.9
6.6
Hours worked
8.3
7.9
+0.4
Increasing
11
15.6
77.1
7.3
Wages and benefits
33.3
32.2
+1.1
Increasing
50
37.2
58.9
3.9
Input prices
43.7
44.1
-0.4
Increasing
46
48.4
46.9
4.7
Selling prices
34.3
44.2
-9.9
Increasing
46
40.6
53.1
6.3
Capital expenditures
26.1
26.9
-0.8
Increasing
23
32.3
61.5
6.2
Inventories
8.4
14.9
-6.5
Increasing
39
27.2
54.0
18.8
Companywide Retail Activity
Sales
33.7
42.9
-9.2
Increasing
47
45.1
43.5
11.4
Internet sales
28.6
30.0
-1.4
Increasing
47
32.7
63.3
4.1
Catalog sales
3.6
6.6
-3.0
Increasing
9
11.8
80.0
8.2
General Business Conditions, Retail
Future (six months ahead)
Indicator Feb
Index
Jan
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
23.0
11.6
+11.4
Improving
46
33.7
55.6
10.7
General business activity
18.8
13.7
+5.1
Improving
17
34.0
50.8
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 Service Sector Outlook Survey

February 26, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

February 26, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

February 26, 2013

Comments from Survey Respondents

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

Transit and Ground Passenger Transportation

  • Higher fuel prices are increasing the cost to provide service.

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

  • In the last couple of months business activity has slowed. This continued into February.

Professional, Scientific and Technical Services

  • We have several federal contracts, so we are waiting for a congressional decision on March 1 concerning sequestration. That decision will impact our six-month forecast.
  • Our business outlook has remained strong since the last quarter of 2012, but commercial activity has cooled some in 2013. Residential activity has remained strong due to the pent-up demand of the consumer, and we feel that commercial activity in 2013 will be in-line with 2012. The driving force of the market will be residential resale with the refinance market slowing throughout 2013. We have no plans to increase staff until we get a better sense of the direction our government is headed with the looming fiscal cliff issues.

Management of Companies and Enterprises

  • Decreasing margins and increased regulatory expense have led to a reduction in staff.

Ambulatory Health Care Services

  • The sequestration is a real worry since 80 percent of our revenue is from Medicare and payments to health care providers will be reduced. Like every other employer, we are trying to determine the impact of the Affordable Care Act on our programs. We have a program in Louisiana that we will possibly have to shut down in 2014, leaving over 200 employees out of work (about 20 percent of our workforce).
  • As medical providers, we will have a few stable months of reimbursement. However, unless Congress addresses the Medicare reimbursement, in January 2014 we will have to severely curtail future expansion and may even be subject to declining employment.
  • Medicare reimbursement was cut related to the health reform effective Jan 1, 2013. An additional 6 percent cut will be implemented Jan. 1, 2014. This will have a devastating impact on our business since margins are already less than 2 percent

Nursing and Residential Care Facilities

  • We provide health care services that depend on Medicaid and Medicare.
  • Sequestration of Medicare funding through the federal budget is a matter of significant concern. Significant cost and revenue pressures exist in health care, and this will disrupt the business climate for health care in the next 12 to 18 months.

Accommodation

  • We are waiting to see how a major new building and new RV park additions will fare over time.

Food Services and Drinking Places

  • Our growth is coming from new restaurants in new markets. We have seen a sharp decline in same-store sales, year over year. We believe this is a result of the higher payroll taxes and late federal tax return filing, and thus, late refunds that most of our guests probably receive. We should know by March which one of these factors is the most critical as tax refunds hit customers’ bank accounts.
  • We have not yet experienced all the negative effects of the increased taxes. We believe this increase will impact us in the next three to four months.
  • Health care issues and costs will cripple our short- and medium-term growth plans.
  • Sales have gotten even softer than they were in January. We are setting new lows, losing all the progress of the last couple years. The payroll tax increase and rising gasoline prices seem to be the most likely causes of the downturn. Working hours are down for both full-time and part-time employees. We are probably going to have more part-time hourly employees over the six-month horizon as we try to manage labor even tighter than we have in the past to control ever-rising costs. We expect to take a small price increase next month, probably less than 1 percent. Cost of goods sold slipped up about 0.3 percent over the last month from the previous month. We expect that to continue in coming months. Our outlook for both our company and the general level of business activity has definitely worsened for the present, and we see no reason to continue expecting things to get better within the six-month horizon.

Merchant Wholesalers, Durable Goods

  • Decrease in sales from January is due to three fewer business days. The decrease in inventory in February and six months from now is our attempt to reduce our inventory of overstock and slow moving items.
  • All of our estimates regarding “improved outlook” on growth and employment are contingent on the U.S. Senate and House of Representatives settling very difficult budgetary issues.

Merchant Wholesalers, Nondurable Goods

  • Business was slower in January than expected, and February is off significantly from February 2011 and 2012. This has been unexpected. We will review it for the balance of the month of February and then take action if March does not improve.

Motor Vehicle and Parts Dealers

  • Our franchisor continues to struggle. Our industry is slightly better overall.
  • We are blessed to be in Texas. It could be much worse.
  • Auto business is off to a good start in 2013 and met expectations.

Building Material and Garden Equipment and Supplies Dealers

  • Banks are starting to lighten up. That’s a good sign. We just hope they don't lighten up too much and then turn the spigot off like they did last time.

Food and Beverage Stores

  • Improvement in the economy has lagged and seems to just be stagnant. We are fearful of the expanding discussions of regulation and forced spending by the government but hope the summer brings some growth.

 

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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