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Texas Service Sector Outlook Survey

Report in PDF
October 29, 2013

Texas Service Sector Activity Increases at a Slower Pace

What's New This Month

For this month's survey, manufacturers were asked supplemental questions on credit availability. Read Special Questions.

Growth in Texas service sector activity slowed in October, 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 dipped from 8.9 to 5.3.

Labor market indicators were mixed. The employment index edged up from 3.7 to 5.5 this month, indicating the pace of hiring picked up. The hours worked index fell more than 4 points into negative territory to a reading of -2.3, suggesting shorter workweeks.

Perceptions of broader economic conditions reflected less optimism in October. The general business activity index declined from 14 to 6.4. The company outlook index inched down from 6.3 to 4.9, with 17 percent of respondents reporting that their outlook improved from last month and 12 percent noting it worsened.

Price pressures increased, while wage pressures eased in October. The selling prices index rose slightly from 5 to 7.4. The wages and benefits index moved down from 14.1 to 8.7, its lowest reading since August last year, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions continued to reflect optimism this month. The index of future general business activity remained in solid positive territory but dropped 9 points to 14.5. The index of future company outlook rose from 17.4 to 20.5. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory.

Texas Retail Outlook Survey

October 29, 2013 

Retail Sales Expand, but at a Slower Pace

Retail Sales Expand, but at a Slower Pace

Retail sales grew in October, according to business executives responding to the Texas Retail Outlook Survey. However, the sales index fell from 16.5 to 7.9, suggesting slower growth. Inventories rose.

Labor market indicators were mixed. The employment index was unchanged at 6.2 this month, indicating hiring continued at the same pace as last month. The hours worked index dropped over 6 points into negative territory to a reading of -1.8, suggesting shorter workweeks.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in October. The general business activity index remained positive but, after spiking in September, plunged 11 points to 16.9. The company outlook index ticked up from 12.2 to 13.3, with 23 percent of respondents noting an improved company outlook over the prior month, compared with 10 percent reporting their outlook had worsened.

Retail price pressures increased, while wage pressures eased in October. The selling prices index jumped from 6.2 to 16.8, suggesting prices rose at a faster pace than in September. The wages and benefits index declined from 9 to 5.9, its lowest reading in six months, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected less optimism in October. The future general business activity index fell from 36.9 to 29.2, while the index of future company outlook dipped from 32.3 to 28.9. 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 Oct. 15–23, and 200 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: November 26, 2013

Texas Service Sector Outlook Survey

October 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
5.3
8.9
-3.6
Increasing
48
25.9
53.5
20.6
Employment
5.5
3.7
+1.8
Increasing
44
16.7
72.1
11.2
Part-time employment
0.0
3.4
-3.4
Unchanged
1
7.1
85.8
7.1
-2.3
2.2
-4.5
Decreasing
1
6.6
84.5
8.9
Wages and benefits
8.7
14.1
-5.4
Increasing
53
14.2
80.3
5.5
Input prices
28.6
27.4
+1.2
Increasing
54
29.3
70.0
0.7
Selling prices
7.4
5.0
+2.4
Increasing
35
12.4
82.6
5.0
Capital expenditures
8.2
9.8
-1.6
Increasing
50
18.4
71.4
10.2
General Business Conditions
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
4.9
6.3
-1.4
Improving
25
17.0
70.9
12.1
General business activity
6.4
14.0
-7.6
Improving
24
19.9
66.6
13.5
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
39.5
41.8
-2.3
Increasing
56
52.6
34.3
13.1
Employment
25.1
21.2
+3.9
Increasing
53
34.9
55.2
9.8
Part-time employment
9.2
12.5
-3.3
Increasing
16
15.5
78.2
6.3
-2.5
2.7
-5.2
Decreasing
1
5.3
86.9
7.8
Wages and benefits
34.4
34.6
-0.2
Increasing
82
37.2
60.0
2.8
Input prices
46.2
47.5
-1.3
Increasing
82
48.7
48.8
2.5
Selling prices
25.7
27.1
-1.4
Increasing
54
33.1
59.5
7.4
Capital expenditures
24.6
24.2
+0.4
Increasing
55
31.6
61.4
7.0
General Business Conditions
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
20.5
17.4
+3.1
Improving
26
30.1
60.3
9.6
General business activity
14.5
23.5
-9.0
Improving
25
26.4
61.7
11.9

*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 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 Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
7.9
16.5
-8.6
Increasing
4
29.9
48.0
22.0
Employment
6.2
6.2
0.0
Increasing
27
15.4
75.4
9.2
Part-time employment
-3.9
-1.8
-2.1
Decreasing
2
5.9
84.3
9.8
Hours worked
-1.8
4.7
-6.5
Decreasing
1
7.4
83.4
9.2
Wages and benefits
5.9
9.0
-3.1
Increasing
32
12.7
80.5
6.8
Input prices
20.1
18.6
+1.5
Increasing
52
23.6
72.9
3.5
Selling prices
16.8
6.2
+10.6
Increasing
15
18.3
80.2
1.5
Capital expenditures
-3.8
-1.7
-2.1
Decreasing
2
7.7
80.8
11.5
Inventories
4.9
10.5
-5.6
Increasing
17
20.5
63.9
15.6
Companywide Retail Activity
Sales
6.1
26.0
-19.9
Increasing
29
28.3
49.4
22.2
Internet sales
0.0
-7.0
+7.0
No Change
1
10.5
78.9
10.5
Catalog sales
-8.5
-5.4
-3.1
Decreasing
2
2.9
85.7
11.4
General Business Conditions, Retail
Current (versus previous month)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.3
12.2
+1.1
Improving
6
23.1
67.1
9.8
General business activity
16.9
27.9
-11.0
Improving
6
25.7
65.5
8.8
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
45.8
48.0
-2.2
Increasing
56
48.5
48.8
2.7
Employment
24.8
26.4
-1.6
Increasing
46
26.0
72.8
1.2
Part-time employment
17.0
9.5
+7.5
Increasing
4
18.1
80.8
1.1
Hours worked
2.9
11.5
-8.6
Increasing
5
9.3
84.3
6.4
Wages and benefits
27.0
32.1
-5.1
Increasing
58
27.0
73.0
0.0
Input prices
34.7
34.5
+0.2
Increasing
54
38.5
57.7
3.8
Selling prices
34.7
38.2
-3.5
Increasing
54
38.5
57.7
3.8
Capital expenditures
19.6
21.9
-2.3
Increasing
31
23.5
72.5
3.9
Inventories
26.7
32.8
-6.1
Increasing
47
30.6
65.5
3.9
Companywide Retail Activity
Sales
35.0
42.6
-7.6
Increasing
55
40.9
53.2
5.9
Internet sales
11.4
10.2
+1.2
Increasing
55
14.3
82.9
2.9
Catalog sales
-3.5
1.7
-5.2
Decreasing
1
1.3
93.9
4.8
General Business Conditions, Retail
Future (six months ahead)
Indicator Oct
Index
Sep
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
28.9
32.3
-3.4
Improving
54
33.0
62.9
4.1
General business activity
29.2
36.9
-7.7
Improving
25
35.3
58.6
6.1

*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

October 29, 2013

TSSOS Chart

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

 

Texas Retail Outlook Survey

October 29, 2013

TSSOS Chart

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

Texas Service Sector Outlook Survey

October 29, 2013

Comments from Survey Respondents

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

Pipeline Transportation

  • We believe some of the uplift we expected to see relative to the ongoing progress of the economy was negated by the adverse impacts of the government shutdown and related uncertainties.

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

  • There has not been much change in the lackluster activity due to five or six continuing unknowns in the business world, such as taxes and regulation. Without a resolution of these issues, businesses will continue to hesitate.

Professional, Scientific, and Technical Services

  • The Texas real estate industry has remained strong in spite of the continued political issues that our country is facing. We have enjoyed a 46 percent increase in revenue over 2012 and believe this trend will continue over the coming months but remain cautious about adding cost due to continuing government debt issues. Managing a company in this environment is very challenging.
  • Design phase work for new construction remains strong in the industrial and residential sectors. There appears to be interest in preliminary design beginning in the retail market.
  • We think the federal government shutdown and debt ceiling debate have taken some air out of the economy. Our growth in income and employees is the result of new clients coming on board. Existing business is only steady.

Management of Companies and Enterprises

  • Overregulation is hurting everyone. We spend more time trying to stay in compliance with regulations than we spend helping customers.

Administrative and Support Services

  • Competition remains stiff, and some of our competitors are buying business with low prices in an effort to try to keep market share. Customers are reluctant to make changes and add new vendors without strong incentives. Business is uneasy, and it would not take much negative economic news to change from a neutral perspective. We need to see more improvement in logistics costs to help material costs.

Ambulatory Health Care Services

  • As a medical surgical practice, our revenues increase as patients schedule surgeries before year-end, after which they have to begin paying deductibles for 2014. This year’s fourth quarter looks to be more normal than the fourth quarters of the last two to three years. 2014 looks uncertain as we are facing a 27 percent cut by Medicare unless Congress changes that.

Nursing and Residential Care Facilities

  • Significant uncertainty exists in the health care economy related to disruptive implementation of the Affordable Care Act and the nonexpansion of Medicaid in Texas.

Food Services and Drinking Places

  • Last week we would have reported a significant drop in sales in response to the government shutdown and deficit debate. However, we have bounced back nicely this week, and it looks like we will not have any longer term impact. Our capital expenditures were up because we remodeled a restaurant last month. We still expect a price increase within the next couple of months to make up for cost of goods and benefits increases. Wages are still quite stable.

Merchant Wholesalers, Durable Goods

  • Texas may be deviating from the national scene on housing. Our business is doing great right now with a lot of housing starts coming; however, we see quite a few developments being prepared but not a lot of homes being built just yet. We believe business should be good through midyear 2014 and then become flat or a little softer.

Motor Vehicle and Parts Dealers

  • We continue to be impacted by product issues with our main manufacturer. In our experience, the business situation is slightly improving.

Building Material and Garden Equipment Supplies Dealers

  • We are seeing a slowdown in some areas. There is not the optimism now that we saw in the first half of the year.

 

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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