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Texas service sector growth hits 2019 high, retail sales flatten out in July, says Dallas Fed survey

For Immediate Release: July 30, 2019

DALLAS—Texas service sector activity grew at a faster pace in July, according to business executives responding to the Texas Service Sector Outlook Survey.

The revenue index, a key measure of state service sector conditions, picked up from 13.6 in June to 20.9 in July. Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.

The employment index rose from 6.9 to 8.7, while the hours worked index increased nearly three points to 7.6 in July.

“The Texas service sector expanded at a faster pace in July, as the survey’s revenue index reached its highest value so far this year,” said Christopher Slijk, Dallas Fed assistant economist. “Labor market indicators reflected continued growth, and wage pressures increased. Firms were generally more optimistic about business conditions, although retailers continued to report weakness in their outlooks.”

Additional key takeaways from the report include:

Perceptions of broader business conditions improved modestly. The general business activity index rose from 3.2 in June to 4.7 in July, while the company outlook index fell one point to 3.6. The capital expenditures index fell nearly nine points to 7.9, its lowest reading since 2016, while the outlook uncertainty index slipped three points to 16.3.

Respondents were somewhat more optimistic about future business conditions. The future general business activity index increased from 9.0 to 10.7 in July, while the future company outlook index ticked up to 13.4.

The survey 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 that report include:

Retail sales were flat. The sales index rose over seven points to 0.6, indicating little net change compared with June. Inventories increased, as the inventories index rose from 1.4 to 7.3.  

Labor market indicators held steady. The employment index rose nearly 10 points to 0.7, while the hours worked index increased from -3.7 to 1.7 in July.

Retailers remained pessimistic about broader business conditions. The general business activity index rose slightly from -9.3 in June to -7.7 in July, while the company outlook index increased about three points to -7.9.

The Dallas Fed conducts the survey monthly 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.


Media contact:
Jennifer Chamberlain
Federal Reserve Bank of Dallas
Phone: (214) 922-6748