Dallas Fed: Modest expansion continues in Texas service sector, though outlooks worsen
March 28, 2023
DALLAS—Growth in Texas service sector activity continued in March, according to business executives responding to the Texas Service Sector Outlook Survey.
“Modest growth in Texas service sector activity continued in March, and labor market indicators pointed to mostly flat employment and a slight contraction in workweeks,” said Jesus Cañas, Dallas Fed senior business economist. “Price pressures eased, and wage pressures remained elevated. Perceptions of broader business conditions worsened further in March as uncertainty picked up.”
Key takeaways from the service sector survey:
- The revenue index edged down just over one point to 5.5, suggesting a slight slowdown in activity growth.
- The employment index fell below zero—for the first time since July 2020—to -0.4, indicating employment growth stalled in March.
- The input prices index ticked down from 40.6 to 38.3, and the selling prices index dropped eight points to 11.4.
- The wages and benefits index remained flat at 19.8, still elevated relative to its average reading of 15.7.
- The company outlook index fell, from -1.7 to -11.3, while the outlook uncertainty index rose 10 points to 22.8—above its series average of 13.5.
Texas Retail Sales Flatten
“Retail sales activity flattened in March while retail labor market indicators reflected contraction in employment and notably shorter workweeks,” Cañas said. “Retailers’ perceptions of broader business conditions continued to worsen in March.”
Key takeaways from the retail survey:
- The sales index, a key measure of state retail activity, was 0.8, suggesting sales were mostly flat in March.
- The employment index dropped from 6.9 to -6.8.
- The company outlook index edged up to -15.7, and the outlook uncertainty index shot up 12 points to 25.4.
Data were collected March 14–22, and 300 Texas service sector business executives, of which 63 were retailers, responded to the survey. For this month’s survey, executives in both manufacturing and the service sector responded to special questions on revenue outlooks and concerns.
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’s economy and employs about 9.5 million workers.
Federal Reserve Bank of Dallas