Texas Service Sector Outlook Survey

Historical data are available from January 2007 to the most current release month.

Historical data are available from January 2007 to the most current release month.

*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.

**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.

†Added to survey in January 2018.

Data have been seasonally adjusted as necessary, with the exception of the outlook uncertainty index which does not yet have a sufficiently long time series to test for seasonality.

Texas Service Sector Outlook Survey

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Texas Retail Outlook Survey

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Texas Service Sector Outlook Survey

Comments from survey respondents

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

• The January outlook is based on acquiring some consulting work that is expected to last a couple of months. No work is indicated for six months from now.
• The labor market is still very tight.
• Contracts are taking longer to review; everyone has added more protections and precautions on the front end for what would have been a general assumption prior to COVID. Too many contractors and suppliers have been burned (heavy civil infrastructure projects).
• Many large developers and real estate investment trusts are pulling back or even canceling projects. The first quarter looks rough. Everyone is waiting for a decision on interest rates. Land prices, labor and construction pricing remain high, making it hard to make deals work. It's starting to look a lot like 2009 with everyone on the sidelines watching everyone else.
• I think things are stable, and there is plenty of business for small businesses.
• I am the owner of a direct-hire recruiting firm. At this point, sales have been about the same as December. However, there is a lot in the news about a looming recession and, therefore, as a business owner, I am nervous about the next six months. Our team is working on ways to increase marketing to let people know what we do. We are also working on developing a referral bonus program for people outside of our company who refer companies/organizations to us that need help filling positions. The one thing that gives me hope is that I read about people in their late 20s to early 40s who are just as likely to leave positions, which means we will have opportunities to fill the positions.
• Our outlook is a bit skewed this month due to an executive transition. One of the founders/managers of the business has left the business through a buyout by the other member. Our outlook is a bit unsettled, but that is to be expected.
• The residential real estate market has continued its downward trend the past few months, and the commercial market is now following. The order count for residential is down 35 percent, and commercial orders are down 40 percent this month over the same period last year. We hope to see an easing of the interest rate increases soon, so we can determine how far this market has fallen.
• We expect business activities to pick up in the next six months. However, labor shortages in the professional arena are still a major detriment to meeting business opportunities.
• The constant speculation of a recession is becoming a psychologically self-fulfilling prophecy.
• Interest rate hikes are slowing design and construction, especially in the speculative buildings.

• Interest rates, general anxiety and recent earnings reports of major banks suggest continued interim economic weakness. Clients are continuing to report strong earnings. No obvious, visible signs of weakness in client activity or pricing pressure.
• We are investing in our people. There is a continued shortage of talent, and the need for talented employees continues. [We are] hiring needed staff to assist with our growth despite the uncertain economic conditions. We believe Dallas–Fort Worth to be more stable than other parts of the country.
• With the rising interest rates, cost of goods and inflation, our business has experienced a fall in revenue.

• Our outlook for six months from now hinges on actions of the state Legislature impacting our budget. While we are optimistic, we remain in a state of uncertainty about our financial status until the state budget is approved.

• Monthly economic pithy limerick for professional amusement: Inflation is causing consternation; the Federal Reserve needs to keep the economy fair.
• Ironically, warmer weather has decreased the incidence of flu and COVID, which is a negative impact on our business. Also, more layoffs have reduced employer-sponsored insurance coverage and increased the threshold by which parents seek care for their sick children. Also, due to at-home COVID testing capabilities, this has reduced in-clinic or professional testing for COVID, and COVID testing requirements have softened for travel and return to work, which has negatively impacted our business.
• Wage inflation is still a concern, [as well as] significant technical staff shortages despite generous wage and benefit packages [There is] continued erosion on the collection side with recent Medicare cuts, so margins continue to erode.

• Interest rates and inflation are killing us.

• It’s the start of the new year and nothing has changed yet. We are optimistic that prices for commodities will continue to drop.

• News reports that suggest an imminent worldwide recession create fear among clientele and put the brakes on spending.

• The increase in interest rates slowed down first-time homebuyers and buyers wanting to move to a bigger home.
• Short-term, mortgage rates in excess of 6.5 percent for 30-year financing puts a chill on activity. However, recent improvement in rates bodes well for the longer term.
• Interest rate and insurance cost increases threaten to wipe out gains we made coming out of COVID. Our multifamily owner clients who do not have interest rates locked in or sufficiently hedged are beginning to feel the pain. Commercial insurance on the Gulf Coast is difficult to place. Since rents are not keeping up, some probably won't make it. As lenders are forced to take over, a number of mom-and-pop equity investors will be wiped out.
• The feckless leadership from the White House, the damaging energy policies and the electrical vehicle push are causing unneeded chaos in all parts of the economy. What will happen to the automobile manufacturers that have totally remade themselves if electrical vehicles are proven not to be the answer? And what about all the battery-making facilities that won't be needed?
• There is an increasing lack of equity and debt capital available to support investment/development of income-producing real estate projects.

• The Federal Reserve raising interest rates has resulted in a definite slowdown in economic activity. Both commercial and residential sales are slowing with most noticeable declines in one- to four-bedroom family residential/investment property vacancy rates, especially in Class A properties. Ag real estate/farm and ranch property sales and related bank financing have also slowed. Cash flows have tightened with increased interest rates and inflation cost increases, thus borrowers’ ability to qualify for loans has been negatively impacted.

• [We are] not really seeing any business activity pickup.

• The cost of truck parts seems to change from week to week as the availability of parts is uncertain. Our business has slowed 15 percent from December. On the bright side, I have hired a mechanic from California who starts in April. I am talking to two more from the same area.

• All our costs have increased significantly. Yet, selling prices have dropped significantly.

• 2023 will benefit from higher selling prices as we adjust our tariffs on Jan. 1 of each year. Employee wages will also increase as a result of the beginning of the year cost-of-living adjustment. Other input costs seem to be moderating slightly.

• Inflation is greatly impacting our clients' and prospects' ability to purchase more of our services. The impact of higher costs is affecting our ability to grow and finance growth through revenue or traditional means.

• Tight capital markets continue to hamper our ability to invest and have driven us to make some reduction in the labor force. At the same time, reduced consumer spending is now impacting some of our business segments. While cost growth has flattened out, we are still seeing top-line and bottom-line pressure.

• We have some concerns for our lending business. Our back-ended capital partners have taken significant losses and are very slow to finalize their agreements with us. (They upsized their commitment from $5 million to $15 million but have not finalized the agreements.) We are seeing an abundance of caution with bank partners that is impacting our ability to make loans today. Our business in garage operations is doing well and growing.
• We are in the process of going private (were acquired), so we are laying off employees as a result of that transaction.
• The increasing levels for short-term interest rates over the past two quarters has resulted in an increase in the number of commercial real estate owners who are interested in replacing short-duration or variable interest rate debt with long-term fixed-rate debt, typically moving from bank sources to insurance company sources that can provide fixed-rate debt capital for 15–25 years. We are also hearing of increasing numbers of sales transactions that will not close, at least not under the terms initially agreed to by the parties to the transaction.
• The interest rate market is a key factor in determining future performance of the company. Cost of funds is going to continue to increase, and revenue margins will get tighter as the competition for liquidity becomes more of an issue.

• We continue to see a reasonable business climate, but part of the rebalancing is how current interest rates are benefiting some of our products and services. That is helping to offset some of the uncertainty in other areas. We continue to be labor constrained and still have aggressive targets on hiring and expanding.

• Business continues to be surprisingly robust in January, and interest rate increases have not had a dramatic effect on retail sales, yet.
• Our outlook is concerning. We have too many headwinds beyond our control facing us: affordability, inflation, cost of living, fringe benefits, health care, margin erosion, high interest rates, inconsistency of supply chain.
• Economic activity in our area has decreased, impacting retail in a very adverse way.

• The health care industry is becoming more regulated. The increasing costs of medications, insurance and hospital stays are forcing independent providers to form an alliance and combat antitrust concerns. These formations are leading a pathway to lower costs for smaller pharmacies and providers, which can pass those cost savings down to patients and consumers. This position allows for more competition, which not only improves prices, but it also improves quality.

• Generally speaking, our company's sales have held up well over the past 30 days. Input prices, including equipment and supplies, have all increased with notices from most all major suppliers. The cost of construction has risen to truly unsustainable levels. Considering this, we have dialed back or moderated 2023 and 2024 growth plans in the past 30 days, as we also believe there is a very high probability of recession, the depth and duration of which is still very uncertain.
• Lunches are still way off due to those working from home and the high vacancy rate for office space.
• Year-to-date sales have shown a slight increase over 2022 and pre-COVID. However, we are still dealing with supply-line issues and staff shortages. A slow comeback to the office and business travel remain drags on customer demand. Difficulty staffing remains and is constraining revenue as we still must be closed one day per week due to being short staffed. The cost of goods sold and labor costs including fringes [benefits] are increasing. The bottom line is we are squeezed by inflation and a shortage of labor. We feel that a recession is coming. The politicians on both sides are not doing anything to rein in government spending and other measures that cause inflation to get out of control.

• If everyone keeps talking about everything falling off, it's probably going to happen.
• Retail activity is slowing at an accelerated pace.

• We will hire more people if we can find qualified applicants. The situation with the labor shortage continues to be our biggest problem. We see new employers coming to our region, and we wish they would go somewhere else because they will take people out of the labor pool. Also, we are finding that younger employees are very unreliable. For example, we hire them, and they don't show up, or they work for a short while and suddenly quit—even if they know that we really need them. No such problems with older employees.
• January is always slow. We finished last year up 29.1 percent over another double-digit year in 2021. We have noticed a big change in traffic. Customers [who were] pulling [away] are back, etc.

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	Unadjusted
Seasonally adjusted	Seasonally adjusted

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	Unadjusted
Seasonally adjusted	Seasonally adjusted