Texas service sector activity expands at slower pace; retail sales fall in April, says Dallas Fed survey
For Immediate Release: May 1, 2018
DALLAS—Texas service sector activity continued to increase in April, albeit at a slower pace than in March, 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, slipped from 20.0 in March to 14.7 in April. Perceptions of broader economic conditions continued to reflect optimism in April. The general business activity index edged up from 13.4 to 14.5. The company outlook index fell five points, but remained positive at 12.7.
Here are some additional takeaways from this month’s report:
Price and wage pressures continued to rise. The selling prices index increased from 17 to 19.2, its highest level in over 10 years. The wages and benefits index rose nearly three points to 23.5, with 26.6 percent of firms reporting increases in compensation costs—the highest on record.
Labor market indicators reflected continued employment growth. The employment index and hours worked index remained largely unchanged at 15.9 and 8.0, respectively.
Respondents were slightly less optimistic about future business conditions. The index of future general business activity fell two points to 24.7, while the index of future company outlook slipped seven points to 25; both remained significantly above their average readings.
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 fell slightly in April. The sales index came in at –3.1 in April, down significantly from its March reading of 14.9. Inventories grew at a slower pace.
Retail employment grew at a slower pace. The employment index fell from 17.2 to 9.6. The hours worked index retreated to near zero.
Retail price and wage pressures remained elevated but eased somewhat. The selling prices index fell from 30.4 to 25. The wages and benefits index fell 13 points to 10.3, although the majority of firms continued to note no change in compensation costs.
This month, business executives were asked special questions on a range of topics, covering tax reform, tariffs and linkages to the energy industry.
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 8.6 million workers. Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.
-30-
Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748
E-mail: jennifer.chamberlain@dal.frb.org