Dallas Fed: Texas service sector activity flat, outlook continues to worsen

DALLAS—Growth in Texas service sector activity stalled in October, according to business executives responding to the Texas Service Sector Outlook Survey.

“Labor market indicators pointed to no growth in employment and a largely stable workweek,” said Jesus Cañas, Dallas Fed senior business economist. “Price pressures remained unchanged while wage growth eased slightly. Perceptions of broader business conditions continued to worsen in October, as pessimism notably increased.”

Key takeaways from the service sector survey:

• The revenue index fell eight points to 0.7, with the near- zero reading suggesting little change in activity from September.
• The employment index fell from 2.7 to 0.1, its lowest level in seven months.
• The input prices index was flat at 37.3 and the selling prices index remained steady at 9.5.
• The wages and benefits index fell two points to 17.0, approaching its average reading of 15.8.   
• The general business activity index dropped from -8.6 to -18.2, its lowest level since December of last year, while the company outlook index fell to -12.8, its lowest level in 16 months.

Texas retail sales continue to weaken

“Retail sales declined again in October while retail labor market indicators reflected a contraction in employment and workweeks,” Cañas said. “Retailers’ perceptions of broader business conditions worsened.”

Key takeaways from the retail survey:

• The sales index fell from -4.4 to -18.1, marking its sixth consecutive month in negative territory.
• The employment index fell 13 points to -12.4 while the hours worked index fell from 0.6 to -12.1. 
• The general business activity index dropped from -10.2 to -23.0.

For this month’s survey, Texas business executives were asked supplemental questions on credit conditions.

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.

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Media contact:
Jon Prior
Federal Reserve Bank of Dallas
Phone: 214-922-6857
Email: jon.prior@dal.frb.org