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Texas Service Sector Outlook Survey

Report in PDF
October 1, 2013

Texas Service Sector Activity Expands, but at a Slower Pace

Texas service sector activity growth slowed in September, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, remained positive but fell from 13.6 to 8.9.

Labor market indicators reflected slower employment growth but longer workweeks. The employment index declined 4 points to 3.7 this month, and the share of employers hiring fell. The hours worked index was largely unchanged at 2.2.

Perceptions of broader economic conditions reflected less optimism in September. The general business activity index dipped from 16.7 to 14. The company outlook index moved down 5 points to 6.3, with 18 percent of respondents reporting that their outlook improved from last month and 12 percent noting it worsened.

Price pressures eased, while wage pressures held steady in September. The selling prices index edged down from 7.2 to 5. The wages and benefits index was similar to August with a reading of 14.1, indicating labor costs rose at the same pace as last month, 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 dropped 4 points to 23.5, and the index of future company outlook fell from 21.4 to 17.4. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory.

Texas Retail Outlook Survey

October 1, 2013 

Retail Sales Continue Rising

Retail Sales Continue Rising

Retail sales climbed again in September, according to business executives responding to the Texas Retail Outlook Survey. However, the sales index fell from 21.1 to 16.5, suggesting slower growth. Inventories rose.

Labor market indicators reflected slower employment growth but longer workweeks. The employment index ticked down from 8.5 to 6.2. The hours worked index was similar to August with a reading of 4.7.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in September, although the two measures diverged sharply. The general business activity index advanced from 19.4 to 27.9, its highest reading since February 2012. In contrast, the company outlook index plunged 10 points to 12.2, with 25 percent of respondents noting an improved company outlook over the prior month, compared with 12 percent reporting their outlook had worsened.

Retail price and wage pressures abated in September. The selling prices index dropped from 14.9 to 6.2, suggesting prices rose at a slower pace than in August. The wages and benefits index declined from 14.3 to 9, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected continued optimism in September, although changes in the two measures were mixed. The future general business activity index was largely unchanged at 36.9, while the index of future company outlook moved down from 38 to 32.3. Indexes of future retail sector activity fell but remained in solid positive territory this month.

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 Sept. 17–25, and 223 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 29, 2013

Texas Service Sector Outlook Survey

October 1, 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 Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
8.9
13.6
-4.7
Increasing
47
26.6
55.7
17.7
Employment
3.7
7.5
-3.8
Increasing
43
15.1
73.5
11.4
Part-time employment
3.4
7.1
-3.7
Increasing
8
12.0
79.4
8.6
2.2
1.8
+0.4
Increasing
2
8.6
85.0
6.4
Wages and benefits
14.1
14.6
-0.5
Increasing
52
17.7
78.7
3.6
Input prices
27.4
22.6
+4.8
Increasing
53
29.8
67.8
2.4
Selling prices
5.0
7.2
-2.2
Increasing
34
11.5
82.0
6.5
Capital expenditures
9.8
14.1
-4.3
Increasing
49
18.7
72.4
8.9
General Business Conditions
Current (versus previous month)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
6.3
11.3
-5.0
Improving
24
18.1
70.1
11.8
General business activity
14.0
16.7
-2.7
Improving
23
23.6
66.7
9.6
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
41.8
39.3
+2.5
Increasing
55
51.2
39.4
9.4
Employment
21.2
25.0
-3.8
Increasing
52
32.3
56.6
11.1
Part-time employment
12.5
10.9
+1.6
Increasing
15
19.8
72.9
7.3
2.7
4.4
-1.7
Increasing
49
11.2
80.3
8.5
Wages and benefits
34.6
39.0
-4.4
Increasing
81
37.9
58.8
3.3
Input prices
47.5
45.5
+2.0
Increasing
81
49.4
48.7
1.9
Selling prices
27.1
24.6
+2.5
Increasing
53
32.9
61.3
5.8
Capital expenditures
24.2
29.3
-5.1
Increasing
54
31.2
61.8
7.0
General Business Conditions
Future (six months ahead)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
17.4
21.4
-4.0
Improving
25
29.7
58.0
12.3
General business activity
23.5
27.5
-4.0
Improving
24
31.6
60.3
8.1

*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 Retail Outlook Survey

October 1, 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 Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
16.5
21.1
-4.6
Increasing
3
35.3
45.9
18.8
Employment
6.2
8.5
-2.3
Increasing
26
19.3
67.6
13.1
Part-time employment
-1.8
5.2
-7.0
Decreasing
1
10.7
76.8
12.5
Hours worked
4.7
5.1
-0.4
Increasing
2
14.7
75.3
10.0
Wages and benefits
9.0
14.3
-5.3
Increasing
31
14.9
79.2
5.9
Input prices
18.6
21.8
-3.2
Increasing
51
23.4
71.8
4.8
Selling prices
6.2
14.9
-8.7
Increasing
14
14.5
77.2
8.3
Capital expenditures
-1.7
11.6
-13.3
Decreasing
1
8.6
81.0
10.3
Inventories
10.5
17.2
-6.7
Increasing
16
25.4
59.7
14.9
Companywide Retail Activity
Sales
26.0
23.1
+2.9
Increasing
28
40.1
45.8
14.1
Internet sales
-7.0
14.9
-21.9
Decreasing
1
7.0
79.1
14.0
Catalog sales
-5.4
4.9
-10.3
Decreasing
1
2.7
89.2
8.1
General Business Conditions, Retail
Current (versus previous month)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
12.2
22.4
-10.2
Improving
5
24.6
63.0
12.4
General business activity
27.9
19.4
+8.5
Improving
5
32.6
62.7
4.7
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
48.0
57.3
-9.3
Increasing
55
53.5
41.0
5.5
Employment
26.4
33.0
-6.6
Increasing
45
31.7
63.0
5.3
Part-time employment
9.5
14.2
-4.7
Increasing
3
17.1
75.3
7.6
Hours worked
11.5
12.6
-1.1
Increasing
4
21.6
68.3
10.1
Wages and benefits
32.1
38.1
-6.0
Increasing
57
34.3
63.5
2.2
Input prices
34.5
38.0
-3.5
Increasing
53
34.5
65.5
0.0
Selling prices
38.2
39.7
-1.5
Increasing
53
40.0
58.2
1.8
Capital expenditures
21.9
24.1
-2.2
Increasing
30
25.5
70.9
3.6
Inventories
32.8
26.4
+6.4
Increasing
46
39.2
54.4
6.4
Companywide Retail Activity
Sales
42.6
54.6
-12.0
Increasing
54
47.3
47.9
4.7
Internet sales
10.2
27.9
-17.7
Increasing
54
17.9
74.4
7.7
Catalog sales
1.7
7.9
-6.2
Increasing
16
9.1
83.5
7.4
General Business Conditions, Retail
Future (six months ahead)
Indicator Sep
Index
Aug
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
32.3
38.0
-5.7
Improving
53
36.8
58.7
4.5
General business activity
36.9
37.6
-0.7
Improving
24
39.4
58.1
2.5

*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 Service Sector Outlook Survey

October 1, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

October 1, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

October 1, 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

  • We continue to struggle with five main issues—government regulation, health care costs, taxes and fees, loan availability and restrictions, and lack of skilled and experienced personnel. These issues just make it harder and more expensive to do business.

Insurance Carriers and Related Activities

  • Interest rates on home loans are having a larger effect on local sales than anticipated.

Rental and Leasing Services

  • Our year-over-year business is almost flat. The economy remains significantly soft, except from hot spots in the oilfield, although those too are cooling.

Professional, Scientific, and Technical Services

  • The business climate has chilled due to concern over the debt debate and deficit as well as uncertainty about the Affordable Care Act.
  • The overall real estate market remains strong in spite of the rise in the 10-year rate. Commercial transactions have continued to increase, and the residential sector remains strong even with its normal seasonal slowing. We are cautiously optimistic about the future due to the unknown of how the economy will be affected once the Fed stops its bond-buying stimulus program.
  • It's very hard to plan six months out with any certainty. Clients are doing what they must to sustain growth and profitability. There is no confidence in long-range planning, and therefore very little employment growth.

Management of Companies and Enterprises

  • Too many regulations are running up our costs and hurting our ability to help our customers.

Administrative and Support Services

  • We feel too much government regulation is hurting business.
  • Commodity products continue to show price pressure as customers continue to look at ways to cut costs. Price flexibility in niche products does exist.
  • The long-term impacts of more governmental intervention are unsettling.
  • The number of full-time jobs is at a very low level and has been all of 2013. There is no sign that it will improve any time soon.

Ambulatory Health Care Services

  • Our decrease in part-time employees is due to dropping summer seasonal workers. Declines in our six-month outlook reflect unknowns with Medicare reimbursements for 2014.
  • We will get our health insurance renewal quotes in October, so we will see if there is any effect from the Affordable Care Act. Competition for patients is fierce right now in our segment of the industry. We are waiting to see what the Centers for Medicare and Medicaid Services final Medicare rates for 2014 will be, as Medicare is a significant portion of our business.

Accommodation

  • An additional hospitality business, which is currently being built, will have an impact on revenues over the next six months and will put a strain on the available workforce.
  • After a very busy first six months of the year, there has been a dramatic slowdown since June, which is very worrisome.

Food Services and Drinking Places

  • Sales are very slow right now, and the drop is more than we expected for normal seasonal change. A number of our local competitors have had even worse drops in sales. Hours worked have dropped to adjust for the slow sales. The cost of goods increased significantly in September over August, and our expectation is that such increases are likely to continue over coming months. We expect to get our health insurance renewal quote next week and have been led to believe there will be a very significant increase, so we are projecting an increase in wages and benefits in the six-month horizon. We expect to increase prices in October or November after we establish what the increase in health care insurance cost is going to be. A remodel of one restaurant was recently approved and will begin next month, increasing our capital expenditures.

Merchant Wholesalers, Durable Goods

  • Decreases in our business are seasonal.

Motor Vehicle and Parts Dealers

  • Our situation is unique in that our franchisor’s missteps have impacted our business negatively.
  • Drought conditions are impacting our current and near-term business outlook negatively.
  • We are still concerned about the effects of the Affordable Care Act. Even though we offered a very good insurance program that certainly met all requirements for broad range coverage, future insurance programs will cut into our bottom line due to increased predicted insurance rates and administrative costs as well as hidden costs.

Building Material and Garden Equipment Supplies Dealers

  • Our health care insurance increased 33 percent this year at renewal. Not only are we concerned, but our employees are too because this increase hits our profits and employees’ pocketbooks—this is a real negative going into the future.

 

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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