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Texas Service Sector Outlook Survey

Report in PDF
May 29, 2013

Texas Service Sector Growth Strengthens

Texas service sector activity expanded in May, 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 6.1 to 11.8, indicating activity picked up pace this month.

Labor market indicators signaled continued growth, but at a slower pace. The employment index edged down from 9.2 to 6.8, suggesting hiring slowed. The hours worked index dipped from 7.1 to 4.5.

Perceptions of broader economic conditions continued to reflect some optimism in May. The general business activity index was unchanged at 3.8. The company outlook index was positive but fell slightly from 4.1 to 2.2, with 17 percent of respondents reporting that their outlook improved from last month and 15 percent noting it worsened.

Price and wage pressures decreased slightly in May. The selling prices index moved down from 6.4 to 3.8, indicating prices increased but at a slower pace. The wages and benefits index ticked down from 15.7 to 14.1, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions remained optimistic this month. The index of future general business activity advanced 6 points to 16.9, and the index of future company outlook rose slightly from 11 to 13.4. Indexes of future service sector activity, such as future revenue and employment, fell slightly but remained in solid positive territory.

Texas Retail Outlook Survey

May 29, 2013 

Retail Sales Rebound

Retail Sales Rebound

Retail sales improved notably in May, according to business executives responding to the Texas Retail Outlook Survey. The sales index climbed back into positive territory, gaining 16 points to reach 11.6. Inventories were largely unchanged.

Labor market indicators were mixed. The employment index dipped from 6.1 to 4.7, suggesting hiring continued but at a slower pace than in April. The hours worked index was unchanged at -2.7, indicating workweeks continued to shrink.

Retailers’ perceptions of broader economic conditions improved markedly in May. The general business activity index returned to positive territory, advancing almost 9 points to a reading of 1.3. The company outlook index rose from -0.8 to 6.2, with 19 percent of respondents noting an improved company outlook over the prior month, compared with 13 percent reporting their outlook had worsened.

Retail price and wage pressures increased. The selling prices index edged up from 7.3 to 9.7, indicating prices increased at a faster pace in May. The wages and benefits index ticked up 2 points to 6.8, although the great majority of firms noted no change in labor costs.

Perceptions of future broader economic conditions were notably more optimistic in May. The future general business activity index jumped 11 points to 22.1, while the index of future company outlook advanced to 19.7 from 8. Indexes of future retail sector activity decreased but remained in solid positive territory in May.

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 May 14–22, and 241 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: June 25, 2013

Texas Service Sector Outlook Survey

May 29, 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 May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
11.8
6.1
+5.7
Increasing
43
31.2
49.3
19.4
Employment
6.8
9.2
-2.4
Increasing
39
17.1
72.6
10.3
Part-time employment
4.0
1.4
+2.6
Increasing
4
9.6
84.8
5.6
4.5
7.1
-2.6
Increasing
4
10.7
83.1
6.2
Wages and benefits
14.1
15.7
-1.6
Increasing
48
17.8
78.5
3.7
Input prices
23.4
26.0
-2.6
Increasing
49
26.5
70.4
3.1
Selling prices
3.8
6.4
-2.6
Increasing
30
13.1
77.6
9.3
Capital expenditures
9.1
7.5
+1.6
Increasing
45
17.0
75.0
7.9
General Business Conditions
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
2.2
4.1
-1.9
Improving
20
17.2
67.8
15.0
General business activity
3.8
3.7
+0.1
Improving
19
18.7
66.4
14.9
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
33.5
33.9
-0.4
Increasing
51
50.0
33.5
16.5
Employment
16.7
24.4
-7.7
Increasing
48
31.9
52.9
15.2
Part-time employment
5.7
6.5
-0.8
Increasing
11
14.8
76.1
9.1
2.6
8.2
-5.6
Increasing
45
12.1
78.4
9.5
Wages and benefits
33.5
34.7
-1.2
Increasing
77
37.2
59.1
3.7
Input prices
49.4
45.1
+4.3
Increasing
77
53.3
42.8
3.9
Selling prices
20.8
21.1
-0.3
Increasing
49
29.6
61.6
8.8
Capital expenditures
14.9
17.9
-3.0
Increasing
50
24.7
65.4
9.8
General Business Conditions
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.4
11.0
+2.4
Improving
21
29.6
54.2
16.2
General business activity
16.9
10.8
+6.1
Improving
20
30.4
56.1
13.5

*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

May 29, 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 May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
11.6
-4.4
+16.0
Increasing
1
32.7
46.3
21.1
Employment
4.7
6.1
-1.4
Increasing
22
17.3
70.1
12.6
Part-time employment
0.0
-6.4
+6.4
No Change
1
9.1
81.8
9.1
Hours worked
-2.7
-2.5
-0.2
Decreasing
2
10.3
76.7
13.0
Wages and benefits
6.8
4.6
+2.2
Increasing
27
12.4
82.0
5.6
Input prices
16.1
14.4
+1.7
Increasing
47
24.0
68.1
7.9
Selling prices
9.7
7.3
+2.4
Increasing
10
17.5
74.7
7.8
Capital expenditures
5.8
0.0
+5.8
Increasing
1
12.9
80.0
7.1
Inventories
0.8
6.2
-5.4
Increasing
12
20.6
59.6
19.8
Companywide Retail Activity
Sales
5.8
4.2
+1.6
Increasing
24
28.6
48.6
22.8
Internet sales
3.6
-6.0
+9.6
Increasing
1
12.5
78.6
8.9
Catalog sales
-6.0
-11.9
+5.9
Decreasing
2
4.0
86.0
10.0
General Business Conditions, Retail
Current (versus previous month)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
6.2
-0.8
+7.0
Improving
1
18.9
68.4
12.7
General business activity
1.3
-7.4
+8.7
Improving
1
20.6
60.1
19.3
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
25.2
29.9
-4.7
Increasing
51
43.7
37.8
18.5
Employment
10.6
19.3
-8.7
Increasing
41
25.7
59.2
15.1
Part-time employment
0.5
7.5
-7.0
Increasing
6
12.8
74.9
12.3
Hours worked
-1.0
3.9
-4.9
Decreasing
1
12.2
74.6
13.2
Wages and benefits
24.0
25.6
-1.6
Increasing
53
31.5
61.1
7.5
Input prices
31.9
31.1
+0.8
Increasing
49
36.4
59.1
4.5
Selling prices
30.3
21.3
+9.0
Increasing
49
36.4
57.6
6.1
Capital expenditures
9.1
6.7
+2.4
Increasing
26
22.7
63.6
13.6
Inventories
11.1
14.3
-3.2
Increasing
42
26.7
57.7
15.6
Companywide Retail Activity
Sales
28.4
28.9
-0.5
Increasing
50
41.1
46.2
12.7
Internet sales
18.0
11.1
+6.9
Increasing
50
26.0
66.0
8.0
Catalog sales
5.5
0.5
+5.0
Increasing
12
13.0
79.5
7.5
General Business Conditions, Retail
Future (six months ahead)
Indicator May
Index
Apr
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
19.7
8.0
+11.7
Improving
49
31.8
56.1
12.1
General business activity
22.1
11.3
+10.8
Improving
20
35.9
50.3
13.8

*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 Service Sector Outlook Survey

May 29, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

May 29, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

May 29, 2013

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • We are hoping for business to "remain the same."
  • The main reason we expect increased costs in the future is anticipated increased costs for compliance regulations.

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

  • We had a slight increase in business. We continue to have the same problems with costs going up in all areas, especially health care, labor rates and overtime. Business is slightly better, but still tough.

Real Estate

  • Although current numbers appear healthy, the local residential real estate market is challenged by the lack of available homes for sale. Prices are escalating at rates above the historical average, which is not healthy long-term. Also, continuing drought conditions put a damper on long-term prospects for the regional economy.

Rental and Leasing Services

  • Our increased numbers are due to an acquisition that we did because of the depressed economy. Many of our internal gauges, including accounts receivables, indicate this is an unhealthy economy.

Professional, Scientific, and Technical Services

  • The residential sector of the real estate industry has continued to be a driving force. Home prices and the transactional volume are increasing. In April, our residential division experienced its best revenue month in our company's history, and the commercial division had a 58 percent increase in revenue over last April. Judging by the amount of orders we are receiving, we feel confident that the real estate market will remain strong through at least the end of 2013. We still remain cautious in our hiring because long-term government debt will ultimately press on this economy.
  • We continue to secure more new building and renovation design projects. We expect construction in Texas to increase over the next 12 to 24 months.
  • Business is slightly better than we projected; therefore, we're slightly more optimistic than previously. Our clients seem to be more aggressive with their marketing plans and budgets. We are becoming very concerned about the impact of the Affordable Care Act on costs.
  • We are experiencing sporadic market conditions with many projects slow to realization and some going on hold as financing is delayed.

Administrative and Support Services

  • We are a travel services company and with the overall improved housing market, consumer focus is on expenditures related to their current environment rather than on experiences. Also with business being more productive, time off or away from the office seems a bit more difficult for many.
  • Employers are still very reluctant to hire full-time employees. Full-time employee demand is down now for the fifth month in a row in our Dallas office, but our Houston office is experiencing higher demand for full-time employees.
  • We are not adding employees because of the Affordable Care Act.

Ambulatory Health Care Services

  • The outlook for health care remains uncertain. In April, we felt the impact of the 2 percent sequestration cut on 80 percent of our business. We expect more cuts in the future. Our selling prices are dictated by insurers, the state government and the federal government, and we have virtually no control over them. We continue to look for new revenue streams and to find ways to cut costs. It is difficult to retain good employees in this environment.
  • There is a lot of uncertainty for health care service providers. Small business owners are feeling the effect of payments being squeezed for services rendered even as outcomes continue to dominate the quality aspect of the service. With the impending health insurance mandate, we are heading into a higher operations cost environment even as the basic insurance plans required by the Affordable Care Act do not compensate the providers adequately for services rendered. There is indeed a significant disconnect between consumer expectations, federal mandates and business margins.
  • We feel that consumers are the most adversely affected by health care reform.

Nursing and Residential Care Facilities

  • We continued to experience cost pressures related to federal and state government regulations and reimbursement policies. Also, we remain uncertain about the impact of the Patient Protection and Affordable Care Act. These two factors adversely impact future outlook for health care providers.

Accommodation

  • We have planned small capital projects for the summer to fall months.

Food Services and Drinking Places

  • For the first time this calendar year, both sides of the two-week payroll cycle are reflecting increases over last year. This continues the trends we are seeing that indicate we are breaking out of the impact of the payroll tax increase and have a solid chance of positive sales increases over last year as we move into the summer season. We're showing revenue increases without change in number of employees or workweek, which is possible because the sales increases are allowing us to more effectively use labor and our costs have been improving. In the next six months, we expect to increase the number of part-time employees, so while we will have more sales and more hours worked, they will be spread over a greater number of part-time employees and we expect the average workweek to decline. Cost of goods has been very stable lately, but we expect that to end and costs to increase soon. Therefore, we have price increases planned.
  • We believe that the effects of the Affordable Care Act will hurt our small business tremendously. It will have many more negative consequences on business than many people realize.

Merchant Wholesalers, Durable Goods

  • We have hit a hiccup. Commercial construction is down over 40 percent in DFW and Houston. Residential is still strong, though we have seen some dropping activity in multifamily.

Merchant Wholesalers, Nondurable Goods

  • We think we will likely have to reduce head count by one or two personnel to offset the increase in our health care costs due to the Affordable Care Act. We feel that the market continues to be tepid at best.

Motor Vehicle and Parts Dealers

  • We continue to be impacted by our chief franchisor’s problem. In our opinion the overall level of activity is definitely up. We simply cannot participate in the improvement at this time.

Building Material and Garden Equipment Supplies Dealers

  • We will set another sales record this month, the third one this year.
  • Things are getting much better. However, we already have too many rules and regulations, and we do not need any more. Business could top 100 million very soon.

 

 

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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