Dallas Fed: Texas service sector growth holds steady in May; price and wage pressures ease
May 31, 2023
DALLAS—Growth in Texas service sector activity continued in May, according to business executives responding to the Texas Service Sector Outlook Survey.
“Texas service sector growth held steady in May, and labor market indicators pointed to continued employment growth. But there was a slight decline in part-time employment and workweeks,” said Jesus Cañas, Dallas Fed senior business economist. “Perceptions of broader business conditions continued to worsen in May, and price and wage pressures eased.”
Key takeaways from the service sector survey:
- The revenue index was unchanged at 6.9, suggesting activity grew at the same rate as the previous month.
- The employment index edged down one point to 4.2, indicating a slight moderation in employment growth.
- The input prices index ticked down from 35.5 to 31.8, and the selling prices index fell two points to 13.8, though both indexes remained above their series averages.
- The wages and benefits index inched down two points to 16.6—near its average reading of 15.7.
- The company outlook index remained the same at -9.5, while the outlook uncertainty index was flat at 15.8—close to its series average of 13.6.
Texas Retail Sales Decline
“Retail sales declined in May and labor market indicators reflected a contraction in employment and continued shortening of workweeks,” Cañas said. “Perceptions of broader business conditions worsened.”
Key takeaways from the retail survey:
- The sales index fell six points to -3.2, suggesting retail sales contracted in May.
- The employment index fell five points to -3.3 while the part-time employment index dropped 10 points to -9.3.
- The company outlook index increased from -16.1 to -9.2, and the outlook uncertainty index ticked up from 11.8 to 12.9.
Data were collected May 16–24, and 306 Texas service sector business executives, of which 64 were retailers, responded to the survey.
For this month’s survey, executives in both manufacturing and the service sector responded to special questions on prices and wages.
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