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Texas Service Sector Outlook Survey

Report in PDF
August 26, 2014

Texas Service Sector Growth Continues

What's New This Month

For this month's survey, business executives were asked supplemental questions on health care costs and the impact of the Affordable Care Act. Read Special Questions.

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, was unchanged from last month at 21, indicating activity increased at the same pace as in July.

Labor market indicators reflected faster employment growth and longer workweeks. The employment index advanced from 4.6 to 13.2 in August. The hours worked index was largely unchanged at 4.1 this month.

Perceptions of broader economic conditions continued to reflect optimism in August. The general business activity index was similar to last month at 22.8. The company outlook index dipped from 21.6 to 18.3, with 23 percent of respondents reporting that their outlook improved from last month and 5 percent noting it worsened.

Price pressures eased while wage pressures held steady this month. The selling prices index ticked down from 11.7 to 10.5, indicating prices increased at a slower pace than in July. The wages and benefits index held steady at 20.1, suggesting labor costs increased 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 less optimism in August. The index of future general business activity fell slightly from 34.2 to 31.2. The index of future company outlook declined from 40.3 to 33. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory this month.

Texas Retail Outlook Survey

August 26, 2014 

Retail Sales Continue Rising

Retail Sales Continue Rising

Retail sales climbed again in August, according to business executives responding to the Texas Retail Outlook Survey. However, the sales index inched down from 22 to 20.6, suggesting slightly slower growth. Inventories increased at a slower pace than last month.

Labor market indicators improved this month. The employment index jumped from 0 to 15.7, indicating retail jobs increased in August. The hours worked index was largely unchanged at 2.5, suggesting longer workweeks, although the great majority of firms continued to note no change.

Retailers’ perceptions of broader economic conditions continued to reflect optimism in August. The general business activity index edged up from 21.3 to 22.9. The company outlook index dropped 10 points to 16.8, with 23 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 eased this month. The selling prices index fell from 19.4 to 15. The wages and benefits index moved down from 23.4 to 19.3, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected less optimism in August. The future general business activity index declined from 35.4 to 31. The index of future company outlook plunged 11 points to 30.3. Indexes of future retail sector activity remained in 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 Aug. 12–20, and 244 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: September 30, 2014

Texas Service Sector Outlook Survey

August 26, 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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
21.0
21.5
-0.5
Increasing
58
35.2
50.6
14.2
Employment
13.2
4.6
+8.6
Increasing
54
19.4
74.4
6.2
Part-time employment
10.0
7.5
+2.5
Increasing
10
15.2
79.6
5.2
4.1
3.9
+0.2
Increasing
7
7.9
88.3
3.8
Wages and benefits
20.1
20.3
-0.2
Increasing
63
21.6
76.9
1.5
Input prices
25.0
23.3
+1.7
Increasing
64
28.0
69.0
3.0
Selling prices
10.5
11.7
-1.2
Increasing
45
15.0
80.5
4.5
Capital expenditures
16.5
13.2
+3.3
Increasing
60
21.9
72.7
5.4
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
18.3
21.6
-3.3
Improving
36
23.4
71.5
5.1
General business activity
22.8
22.4
+0.4
Improving
34
26.9
69.0
4.1
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
56.2
54.3
+1.9
Increasing
66
60.2
35.8
4.0
Employment
35.7
39.7
-4.0
Increasing
65
38.4
58.9
2.7
Part-time employment
13.2
19.0
-5.8
Increasing
26
18.7
75.8
5.5
4.1
11.2
-7.1
Increasing
9
7.5
89.1
3.4
Wages and benefits
42.4
43.5
-1.1
Increasing
92
43.6
55.2
1.2
Input prices
46.4
49.9
-3.5
Increasing
92
49.7
46.9
3.3
Selling prices
28.4
27.5
+0.9
Increasing
64
32.5
63.4
4.1
Capital expenditures
31.8
32.7
-0.9
Increasing
65
36.0
59.8
4.2
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
33.0
40.3
-7.3
Improving
36
37.3
58.4
4.3
General business activity
31.2
34.2
-3.0
Improving
35
36.0
59.2
4.8

*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 Retail Outlook Survey

August 26, 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 Aug
Index
Jul
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
20.6
22.0
-1.4
Increasing
14
37.1
46.3
16.5
Employment
15.7
0.0
+15.7
Increasing
1
18.0
79.7
2.3
Part-time employment
12.9
-1.9
+14.8
Increasing
1
21.0
71.0
8.1
Hours worked
2.5
2.1
+0.4
Increasing
3
9.3
83.9
6.8
Wages and benefits
19.3
23.4
-4.1
Increasing
42
20.7
77.9
1.4
Input prices
20.5
20.2
+0.3
Increasing
49
26.5
67.5
6.0
Selling prices
15.0
19.4
-4.4
Increasing
25
21.7
71.6
6.7
Capital expenditures
14.3
12.5
+1.8
Increasing
10
17.5
79.4
3.2
Inventories
19.1
23.4
-4.3
Increasing
31
33.6
51.9
14.5
Companywide Retail Activity
Sales
17.8
28.1
-10.3
Increasing
39
36.4
45.0
18.6
Internet sales
21.7
16.2
+5.5
Increasing
7
21.7
78.3
0.0
Catalog sales
0.0
12.1
-12.1
No Change
1
2.5
95.0
2.5
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
16.8
27.1
-10.3
Improving
16
22.8
71.2
6.0
General business activity
22.9
21.3
+1.6
Improving
16
30.0
62.9
7.1
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
54.1
47.7
+6.4
Increasing
66
60.7
32.7
6.6
Employment
25.5
26.7
-1.2
Increasing
56
30.6
64.3
5.1
Part-time employment
14.3
9.5
+4.8
Increasing
14
21.0
72.3
6.7
Hours worked
9.5
11.1
-1.6
Increasing
29
11.9
85.7
2.4
Wages and benefits
36.7
39.8
-3.1
Increasing
68
38.8
59.1
2.1
Input prices
35.5
38.9
-3.4
Increasing
64
40.3
54.8
4.8
Selling prices
33.8
35.1
-1.3
Increasing
64
40.3
53.2
6.5
Capital expenditures
26.2
29.6
-3.4
Increasing
41
32.8
60.7
6.6
Inventories
27.6
33.1
-5.5
Increasing
57
39.1
49.4
11.5
Companywide Retail Activity
Sales
59.8
49.9
+9.9
Increasing
65
62.4
35.0
2.6
Internet sales
31.7
26.5
+5.2
Increasing
65
31.7
68.3
0.0
Catalog sales
8.7
19.9
-11.2
Increasing
10
8.9
90.9
0.2
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
30.3
41.5
-11.2
Improving
65
32.8
64.7
2.5
General business activity
31.0
35.4
-4.4
Improving
35
36.1
58.8
5.1

*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

August 26, 2014

TSSOS Chart

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

 

Texas Retail Outlook Survey

August 26, 2014

TSSOS Chart

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

Texas Service Sector Outlook Survey

August 26, 2014

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • There is a great deal of concern about the proposed increase of EPA regulations on the control of surface water.

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

  • We are experiencing a significant increase in our federal taxes due to the nonrenewal of tax codes dealing with the expensing of expenditures, which generally consider capital expenditures for tax purposes, and bonus depreciation. Therefore, fewer capital expenditures mean less expansion and no increase in employment. In all probability, there will be employee layoffs to try to offset the increase in taxes. The tax issues combined with additional regulations requiring additional expenditures line up for a difficult year.
  • There is slower job growth locally, and construction is slowing from high levels.

Professional, Scientific and Technical Services

  • We are laying off people. We have not done that since 2010.
  • The Dallas–Fort Worth metroplex real estate market is as hot as it gets and has been that way for the past year. We feel it has to cool off a little and are planning accordingly. Hopefully we are wrong, but it just doesn’t seem feasible that it can continue at this pace.

Management of Companies and Enterprises

  • Too much regulation is hurting our ability to help our customers.
  • Costs to comply with increases in regulatory requirements continue to command large parts of our earnings and staff time.

Administrative and Support Services

  • We are seeing numerous price increases in our cost of goods related to plastic, aluminum and foam products. However, due to competition, we are not able to pass along all of these increases.
  • We continue to aggressively pursue opportunities in the marketplace. We have been fortunate to capture new business in spite of the economy.
  • We still do not know what the Affordable Care Act will do to our business model.
  • Inflationary pressures are rising quickly.

Ambulatory Health Care Services

  • Our costs continue to climb due to government regulation and the Affordable Care Act. However, revenue will decline due to cuts in allowed billable services by the insurance companies, Medicare and Medicaid.

Food Services and Drinking Places

  • Increasing taxes, sky-high insurance costs and regulations are strangling business everywhere. There is no incentive to grow.
  • We will have a new store in the El Paso area opening in early 2015. We will take a price increase in January next year, and we may cut some current benefits to absorb the cost of the Affordable Care Act.
  • During the second half of the summer vacation, we have seen a substantial increase in our incremental sales growth over the price increases we have in place. Our labor is up, but that is only because we opened a new restaurant and allowed it to run very high labor to assure a smooth opening and a good first impression. Our existing restaurants are operating within labor targets, and mid-period reports show no increase in the cost of goods. We expect increased wage and benefit costs in the six-month horizon due to increased benefits costs. We do not have specific quotes yet, but what we are hearing is that there will be substantial increases in costs, particularly in the medical benefit policies, which could be double or triple what they are now. Other than the benefit area, things are looking quite optimistic at this point. However, it is hard to figure out how we are going to absorb the benefits cost increases.
  • The cost of food—particularly protein—is very high. We are unable and unwilling to pass these costs on to our customers for fear of loss of business.

Merchant Wholesalers, Durable Goods

  • Residential and commercial construction are generally improving. Margins are still stressed.
  • Agricultural commodity prices continue to weaken.
  • We are prepared for a slight slowdown in the rate of sales growth, which will probably start in October or November. The dip should only last into April or so. After that, we believe we should see some stellar growth over the next couple of years.
  • The decreases in our capital expenditures are related to elevated expenditures over the past 18 months to streamline processes and create efficiencies in the work of our employees. Our inventory decreases are seasonal.

Motor Vehicle and Parts Dealers

  • The decrease in our selling price is limited to new vehicles and is due to margin contraction.

Building Material and Garden Equipment and Supplies Dealers

  • Business slowed a little in the first six months of the year, but it is starting to increase. We believe oil and gas production will keep things stable.
  • Business is much better than a year ago, but we still don’t feel very good about the underlying strength. There are too many unanswered variables in the economy and worldwide political unrest that could easily affect us.

Food and Beverage Stores

  • There is a lot of new competition entering our retail markets.

 

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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