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Texas Service Sector Activity Increases at a Slower Pace as Optimism Wanes in January, Says Dallas Fed Survey

For immediate release: January 26, 2016

DALLAS—Texas service sector activity continued to reflect expansion in January, according to the Federal Reserve Bank of Dallas’ Texas Service Sector Outlook Survey (TSSOS).

The revenue index—a key measure of state service sector conditions—fell from 15.2 to 10.0, indicating activity increased but at a slower pace than in December.

The survey is conducted monthly by the Dallas Fed to obtain a timely assessment of activity in the state’s service sector, which represents almost 70 percent of the state economy and employs close to 8.2 million workers.

Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.

The employment index edged down from 11.5 in December to 10.0 in January, while the hours worked index dipped 3 points to 3.5.

Perceptions of broader economic conditions turned pessimistic in January. The general business activity index plunged more than 12 points into negative territory to –10.4 in January. The company outlook index also retreated into negative territory to –5.8.

Expectations regarding future business conditions reflected less optimism in January. The index of future general business activity fell sharply into negative territory to –8.1, while the index of future company outlook also dropped but remained positive at 2.3. Indexes of future service sector activity, such as future revenue and employment, also reflected less optimism this month.

TSSOS also includes a component called the Texas Retail Outlook Survey, which uses information from respondents in the retail and wholesale sectors only.

Retail sales increased at a slower pace in January, according to business executives responding to the Texas Retail Outlook Survey. The sales index moved down from 14.9 in December to 11.0 in January.

Retailers’ perceptions of broader economic conditions were mixed this month. The general business activity index was negative for a third consecutive month but moved up from –8.4 to –4.8. The company outlook index rose from zero to 6.8 in January.

Indexes of future retail sector activity generally declined but remained solidly positive in January.

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Media contact:
Justin Jones
Federal Reserve Bank of Dallas
Phone: (214) 922-5449
Email: justin.jones@dal.frb.org