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Texas Service Sector Outlook Survey

Report in PDF
August 27, 2013

Texas Service Sector Growth Continues

Texas service sector activity expanded in August, 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 12.7 to 13.6, its highest reading in five months.

Labor market indicators reflected continued hiring and longer workweeks. The employment index dipped 2 points to 7.5, suggesting hiring proceeded but at a slower pace than in July. The hours worked index moved up into positive territory to 1.8, but the great majority of firms noted no change in workweeks.

Perceptions of broader economic conditions continued to reflect optimism in August, with both measures posting their best readings in 18 months. The general business activity index ticked up from 15.3 to 16.7. The company outlook index was largely unchanged at 11.3, with 20 percent of respondents reporting that their outlook improved from last month and 8 percent noting it worsened.

Price pressures eased, while wage pressures held steady in August. The selling prices index fell slightly from 10.3 to 7.2. The wages and benefits index was similar to July with a reading of 14.6, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected slightly less optimism this month. The index of future general business activity edged down from 29.7 to 27.5, and the index of future company outlook declined from 28.9 to 21.4. Indexes of future service sector activity, such as future revenue and employment, also ticked down but remained in solid positive territory.

Texas Retail Outlook Survey

August 27, 2013 

Retail Sales Growth Picks Up

Retail Sales Growth Picks Up

Retail sales climbed again in August, according to business executives responding to the Texas Retail Outlook Survey. The sales index advanced from 12.6 to 21.1, its highest reading in 11 months. Inventories grew.

Labor market indicators generally reflected less hiring, but slightly longer workweeks. The employment index fell 4 points to 8.5. The hours worked index rose into positive territory to 5.1, it highest reading since February.

Retailers’ perceptions of broader economic conditions hit 18-month highs and reflected slightly more optimism in August than in July. The general business activity index ticked up from 17.9 to 19.4. The company outlook index edged up from 21.3 to 22.4, with 29 percent of respondents noting an improved company outlook over the prior month, compared with 6 percent reporting their outlook had worsened.

Retail price and wage pressures diminished in August. The selling prices index declined 6 points to 14.9, suggesting prices rose at a slower pace than in July. The wages and benefits index moved down from 22.6 to 14.3, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected a bit more optimism in August. The future general business activity index inched up from 36.8 to 37.6, while the index of future company outlook ticked up 1 point to 38. Indexes of future retail sector activity increased and remained in solid positive territory in August.

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 Aug. 13–21, and 225 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: October 1, 2013

Texas Service Sector Outlook Survey

August 27, 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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
13.6
12.7
+0.9
Increasing
46
30.3
53.0
16.7
Employment
7.5
9.7
-2.2
Increasing
42
17.9
71.7
10.4
Part-time employment
7.1
7.5
-0.4
Increasing
7
13.6
79.9
6.5
1.8
-2.7
+4.5
Increasing
1
7.6
86.6
5.8
Wages and benefits
14.6
15.0
-0.4
Increasing
51
18.0
78.6
3.4
Input prices
22.6
25.1
-2.5
Increasing
52
23.9
74.8
1.3
Selling prices
7.2
10.3
-3.1
Increasing
33
11.6
84.0
4.4
Capital expenditures
14.1
6.7
+7.4
Increasing
48
20.0
74.2
5.9
General Business Conditions
Current (versus previous month)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.3
10.8
+0.5
Improving
23
19.7
71.9
8.4
General business activity
16.7
15.3
+1.4
Improving
22
23.0
70.7
6.3
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
39.3
42.0
-2.7
Increasing
54
51.9
35.5
12.6
Employment
25.0
26.0
-1.0
Increasing
51
34.4
56.2
9.4
Part-time employment
10.9
11.3
-0.4
Increasing
14
19.0
72.9
8.1
4.4
6.6
-2.2
Increasing
48
11.4
81.6
7.0
Wages and benefits
39.0
35.7
+3.3
Increasing
80
41.6
55.9
2.6
Input prices
45.5
43.7
+1.8
Increasing
80
48.2
49.0
2.7
Selling prices
24.6
23.2
+1.4
Increasing
52
30.1
64.4
5.5
Capital expenditures
29.3
17.5
+11.8
Increasing
53
35.9
57.5
6.6
General Business Conditions
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
21.4
28.9
-7.5
Improving
24
30.9
59.6
9.5
General business activity
27.5
29.7
-2.2
Improving
23
35.0
57.5
7.5

*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

August 27, 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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
21.1
12.6
+8.5
Increasing
2
35.9
49.3
14.8
Employment
8.5
12.5
-4.0
Increasing
25
19.3
69.9
10.8
Part-time employment
5.2
1.7
+3.5
Increasing
2
15.5
74.1
10.3
Hours worked
5.1
-2.2
+7.3
Increasing
1
12.4
80.3
7.3
Wages and benefits
14.3
22.6
-8.3
Increasing
30
18.4
77.5
4.1
Input prices
21.8
16.3
+5.5
Increasing
50
25.6
70.6
3.8
Selling prices
14.9
21.0
-6.1
Increasing
13
15.0
84.9
0.1
Capital expenditures
11.6
8.2
+3.4
Increasing
2
18.3
75.0
6.7
Inventories
17.2
4.0
+13.2
Increasing
15
28.8
59.6
11.6
Companywide Retail Activity
Sales
23.1
22.3
+0.8
Increasing
27
32.9
57.3
9.8
Internet sales
14.9
19.0
-4.1
Increasing
4
14.9
85.1
0.0
Catalog sales
4.9
2.5
+2.4
Increasing
2
9.8
85.4
4.9
General Business Conditions, Retail
Current (versus previous month)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
22.4
21.3
+1.1
Improving
4
28.7
65.0
6.3
General business activity
19.4
17.9
+1.5
Improving
4
25.9
67.6
6.5
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
57.3
45.3
+12.0
Increasing
54
61.9
33.5
4.6
Employment
33.0
22.1
+10.9
Increasing
44
37.0
59.0
4.0
Part-time employment
14.2
2.1
+12.1
Increasing
2
21.7
70.8
7.5
Hours worked
12.6
5.2
+7.4
Increasing
3
22.0
68.6
9.4
Wages and benefits
38.1
34.6
+3.5
Increasing
56
39.7
58.7
1.6
Input prices
38.0
34.5
+3.5
Increasing
52
41.4
55.2
3.4
Selling prices
39.7
30.5
+9.2
Increasing
52
41.4
56.9
1.7
Capital expenditures
24.1
15.8
+8.3
Increasing
29
31.0
62.1
6.9
Inventories
26.4
22.1
+4.3
Increasing
45
30.8
64.8
4.4
Companywide Retail Activity
Sales
54.6
39.7
+14.9
Increasing
53
55.7
43.2
1.1
Internet sales
27.9
21.0
+6.9
Increasing
53
30.2
67.4
2.3
Catalog sales
7.9
7.6
+0.3
Increasing
15
15.1
77.7
7.2
General Business Conditions, Retail
Future (six months ahead)
Indicator Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
38.0
36.8
+1.2
Improving
52
40.9
56.2
2.9
General business activity
37.6
36.8
+0.8
Improving
23
42.0
53.6
4.4

*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

August 27, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

August 27, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

August 27, 2013

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • Rising interest rates are causing several commercial real estate owners to decide to either refinance with long-term mortgages or sell to the growing number of both domestic and international investors looking to buy property in Texas.

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

  • Good rains have improved outlook for agriculture and retail sales. Construction is holding strong. Overall job growth is slowing.
  • We are just in a holding pattern right now.

Insurance Carriers and Related Activities

  • It continues to be very difficult to forecast our future growth and profitability with the uncertainty around health care and unemployment.

Real Estate

  • We are concerned demand for our services may be dampened by higher long-term interest rates.

Professional, Scientific, and Technical Services

  • Affordable Care Act taxes are hurting our margins. The increase in tax rates has hurt our business, decreasing our ability to reward employees and hire additional workers.
  • The building boom in Texas continues with many build-to-suit projects for energy and banking services.
  • August sales will be lower than in July because we had a huge sales month in July. August is still looking as if it will exceed our forecasted sales, though.
  • Things are steady—not red hot, but solid.
  • Activity is strong in both construction and design. We do not anticipate, based on proposal activity, to see more than a 5 percent increase in activity through spring 2014.
  • Costs continue to escalate. The delay in the Affordable Care Act employer mandate is positive because we are very concerned about the resulting additional costs. Our projection is cautious as the economy remains fragile and uncertain.
  • Projects are not moving forward.
  • The overall real estate market has continued to improve throughout this year in spite of the recent uptick in the 10-year rates. We have a seen an increase in the volume of transactions trading hands as well as an increase in values. July revenue from our commercial and residential divisions increased significantly over June, and August revenues remain strong. Our outlook for the near future is strong, but until we can determine how the recent increases in the 10-year rate are going to affect our business, we will remain cautious about capital expenditures and increasing our work force.
  • It looks like the economic recovery is taking hold, albeit slowly. It feels like there is more pent-up consumer demand, but business customers are still cautious. If the consumer recovery continues to take hold, then we should see more from business, too.
  • Activity related to shale oil and gas is starting to impact our business positively.
  • We continue to keep a cautious eye on the U.S. and global economies. While there has been some improvement in earnings and business activity in recent months, weakness and uncertainty remain in our outlook. We will continue to maintain a somewhat guarded outlook well into 2014, as we continue to navigate the recovery in progress.

Management of Companies and Enterprises

  • Government regulation is driving up our costs and hurting our ability to help customers.

Administrative and Support Services

  • Logistics costs continue to increase, which has an effect on all aspects of our business. We anticipate increases in all areas of insurance costs. In general, customers are still cautious about spending money, and we believe it will take several quarters of increasing positives to change their outlook.

Ambulatory Health Care Services

  • Centers for Medicare and Medicaid Services has published Medicare rates for our industry effective Jan. 1. It will be the fourth year in a row for decreases, plus we were hit with a sequestration cut. Currently, our business is 80 percent Medicare. We are actively searching for alternative streams of revenue. Additionally, we are consolidating offices and have closed several this year in order to save the personnel costs of small offices.

Nursing and Residential Care Facilities

  • The impact of the insurance exchange marketplace as part of the continuing implementation of the Affordable Care Act is at best disruptive. The uncertainty of reimbursements with the likelihood of decreasing revenues provides a bleak outlook for health care providers.

Social Assistance

  • We are concerned about benefit costs. Our concern about ability to sell services is due to other companies' concerns about benefit costs causing hiring cutbacks.

Accommodation

  • We are still evaluating how the Affordable Care Act provisions will affect 2014 budgets.

Food Services and Drinking Places

  • We will be opening a new restaurant in Houston in August. This is the reason for the increase in revenue, employees, etc. We have several other new facilities that will open in early 2014. Same store sales continue to be close to flat. We are not seeing an increase in existing business.
  • Sales slowed compared with last period, and we ended up having another slow summer. We have been running basically even with last year, but adjusted for price increases, we are down. Each of the last three weeks has improved slightly, which is somewhat encouraging. We no longer expect as large an increase in our cost of benefits since the Affordable Care Act employer mandate has been delayed. However, we still expect a substantial increase in premiums in our Jan. 1 renewal. We are still projecting an increase in input costs for the remainder of the year, but since costs of goods sold have been tame recently, we may be too pessimistic. We expect to increase prices in November to adjust for increased benefit costs and costs of goods sold.

Merchant Wholesalers, Durable Goods

  • The outlook for our company has improved due to some recent hires and customer contracts; we are gaining market share.
  • Dry weather prevails, causing decreased business.

 

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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