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.

Data have been seasonally adjusted as necessary.

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.

• A lower CPI [Consumer Price Index] and lagged shelter costs on the way down bode well for the FOMC [Federal Open Market Committee] being at the end of the tightening cycle.
• We are focusing on hiring the right people and putting them in the right seats. We have made some progress but [there are] still more positions to fill. Once we complete this, we will feel much more positive looking forward.
• There is a lot of construction work to be performed in the next few years, but it is slow to start right now. 2024 should be much busier than 2023.

• Uncertainty continues to increase. More clients continue to defer work or request a smaller team. Net new clients are delaying signature [on contracts] altogether.
• Although orders to sell commercial and residential real estate have increased slightly, the average purchase prices have declined. This is putting intense pressure on our revenue and what we can pay our employees. Even if we see a pause in interest rate hikes, it is going to be a long road to recovery in the real estate market.
• Revenue is down this month from last month, but last month was the best month in our 40-year history, and this month is still strong—just not as strong as last month.
• Wages seem to have stabilized. The amount of new work is dropping and will affect future business.
• We're cautiously optimistic given the uncertainty of the banking industry to trust and work with small businesses to provide contract and capital expansion funding.

• The continued increase in interest rates that the Fed [Federal Reserve] has done is hurting banks and our customers.

• Despite all the talk of recession or an economic downturn, [there is] no sign of weakness in client volumes, revenues or earnings.
• Clients continue to need help finding good talent; however, they are taking longer to interview and dragging out the hiring process. Candidates continue to feel like it is a candidate market, and to some extent they are correct. There continues to be a labor shortage, and great talent is difficult to find, much less convince to consider a new role during economic uncertainty.
• The reduction in M&A [mergers and acquisitions] activity suggests that interest rate increases are hampering transactions. While short-term economic indicators are positive, we're going into a recession before the year is out.
• Higher rates have hit commercial real estate hard. Financing is harder to get. Getting projects to pencil with higher rates and higher construction costs is difficult.

• Core PCE [personal consumption expenditures] is still elevated and concerning. Our fiscal policy continues to be unconstrained and will increase inflationary pressures on prices.
• [We are] waiting for an answer from the IRS regarding the Employee Retention Credit (ERC). June marks the 13th month since the IRS received our amended 941s. So far, we have received cash on two out of six quarters. We expect the third one this month, and the other three are under review. ERC provides a nice cash cushion.

• In a world of finance and might; Interest rates took quite a flight; Banks tightened their purse; No loans to disperse; Economic growth took a fright; With rates reaching skyward so high; Banks held their cash, oh, my, oh my; Investments grew slow; No funds to bestow; Economic activity went awry; Inflation, it started to wane; Prices dropping, causing some pain; With lending on hold; The economy got cold; As deflation began to gain; So, let's hope for a lending spree; To boost our economy with glee; Lower rates we desire; Banks’ lending on fire; And inflation back to a degree!
• We have launched a new service line that has become popular as many employers seek to lower health care costs while providing a valued benefit to their employees. Due to the competitive labor market and the rising costs of health care benefits, we believe our customer base will continue to grow.

• The weather is the main reason for a decrease in our revenue. We are an outdoor attraction. The supply chain is a problem as many former suppliers are out of business, and those that are operating now are telling us that parts are obsolete, and [they] want to install new operating systems at a very high cost.

• Consumer booking activity for travel appears to be slowing down.
• In general, we are not seeing as strong leisure demand as last year. It may be too soon to come to any real conclusion.

• Recessions start when the fed funds rate gets to its highest point. I would assume we are about there. I think a recession will hit us in the third and fourth quarters. In addition, oil is declining to $60, maybe $40 before it it blows the lid off. [There is] nothing to be excited about for the next six to nine months I think.

• A slowing economy is evident by the slowing loan demand in all loan types. Also, fewer applicants are qualifying for loans based upon significant increased borrowing interest rates, thus negatively impacting debt service coverage ratios and related income available to service current and future debt obligations of the applicant/borrower.

• Seems to be that companies are putting projects on hold because of business uncertainty.

• With the resolution of California's longshoreman contracts, things are looking better. However, it seems the general lack of good labor is impacting our vendors' ability to provide consistent service across the board.
• We are working hard to increase automation and productivity to improve our margin. We saw too much margin erosion from inflation and performed some mid-manager layoffs to save money. We implemented 12 robots in fourth quarter 2022, but were not getting the productivity expected and went back to the vendor for improvements. The robots are doing better. We are working diligently to squeeze increased margin for the next year to increase profitability.

• Risks remain but international business is trending better so [there are] some positive ripples for smart training software with growing opportunities for more comprehensive solutions that provide instant measures and adjustments for learning comprehension. The trends of smaller, smarter hardware bathed in many more forms of software with distributed security options sells—for human/automation efficiencies to have more control over various business risks.

• Buying decisions continue to get stalled. With summer approaching, this will likely be a tougher seasonal period than the past couple of years. Channel partners are also struggling with their sales.
• Uncertainty in the economy and recent FDIC [Federal Deposit Insurance Corp.] money burdens passed on to [surviving] banks are causing our buyers to delay purchases and cut costs. Even long-time customers who make money from our software services are looking for ways to cut costs to lower their budgeted expenses for next year. (Meanwhile, unregulated financial services providers share none of the burden.)

• We deal with small truck fleets and owner operators. They are hurting due to a sharp decline in freight rates from last year. Since we repair their trucks, our business has slowed as they put off repairs.

• The biggest factors impacting the banking industry are higher interest rate expense and steadily lower loan demand. Capital ratios are growing stronger, but liquidity is tighter. Deposits are decreasing gradually due to a combination of deposits migrating out of banks and customers’ cash balances diminishing due in part to increased inflation and cost of goods.
• Tightening credit availability in the banking sector is generally good for our business. This is offset somewhat by the impact of "The Great Reset" period on both real estate and the corporate sector— anyone who borrows money or whose business activity depends on asset prices.

• Higher rates are hurting income statements. Supply-chain problems are easing for automotive and equipment manufacturing.

• Workers not in offices is a problem for our industry. June, July and August can be really bad months. Houston Restaurant Weeks helps in August. Summer is tough.
• Summer for local businesses usually means less foot traffic as families go out of town. I don't see a significant drop in sales coming but am preparing by increasing prices slightly, by 2 percent, just to stay close to the competition’s prices.

• The labor shortage is scary. We need two employees (drivers) badly.
• People are holding back when shopping. If it is not a “need,” they are holding off on purchasing at this time. Hopefully, that will change.

• New laws that are requiring more transparency from pharmacy benefit managers (PBMs) and breaking up the big conglomerates that control the market share in health care are helping allow smaller independent pharmacies compete. We can provide the services that patients are needing and requiring to reduce the costs on the health care system. With fewer organizations controlling the prices and supply, there is less regulation on what is being done. Large health care organizations can partner with manufacturers to control prices for drugs, take advantage of government-funded programs like 340B and have little to no incentive to pass those savings on to patients while blocking other pharmacies from competing in the market.

• Business is flat, and it’s hard to predict what the next six months to a year will look like. [We are] reducing overhead and expenses currently.

• Affordability is a major concern. Many of our buyers are priced out of the market. Inventories have improved, but shortages still exist in some segments. The preowned market will be an ongoing problem for two to three years.
• Demand for new vehicles continues to be very strong, while high interest rates and short supplies have affected used-car demand.

• Inflation is coming down slowly, but the actions of the Federal Reserve have hurt small businesses and consumers.  Employment numbers are not real since people are working multiple parttime jobs.
• Business seems to be stabilizing after a decrease in activity in April.

Historical Data

Historical data can be downloaded dating back to January 2007.

Indexes

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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.