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Texas Service Sector Outlook Survey

Report in PDF
April 28, 2015

Texas Service Sector Activity Picks Up

Texas service sector activity increased in April, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, rose from 10.7 to 14.6, its highest reading so far this year.

Labor market indicators improved this month. The employment index moved up from 4.2 to 7.9, indicating employment rose at a faster pace than in March. The hours worked index advanced from negative territory last month to 4.7 in April.

Perceptions of broader economic conditions were mixed in April. The general business activity index remained negative for the second month in a row but rose slightly from -4.6 to -1. The company outlook index rose from a near-zero reading last month to 4.5 in April, indicating outlooks turned optimistic. About 17 percent of respondents reported that their outlook improved from last month, while 13 percent noted that it worsened.

Price and wage pressures increased this month. The selling prices index rose slightly from 1.7 to 3.4. The wages and benefits index inched up 1 point to 16.2, although the great majority of firms continued to note no change in compensation costs.

Respondents’ expectations regarding future business conditions reflected more optimism in April. The index of future general business activity rose from 2.7 to 6.2. The index of future company outlook was relatively unchanged at 10.2. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory this month.

Texas Retail Outlook Survey

April 28, 2015 

Retail Sales Rebound

Retail Sales Rebound

Retail sales improved notably in April, according to business executives responding to the Texas Retail Outlook Survey. The sales index surged back into positive territory, gaining 27 points to reach 20.5, its highest reading so far this year. Inventories increased.

Labor market indicators recovered in April. The employment index bounced back to positive territory, up 9 points to 2.4, indicating retail jobs increased this month. The hours worked index also climbed back to positive territory to a reading of 6.4, suggesting workweek length increased.

Retailers’ perceptions of broader economic conditions were mixed this month. The general business activity index shot up 20 points to a reading near zero, indicating views were unchanged from March. After a negative reading last month, the company outlook index jumped from -12 to 11.4 in April, with 23 percent of respondents noting an improved company outlook over the prior month, compared with 11 percent reporting their outlook had worsened.

Retail price and wage pressures increased in April. The selling prices index rose from 0 to 5.7. The wages and benefits index edged up from 9.4 to 12.7, although the great majority of firms noted no change in labor costs.

Retailers’ perceptions of future broader economic conditions reflected more optimism in April. The index of future general business activity advanced from -4.2 to 13.3, its highest reading so far this year. The index of future company outlook rose from 5.3 to 12.1. Indexes of future retail sector activity also reflected more optimism 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 April 14–22, and 243 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: May 27, 2015

Texas Service Sector Outlook Survey

April 28, 2015
 

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 Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
14.6
10.7
+3.9
Increasing
66
31.1
52.4
16.5
Employment
7.9
4.2
+3.7
Increasing
62
16.7
74.5
8.8
Part-time employment
3.9
0.9
+3.0
Increasing
18
11.7
80.5
7.8
4.7
-1.0
+5.7
Increasing
1
10.2
84.3
5.5
Wages and benefits
16.2
15.2
+1.0
Increasing
67
18.9
78.4
2.7
Input prices
19.3
14.4
+4.9
Increasing
72
23.5
72.3
4.2
Selling prices
3.4
1.7
+1.7
Increasing
53
11.4
80.6
8.0
Capital expenditures
7.1
10.6
-3.5
Increasing
68
16.3
74.5
9.2
General Business Conditions
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
4.5
-0.9
+5.4
Improving
1
17.2
70.1
12.7
General business activity
-1.0
-4.6
+3.6
Worsening
2
15.9
67.2
16.9
Business Indicators Relating to Facilities and Products in Texas
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Revenue
32.1
31.9
+0.2
Increasing
74
46.9
38.3
14.8
Employment
20.4
23.0
-2.6
Increasing
73
32.9
54.6
12.5
Part-time employment
7.0
10.9
-3.9
Increasing
34
15.9
75.2
8.9
4.3
1.8
+2.5
Increasing
17
10.0
84.3
5.7
Wages and benefits
38.9
34.8
+4.1
Increasing
100
43.5
51.9
4.6
Input prices
40.4
40.4
0.0
Increasing
100
43.4
53.6
3.0
Selling prices
21.5
23.7
-2.2
Increasing
72
30.0
61.5
8.5
Capital expenditures
24.3
21.5
+2.8
Increasing
73
32.5
59.3
8.2
General Business Conditions
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
10.2
9.7
+0.5
Improving
44
27.8
54.6
17.6
General business activity
6.2
2.7
+3.5
Improving
43
25.9
54.4
19.7

*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

April 28, 2015
 

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 Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
20.5
-6.4
+26.9
Increasing
1
39.1
42.3
18.6
Employment
2.4
-6.6
+9.0
Increasing
1
13.1
76.2
10.7
Part-time employment
7.2
-1.8
+9.0
Increasing
1
14.5
78.2
7.3
Hours worked
6.4
-11.9
+18.3
Increasing
1
16.4
73.6
10.0
Wages and benefits
12.7
9.4
+3.3
Increasing
50
16.7
79.3
4.0
Input prices
4.5
2.3
+2.2
Increasing
3
14.1
76.3
9.6
Selling prices
5.7
0.0
+5.7
Increasing
1
19.1
67.5
13.4
Capital expenditures
12.3
3.6
+8.7
Increasing
18
21.1
70.2
8.8
Inventories
10.9
-4.8
+15.7
Increasing
1
25.3
60.3
14.4
Companywide Retail Activity
Sales
34.4
-7.7
+42.1
Increasing
1
47.1
40.2
12.7
Internet sales
15.6
3.4
+12.2
Increasing
23
20.1
75.4
4.5
Catalog sales
11.4
0.0
+11.4
Increasing
1
14.3
82.9
2.9
General Business Conditions, Retail
Current (versus previous month)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
11.4
-12.0
+23.4
Improving
1
22.7
66.0
11.3
General business activity
0.3
-19.9
+20.2
Improving
1
16.6
67.1
16.3
Business Indicators Relating to Facilities and Products in Texas, Retail
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Increase
%
Reporting
No Change
%
Reporting
Decrease
Retail Activity in Texas
Sales
33.9
24.2
+9.7
Increasing
74
45.4
43.1
11.5
Employment
15.3
8.9
+6.4
Increasing
2
30.9
53.5
15.6
Part-time employment
-3.6
0.5
-4.1
Decreasing
1
13.8
68.8
17.4
Hours worked
7.1
-9.2
+16.3
Increasing
1
15.6
75.9
8.5
Wages and benefits
31.8
22.3
+9.5
Increasing
74
37.7
56.4
5.9
Input prices
30.9
30.9
0.0
Increasing
72
34.5
61.8
3.6
Selling prices
34.5
30.3
+4.2
Increasing
72
40.0
54.5
5.5
Capital expenditures
21.8
20.0
+1.8
Increasing
49
29.1
63.6
7.3
Inventories
13.6
22.8
-9.2
Increasing
65
32.8
48.0
19.2
Companywide Retail Activity
Sales
33.3
31.4
+1.9
Increasing
73
46.6
40.0
13.3
Internet sales
22.5
24.3
-1.8
Increasing
73
30.0
62.5
7.5
Catalog sales
11.4
15.2
-3.8
Increasing
3
12.5
86.4
1.1
General Business Conditions, Retail
Future (six months ahead)
Indicator Apr
Index
Mar
Index
Change Indicator
Direction*
Trend**
(months)
%
Reporting
Improved
%
Reporting
No Change
%
Reporting
Worsened
Company outlook
12.1
5.3
+6.8
Improving
73
24.1
63.9
12.0
General business activity
13.3
-4.2
+17.5
Improving
1
27.1
59.1
13.8

*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

April 28, 2015

TSSOS Chart

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

 

Texas Retail Outlook Survey

April 28, 2015

TSSOS Chart

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

Texas Service Sector Outlook Survey

April 28, 2015

Comments from Survey Respondents

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

Credit Intermediation and Related Activities

  • The biggest percentage improvement has come from our expansion into new markets. This is especially true with the increase in loans. Local, more rural markets have been steady to slightly increasing, and we are seeing some slowdown in service-related businesses that are dependent on the oil and gas industry. Water supplies continue to be an increasing concern.
  • The big question is where will the consumer go? Will consumers back off and cool the borrowing trend, or will they gear up for the summer and keep growth intact?

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

  • We think Amarillo's economy has slowed down due to lower levels of job growth.
  • Our business is about 60 percent dependent on the oil and gas industry. Current oil and natural gas prices make prospects for the next few months pretty dim. This situation is coupled with significant increases in insurance and other regulations’ compliance. We expect low and tight revenue with much higher costs, which is not a good combination.

Real Estate

  • There is a slight improvement in our outlook and a very slight increase in costs.

Rental and Leasing Services

  • We think the positive impact of a viable oil industry is greater than the reduced cost of input to other industries during an oilfield bust, and we may be in for some tough times.

Professional, Scientific and Technical Services

  • The strong dollar and low oil prices continue to affect our energy clients and their need for real estate and office buildings. Growth in our medical business is slowing.
  • Proposals for new work have increased approximately 8 percent for the first three months over last year—generally indicating an increase in development and construction over the next six months.
  • Things have slowed down quite a bit. We had a layoff at the end of March. It is looking like we will have another layoff in May, and this one could be larger.
  • The real estate market has been extremely hot for the past two years, and our numbers indicate that there is no sign of a slowdown in the foreseeable future. Apartment and office buildings are still leasing up as fast as they can be built, and there remains a shortage of inventory in the residential sector that is causing prices to continue to increase. Texas is a great place to be.
  • We see low oil prices as creating a strain on the Texas workforce and economy.

Management of Companies and Enterprises

  • We feel we are overregulated.
  • Our costs continue to accelerate because of regulatory burden and health care insurance costs. Cost increases on health care insurance will be greater than 15 percent when all costs are factored in.

Administrative and Support Services

  • We believe the San Antonio economy is very strong and that there is still a large amount of pent-up demand from after the Great Recession. We have seen a tremendous upsurge for our work in the city and surrounding counties. Our backlog has pushed out three months plus.
  • The extended period of suppressed oil prices is having an effect on nearly every sector of our business now. We’ve moved from an optimistic plan for level sales followed by growth to considering staff and other cutbacks.

Telecommunications

  • We are very concerned about the impact low oil and gas prices are having in the Houston area. We have instituted a hiring freeze and have become more conservative in launching new products.

Ambulatory Health Care Services

  • We are facing regulatory cuts in reimbursement from Medicare of 21 percent, which will have a drastic impact on revenue and profits. That, combined with our expectation of a weakening in the local economy, could cause patient and surgical loads to decline.

Hospitals

  • Current regulatory requirements continue to hinder rural hospitals. Decreasing reimbursements continue to stretch rural hospitals.

Nursing and Residential Care Facilities

  • Our business is significantly influenced by policies related to Medicare and Medicaid reimbursement. Changing payment policies place hospitals and other health providers at significant risk moving forward.

Amusement, Gambling and Recreation Industries

  • In our business, it is hard to forecast prices in six months, but we are very concerned about food prices rising due to the drought in California. In addition, if Austin continues to add restaurants, there may be wage pressures. There are many other variables that are hard to predict into the future.

Food Services and Drinking Places

  • The price of beef has come down some. Labor costs have increased, the employment market is tight and we are paying more to attract good staff.

Repair and Maintenance

  • Businesses that are directly related to oil exploration have been hurt, while other industries are doing well, with overall employment steady to improving.

Support Activities for Transportation

  • Based on current planned improvements to our facilities, we anticipate increased activity in total passenger movements over current activity along with increased export activity.

Merchant Wholesalers, Durable Goods

  • Our increase in employment is related to our efforts to improve our e-commerce solution.
  • Our building material business—roofing, siding, insulation, gypsum, lumber and engineered wood products—is up 35 percent this month over last month. The millwork part of our business generally follows about 30 days later. We see an opportunity for strong growth this year, despite a projected dip in starts nationally. This is also wind, flood and hail season, and any storm activity that leads to repair will be a plus to our business.

Motor Vehicle Parts Dealers

  • Weather was a drawback in the first quarter.
  • We are impacted by the low price of oil. We expect a so-so market for the time being.
  • We are beginning to feel the effects from layoffs in the oil and gas industry.

 

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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