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Texas Service Sector Activity Increases at a Slower Pace in July, Says Dallas Fed Survey

For immediate release: July 26, 2016

DALLASTexas service sector activity continued to reflect expansion in July, 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 15.6 in June to 10.3 in July, indicating activity increased at a slower pace than 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 edged up from 2.0 in June to 3.8 in July. The hours worked index dipped from 3.6 to 2.0.

Perceptions of broader economic conditions were mixed again in July. The general business activity index remained pessimistic for a seventh consecutive month, but moved up from –7.7 to –1.3, suggesting pessimism waned. The company outlook index rose slightly from a reading near zero to 1.0.

Expectations regarding future business conditions improved in July. The index of future general business activity jumped up from a reading near zero to 10.1. The index of future company outlook rose from 8.4 to 14.0, reflecting more optimism. Indexes of future service sector activity, such as future revenue and employment, reflected more 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 modestly in July, according to business executives responding to the Texas Retail Outlook Survey. Remaining positive for a second consecutive month, the sales index was unchanged from last month at 2.9.

Retailers’ perceptions of broader economic conditions were mixed in July. The general business activity index climbed from –10.2 to a reading near zero. The company outlook index was positive for a second consecutive month, rising from 3.2 in June to 8.9 in July.

Indexes of future retail sector activity reflected more optimism this month.

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