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Texas Service Sector Outlook Survey

Report in PDF
January 28, 2014

Texas Service Sector Activity Strengthens Further

What's New This Month

This month’s survey data include annual seasonal factor revisions. In January of each year, the Federal Reserve Bank of Dallas revises the historical data for the Texas Service Sector Outlook Survey after calculating new seasonal adjustment factors. Annual seasonal revisions result in slight changes in the seasonally adjusted series. Read more information on seasonal adjustment.seasonal adjustment at www.dallasfed.org/microsites/research/surveys/tmos/seasonal.cfm.

Texas service sector growth picked up in January, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, rose slightly from 16.8 to 18.1, its highest reading since February 2012.

Labor market indicators were mixed this month. The employment index edged up from 9.8 to 11.9, indicating net hiring picked up in January. The hours worked index ticked down into negative territory to -1.4, suggesting shorter workweeks.

Perceptions of broader economic conditions reflected more optimism in January. The general business activity index rose from 13.3 to 16.8. The company outlook index inched up from 10.4 to 13.3, with 20 percent of respondents reporting that their outlook improved from last month and 7 percent noting it worsened.

Price pressures increased, while wage pressures eased this month. The selling prices index edged up from 10.8 to 12.4. The wages and benefits index dipped from 18.9 to 16.9, 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 moved up 6 points to 29.8. The index of future company outlook rose slightly to 24. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory in January.

Texas Retail Outlook Survey

January 28, 2014 

Retail Sales Growth Picks Up

Retail Sales Growth Picks Up

Retail sales climbed again in January, according to business executives responding to the Texas Retail Outlook Survey. The sales index rose from 17.4 to 20.7, signaling stronger growth. Inventories rose at a slower pace than in December.

Labor market indicators improved this month. The employment index moved up from 12.9 to 16.2. The hours worked index was similar to December at 2.6, suggesting slightly longer workweeks.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in January. The general business activity index rose from 17.9 to 21. The company outlook index remained positive but fell 6 points to 21.1, with 25 percent of respondents noting an improved company outlook over the prior month, compared with 4 percent reporting their outlook had worsened.

Retail price pressures eased, while wage pressures were largely unchanged in January. The selling prices index declined from 20.8 to 17.6. The wages and benefits index was similar to December at 18.6, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions continued to reflect optimism this month. The future general business activity index rose 4 points to 28.9. The index of future company outlook was unchanged at 33.7. Indexes of future retail sector activity remained in solid positive territory in January.

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 Jan. 14–22, and 219 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: February 25, 2014

Texas Service Sector Outlook Survey

January 28, 2014
 

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 Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
18.1
16.8
+1.3
Increasing
51
36.4
45.4
18.3
Employment
11.9
9.8
+2.1
Increasing
47
19.6
72.6
7.7
Part-time employment
5.5
5.4
+0.1
Increasing
3
9.8
85.9
4.3
-1.4
0.8
-2.2
Decreasing
1
5.7
87.1
7.1
Wages and benefits
16.9
18.9
-2.0
Increasing
56
19.9
77.0
3.0
Input prices
27.2
28.8
-1.6
Increasing
57
28.8
69.6
1.6
Selling prices
12.4
10.8
+1.6
Increasing
38
16.8
78.8
4.4
Capital expenditures
12.0
16.9
-4.9
Increasing
53
19.5
73.0
7.5
General Business Conditions
Current (versus previous month)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
13.3
10.4
+2.9
Improving
29
19.9
73.4
6.6
General business activity
16.8
13.3
+3.5
Improving
27
24.4
68.1
7.6
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
46.8
46.8
0.0
Increasing
59
53.5
39.8
6.7
Employment
29.9
27.1
+2.8
Increasing
58
35.5
58.9
5.6
Part-time employment
14.4
14.7
-0.3
Increasing
19
19.8
74.8
5.4
8.4
8.1
+0.3
Increasing
2
12.7
83.0
4.3
Wages and benefits
41.2
44.6
-3.4
Increasing
85
42.1
57.0
0.9
Input prices
42.8
50.8
-8.0
Increasing
85
44.7
53.3
1.9
Selling prices
30.3
28.6
+1.7
Increasing
57
36.9
56.4
6.6
Capital expenditures
27.9
34.2
-6.3
Increasing
58
34.8
58.4
6.9
General Business Conditions
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
24.0
21.7
+2.3
Improving
29
30.4
63.2
6.4
General business activity
29.8
23.6
+6.2
Improving
28
36.4
57.1
6.6

*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

January 28, 2014
 

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 Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
20.7
17.4
+3.3
Increasing
7
42.3
36.1
21.6
Employment
16.2
12.9
+3.3
Increasing
30
20.5
75.2
4.3
Part-time employment
3.6
9.6
-6.0
Increasing
2
12.7
78.2
9.1
Hours worked
2.6
3.4
-0.8
Increasing
2
7.6
87.4
5.0
Wages and benefits
18.6
19.4
-0.8
Increasing
35
22.9
72.8
4.3
Input prices
18.7
22.1
-3.4
Increasing
42
20.0
78.7
1.3
Selling prices
17.6
20.8
-3.2
Increasing
18
19.3
79.0
1.7
Capital expenditures
6.9
19.3
-12.4
Increasing
3
15.5
75.9
8.6
Inventories
8.2
24.0
-15.8
Increasing
24
31.9
44.4
23.7
Companywide Retail Activity
Sales
18.1
20.4
-2.3
Increasing
32
34.4
49.3
16.3
Internet sales
-2.4
4.8
-7.2
Decreasing
1
11.9
73.8
14.3
Catalog sales
0.0
0.0
0.0
No Change
2
11.4
77.1
11.4
General Business Conditions, Retail
Current (versus previous month)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
21.1
27.0
-5.9
Improving
9
25.4
70.2
4.3
General business activity
21.0
17.9
+3.1
Improving
9
26.1
68.8
5.1
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
52.9
52.7
+0.2
Increasing
59
58.7
35.5
5.8
Employment
23.7
28.6
-4.9
Increasing
49
27.6
68.5
3.9
Part-time employment
7.8
10.7
-2.9
Increasing
7
15.2
77.4
7.4
Hours worked
7.2
11.1
-3.9
Increasing
22
14.3
78.6
7.1
Wages and benefits
35.6
42.6
-7.0
Increasing
61
37.7
60.2
2.1
Input prices
32.7
40.7
-8.0
Increasing
57
34.5
63.6
1.8
Selling prices
42.5
38.9
+3.6
Increasing
57
44.4
53.7
1.9
Capital expenditures
29.1
27.8
+1.3
Increasing
34
36.4
56.4
7.3
Inventories
23.0
16.0
+7.0
Increasing
50
34.8
53.3
11.8
Companywide Retail Activity
Sales
44.8
54.5
-9.7
Increasing
58
49.5
45.8
4.7
Internet sales
34.2
25.0
+9.2
Increasing
58
34.2
65.8
0.0
Catalog sales
7.2
8.7
-1.5
Increasing
3
11.1
85.0
3.9
General Business Conditions, Retail
Future (six months ahead)
Indicator Jan
Index
Dec
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
33.7
33.7
0.0
Improving
58
38.7
56.2
5.0
General business activity
28.9
24.9
+4.0
Improving
28
36.7
55.5
7.8

*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

January 28, 2014

TSSOS Chart

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

 

Texas Retail Outlook Survey

January 28, 2014

TSSOS Chart

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

Texas Service Sector Outlook Survey

January 28, 2014

Comments from Survey Respondents

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

Credit Intermediation and Related Services

  • Retail financial activity continues to improve as consumers open new credit relationships for autos and other big ticket items. Home improvement activity is picking up as well. Purchase activity on the mortgage side is up, while refinances have bottomed out for the past several months.
  • Piling up cash is becoming less popular. Capital expenditures are trendier.
  • We completed a merger and are planning new branches.
  • The volume of new regulations has consumed community banks to the point where we are guessing how to conform and hoping that we are in compliance. This is certainly not an effective way to try to implement so many changes, making the benefit of the regulation lost in confusion.

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

  • Uncertainty is the mood right now. January started off slow just as December ended slowing down. Our research says this is temporary, but we are waiting for some of the unknowns to be clarified.

Rental and Leasing Services

  • We believe costs to provide services will go up due to regulations.

Professional, Scientific and Technical Services

  • The real estate market seems to be picking up steam entering the new year, and the general consensus is that the market is strong. Typically, the first quarter of the year is a cooling-off period, but our order count shows this is not the case. As a company, our profits were up 15 percent for 2013, and we expect growth to increase in 2014.
  • This economy remains unstable.

Management of Companies and Enterprises

  • There is too much government regulation.
  • Regulatory compliance for our business and our customers’ business interests continues to be the primary drag on business growth.

Administrative and Support Services

  • We have seen a reduced level of both contract and full-time hiring over the last two months.
  • The economy in the Dallas–Fort Worth market should benefit from new companies entering the market.
  • End of December sales activity was very slow due to seasonality and weather.

Ambulatory Health Care Services

  • The seasonal slowdown was accentuated by new high-deductible insurance plans, greater patient responsibility and a larger percentage of no-show patients due to inability or unwillingness to pay.
  • As health reform unfolds, there is a general understanding that there will be no drastic changes in the health insurance industry market. Overall, there is a price squeeze in health care that requires increased revenue to offset the very rapid profit margin decline.

Nursing and Residential Care Facilities

  • Continuing uncertainty about implementation of the Affordable Care Act has softened demand for health care services. In addition, implementation strategies associated with health care exchange insurance products have, at best, left out and, at worst, alienated many physicians. The growing financial burden of Medicare on the federal budget provides increasing market pressures on health care providers.

Food Services and Drinking Places

  • Sales have been improving ever so slightly. Over the last three fiscal periods, we were up more than we have been for some time, but still nothing to get excited about. Everything is pretty static except cost of goods, which has been moving up and down from period to period. Currently, cost of goods is running up significantly, primarily because of large increases in the price of beef. The changes are netting out to a very slow rate of increase, which is good, but the cost from period to period is bouncing quite a bit. We have had too many years in a row of halfway decent results in late winter to early spring to get excited about the coming summer, which is why we are reporting no change for the six-month horizon.
  • We would like to hire more employees, but the Affordable Care Act will prevent us from doing so. The added regulations will be a serious burden going forward.
  • We opened one new restaurant in Houston in December and will be opening two more in Dallas in the next six months. We made a small price increase in January, and input prices are up right now. Cheese is up considerably over the prior year, which will impact profitability if it stays up.

Merchant Wholesalers, Durable Goods

  • The increases are normal increases related to the start of a new year. The decreases in inventory are related to improved systems and processes related to inventory control and purchasing that have been implemented or are in the process of being implemented.
  • We believe that Texas new construction will be fairly strong in the first six months of the year but slowing in the second half of the year for various reasons.
  • The agriculture market is mostly positive due to an increase in moisture in our market area, but possibly somewhat negative due to agricultural commodity prices and loss of tax incentives on purchases.

 

 

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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