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Texas Service Sector Outlook Survey

Report in PDF
March 26, 2013

Texas Service Sector Growth Continues

Texas service sector activity expanded in March, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, edged up from 14.2 to 15.4, its highest reading since September.

Labor market indicators reflected some hiring and longer workweeks. The employment index fell 5 points to 8.3, suggesting hiring continued but at a slower pace than in February. The hours worked index held steady at 3.1, indicating hours worked increased at about the same pace as last month.

Perceptions of broader economic conditions improved again in March. The general business activity index advanced from 5.2 to 9.8, recording its highest reading in a year. The company outlook index was unchanged at 6.2, with 23 percent of respondents reporting that their outlook improved from last month and 16 percent noting it worsened.

Price and wage pressures fell slightly in March. The selling prices index moved down from 11 to 5.8, indicating prices increased but at a slower pace than in February. The wages and benefits index ticked down from 12.3 to 11.6, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected more optimism this month. The index of future general business activity rose slightly to 18.7, and the index of future company outlook jumped up from 9.6 to 20.7. Indexes of future service sector activity, such as future revenue and employment, edged up and remained in solid positive territory.

Texas Retail Outlook Survey

March 26, 2013 

Retail Sales Increase but at a Slower Pace

Retail Sales Increase but at a Slower Pace

Retail sales increased in March, according to business executives responding to the Texas Retail Outlook Survey. However, the sales index fell 4 points to 8.4, suggesting growth slowed. Inventories also rose more slowly.

Labor market indicators reflected less hiring and little change in workweeks. The employment index fell sharply from 21.7 to 8.9, suggesting hiring continued but at a considerably slower pace than in February. The hours worked index moved down from 8.5 to 1.6.

Retailers’ perceptions of broader economic conditions were less optimistic in March. The general business activity index edged down from 10.3 to 7.4. The company outlook index plunged from 22.1 to 7.6, its lowest reading this year. Twenty-five percent of respondents noted an improved company outlook over the prior month, compared with 17 percent who reported their outlook had worsened.

Retail price pressures eased, while wage pressures increased in March. The selling prices index fell from 20.3 to 7.4. The wages and benefits index rose from 7.5 to 13.7, suggesting faster compensation growth, although the great majority of firms noted no change in labor costs.

Perceptions of future broader economic conditions improved. The future general business activity index rose from 18.8 to 26.9, while the index of future company outlook ticked up to 23.3. Indexes of future retail sector activity remained in solid positive territory in March.

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 March 12–20, and 231 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: April 30, 2013

Texas Service Sector Outlook Survey

March 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
15.4
14.2
+1.2
Increasing
41
34.3
46.9
18.9
Employment
8.3
13.4
-5.1
Increasing
37
19.3
69.8
11.0
Part-time employment
5.8
3.8
+2.0
Increasing
2
11.2
83.4
5.4
3.1
3.4
-0.3
Increasing
2
9.8
83.5
6.7
Wages and benefits
11.6
12.3
-0.7
Increasing
46
15.3
81.0
3.7
Input prices
25.3
28.9
-3.6
Increasing
47
28.9
67.5
3.6
Selling prices
5.8
11.0
-5.2
Increasing
28
14.9
76.0
9.1
Capital expenditures
15.8
12.5
+3.3
Increasing
43
21.5
72.8
5.7
General Business Conditions
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
6.2
6.3
-0.1
Improving
18
22.5
61.2
16.3
General business activity
9.8
5.2
+4.6
Improving
17
23.3
63.2
13.5
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
42.7
39.0
+3.7
Increasing
49
54.9
32.9
12.2
Employment
25.6
23.8
+1.8
Increasing
46
35.2
55.2
9.6
Part-time employment
15.7
11.7
+4.0
Increasing
9
21.9
71.9
6.2
7.9
8.4
-0.5
Increasing
43
14.6
78.7
6.7
Wages and benefits
39.7
37.6
+2.1
Increasing
75
43.2
53.3
3.5
Input prices
46.7
46.5
+0.2
Increasing
75
49.7
47.4
3.0
Selling prices
27.9
31.0
-3.1
Increasing
47
37.7
52.5
9.8
Capital expenditures
25.4
21.1
+4.3
Increasing
48
33.9
57.5
8.5
General Business Conditions
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
20.7
9.6
+11.1
Improving
19
33.9
52.9
13.2
General business activity
18.7
15.4
+3.3
Improving
18
29.4
59.9
10.7

*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

March 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 Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
8.4
12.4
-4.0
Increasing
8
33.0
42.5
24.6
Employment
8.9
21.7
-12.8
Increasing
20
18.8
71.3
9.9
Part-time employment
10.7
6.3
+4.4
Increasing
2
14.3
82.1
3.6
Hours worked
1.6
8.5
-6.9
Increasing
4
13.0
75.6
11.4
Wages and benefits
13.7
7.5
+6.2
Increasing
25
19.7
74.3
6.0
Input prices
12.5
21.7
-9.2
Increasing
45
21.4
69.7
8.9
Selling prices
7.4
20.3
-12.9
Increasing
8
15.4
76.6
8.0
Capital expenditures
22.0
14.9
+7.1
Increasing
4
25.4
71.2
3.4
Inventories
9.2
13.2
-4.0
Increasing
10
32.5
44.2
23.3
Companywide Retail Activity
Sales
9.8
23.1
-13.3
Increasing
22
31.1
47.6
21.3
Internet sales
11.4
9.6
+1.8
Increasing
8
20.5
70.5
9.1
Catalog sales
0.0
-2.1
+2.1
No Change
1
12.8
74.4
12.8
General Business Conditions, Retail
Current (versus previous month)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
7.6
22.1
-14.5
Improving
8
24.7
58.2
17.1
General business activity
7.4
10.3
-2.9
Improving
4
24.7
58.0
17.3
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
47.2
39.8
+7.4
Increasing
49
60.6
26.0
13.4
Employment
25.5
25.6
-0.1
Increasing
39
35.3
54.9
9.8
Part-time employment
7.4
9.9
-2.5
Increasing
4
16.6
74.2
9.2
Hours worked
5.9
8.3
-2.4
Increasing
12
18.8
68.3
12.9
Wages and benefits
32.1
33.3
-1.2
Increasing
51
39.5
53.1
7.4
Input prices
33.9
43.7
-9.8
Increasing
47
44.6
44.6
10.7
Selling prices
37.5
34.3
+3.2
Increasing
47
46.4
44.6
8.9
Capital expenditures
14.6
26.1
-11.5
Increasing
24
29.1
56.4
14.5
Inventories
27.8
8.4
+19.4
Increasing
40
45.7
36.4
17.9
Companywide Retail Activity
Sales
48.3
33.7
+14.6
Increasing
48
59.6
29.1
11.3
Internet sales
14.7
28.6
-13.9
Increasing
48
22.0
70.7
7.3
Catalog sales
9.8
3.6
+6.2
Increasing
10
18.3
73.2
8.5
General Business Conditions, Retail
Future (six months ahead)
Indicator Mar
Index
Feb
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
23.3
23.0
+0.3
Improving
47
37.3
48.7
14.0
General business activity
26.9
18.8
+8.1
Improving
18
39.0
48.9
12.1

*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

March 26, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

March 26, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

March 26, 2013

Comments from Survey Respondents

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

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

  • The cattle industry is losing money. Moisture is better this year in our area. Retail sales are up 8 percent; job growth is steady.

Professional, Scientific, and Technical Services

  • We've hired two new employees and are hiring interns for the summer. We haven't done that since 2007.
  • Growth is slight, but it is growth nonetheless. Business is strong in Houston. Our clients are still cautious about marketing spending.
  • It is very tough to make long-term strategic plans when the federal government is running things week to week. More long-term stability would allow for more long-term planning and thus, more capital investment.

Management of Companies and Enterprises

  • As a bank we continue to face compression on interest rate margins as the Federal Reserve keeps the federal funds rate at a low basis to try and stimulate the economy. The only way we can mitigate the effects of the squeeze is to increase loan volume. Growing critical mass in loans continues to be difficult because of the intense competition for quality credit in our markets.
  • We feel there is too much government regulation.

Administrative and Support Services

  • The consumer is delaying purchases until the last minute and then looking for the best price via many available avenues.
  • Texas pulling the funding for health care has really hurt our company.
  • The declines in our activity are slight and too recent to be a trend at this point. They are just month-to-month changes.

Ambulatory Health Care Services

  • Medicare is 80 percent of our business, and our revenue will be reduced by 2 percent beginning in April as a result of sequestration. We are seeing increased interest from hospitals in controlling readmissions. The impact of the Affordable Care Act on our business in the form of increased fees and taxes is not positive. We are still waiting on answers regarding a line of business we have in Louisiana; it is still possible that we will have to close it and put 250 employees out of work.
  • Due to the uncertainty in D.C. about the future of Medicare and Medicaid benefits, there is significant uncertainty in the health care service industry. Even as this issue is stagnating in D.C., insurance payors and others have tightened their reimbursement for health care services with emphasis on additional monitoring, compliance and quality, cutting away at the reimbursement level in a steady manner. This is requiring service providers to add costs to defend increasing levels of documentation. Overall, health care providers are in a freeze because of these issues.

Nursing and Residential Care Facilities

  • Sequestration will reduce our Medicare revenues by 2 percent starting April 1, 2013. This will significantly impact our operations.
  • Federal policies on sequestration and Medicare funding, state policies on Medicaid and health insurance exchanges and a sluggish economy will make economic growth in health care really difficult in 2013.

Social Assistance

  • Our revenue includes reimbursement from private insurance for therapies our staff provides to infants up to 3-years-old in our early childhood intervention program. Reimbursement rates are currently 12 cents on the dollar billed. Because of our reputation for quality service, 60 percent of our clients are privately insured—people who have the means to go anywhere for similar services. We are fundraising to cover the gap but are concerned about the future.

Accommodation

  • Our major capital projects from 2012 are over. However, we will continue to upgrade rooms and amenities as an ongoing room feature.

Food Services and Drinking Places

  • In January and early February, we took a very significant hit on sales, over 4 percent down on a same-store basis, which we attributed to the increase in the payroll tax. Our next four-week fiscal period showed decided improvement over the January and early February period. We definitely think our customers are recovering from the shock of the payroll tax increase. However, to date, all we have done is reduce the shortfall. We are still running down compared with last year, whereas earlier in the fiscal year, which runs July to June, we had moved to positive numbers. This is despite the fact that we took a small price increase earlier this month. Times are still not good, but they do seem to be getting better. Despite the sales increase and our expectation of improvement, we do not plan to increase employee numbers or hours. Our sales are just approaching an amount to get our labor costs back in line with normal. Cost-of-goods actually dropped last fiscal period, but we don't expect that to continue. Our short- and long-term outlooks have improved because of the apparent recovery from the payroll tax shock. Unfortunately, that seems to be taking us only back to where we were last August to December. We don't see anything yet to say that the economy is going to keep growing from there. We are still not even close to being back to sales levels before the recession.
  • We have seen a rise in sales after IRS refunds were received by our customers.

Merchant Wholesalers, Durable Goods

  • Growing conditions are extremely dry.
  • Home construction materials are booming compared with where we have been. Pricing is ticking up, and if purchases continue to ramp up, spot shortages may develop. If it continues, the short supply of critical materials could actually slow construction. It certainly will increase prices and construction material inflation. We are enjoying the profitability but worrying about the future impact of all of the borrowing.
  • Our increases six months from now are seasonal increases.
  • Current optimism is extremely fragile; we are very fortunate to be in Texas. We remain very guarded about the economy. Higher taxes and increased health care costs will affect the economy.

Motor Vehicle and Parts Dealers

  • Auto business is good but not on overdrive at all. There are an assortment of stimulus programs and vehicle introductions, but customers are still full of uncertainty and it takes time and effort to close the deal.
  • Our situation has been affected negatively due to our franchisor’s problems. We see the overall business situation as improved.

 

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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