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Texas Service Sector Activity Expands but Outlook Worsens in February, Says Dallas Fed Survey

For immediate release: March 1, 2016

DALLAS—Texas service sector activity continued to reflect expansion in February, 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—was unchanged from January at 9.7, indicating activity increased at the same pace as last month.

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 fell to near zero indicating stable employment, while the hours worked index reflected slightly longer workweeks as it edged down from 3.5 to 1.3.

Perceptions of broader economic conditions reflected more pessimism in February. The general business activity index retreated from –10.4 to –19.2 in February. The company outlook index held steady at –6.3.

Expectations regarding future business conditions were mixed in February. The index of future general business activity remained in negative territory and fell slightly to –11. The index of future company outlook edged down to near zero. Indexes of future service sector activity, such as future revenue and employment, remained in solid positive territory 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 fell in February, according to business executives responding to the Texas Retail Outlook Survey. The sales index plunged into negative territory to –5.1 in February, its lowest level in nine months.

Retailers’ perceptions of broader economic conditions were pessimistic this month. The general business activity index plunged from –4.8 to –26.1. The company outlook index fell into negative territory to –2.2 in February.
Indexes of future retail sector activity continued to reflect optimism this month.

For this month’s Texas Business Outlook Surveys, respondents were also asked supplemental questions on employment expectations and the labor market in Texas.

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