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Texas Service Sector Activity Strengthens in November, Says Dallas Fed Survey

Retailers See Rising Sales but Slower Employment Growth

For Immediate Release: November 28, 2017

DALLAS— Texas service sector activity strengthened further in November, according to the Federal Reserve Bank of Dallas’ Texas Service Sector Outlook Survey (TSSOS).

Here are some key takeaways from this month’s report:

The revenue index reached its highest reading since November 2014, rising from 19.2 in October to 24.4 in November. Perceptions of broader economic conditions continued to reflect optimism. The general business activity index edged up two points to 20.4. The company outlook index dipped to 14.2.

Labor market indicators reflected faster employment growth this month. The employment index rose slightly from 8.3 to 9.8. Wage pressures increased this month. The wages and benefits index rose slightly from 16.9 to 19.1, although the majority of firms continued to note no change in compensation costs.

Respondents remained optimistic about future business conditions. The index of future general business activity edged up from 30.5 to 33.0. The index of future company outlook held steady at 32.0. Indexes of future service sector activity, such as future revenue and employment, reflected slightly more optimism this month.

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

Key takeaways from this month’s TROS report include:

Retail sales climbed in November. The sales index jumped from 17.7 in October to 30.4 in November. Inventories rose at a slower pace than last month. Price pressures increased, with the selling prices index edging up to 26.1.

Retailers indicated slower employment growth this month. The employment index remained positive but fell six points to 2.0. The hours worked index edged down from 7.5 to 5.6. The wages and benefits index fell slightly from 18.5 to 16.0, although the majority of firms continued to note no change in compensation costs.

Retailers were less optimistic about future broader economic conditions. The index of future general business activity fell from 26.7 to 21.4. The index of future company outlook dipped one point to 24.6. Indexes of future retail sector activity also reflected less optimism this month.

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

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 about 8.5 million workers. Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.

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Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org