Special Questions

Texas Manufacturing Outlook Survey

Data were collected May 16–24, and 89 Texas manufacturers responded to the survey.

NOTES: 85 responses. Averages are calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

Downloadable chart | Chart data

NOTES: 45 responses. This question was only posed to those expecting an increase in selling prices.

NOTES: 15 responses. This question was only posed to those expecting a decrease in selling prices.

NOTE: 84 responses.

NOTE: 64 responses.

Texas Service Sector Outlook Survey

Data were collected May 16–24, and 298 Texas business executives responded to the survey.

NOTES: 274 responses. Averages are calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

Downloadable chart | Chart data

NOTES: 178 responses. This question was only posed to those expecting an increase in selling prices.

NOTES: 17 responses. This question was only posed to those expecting a decrease in selling prices.

NOTE: 271 responses.

NOTE: 200 responses.

Texas Retail Outlook Survey

Data were collected May 16–24, and 62 Texas retailers responded to the survey.

NOTES: 59 responses. Averages are calculated as trimmed means with the lowest and highest 5 percent of responses omitted.

Downloadable chart | Chart data

NOTES: 43 responses. This question was only posed to those expecting an increase in selling prices.

NOTES: 7 responses. This question was only posed to those expecting a decrease in selling prices.

NOTE: 60 responses.

NOTE: 47 responses.

Special Questions Comments

These comments have been edited for publication.

Texas Manufacturing Outlook Survey

• We received no resistance to significant price increases in 2021 and 2022. We are starting to see a little more resistance now to a smaller increase, coupled with more requests for volume discounts and extended payment terms.

• Steel is the major driver for our input costs. While steel costs have risen recently, the costs are still below the previous year, and we are projecting them to trend down from midyear through year-end.
• Our customers are getting tired of price increases. Even though we provide documentation showing our costs are increasing more than we are increasing our prices, they are pushing back.

• There are several variables impacting our demand equation: illiquidity, political instability, inflation, supply of raw (food) ingredients and the loss of faith in our national leadership and border issues.
• The selling-price-increase conversation has gotten much easier.

• We increased our sales prices over 10 percent in 2022; we can be patient this year and only raise prices if input costs (excluding labor) increase more than budget projections.

• The overall outlook is troubling. Natural gas prices and continued rig reduction are driving the reduction in customer orders. While the current backlog is adequate for the first and second quarters, third quarter and beyond are difficult to gauge. The risk of a U.S. default and a potential recession aren’t helping matters.

• When volume is high, prices can increase. But when volume is low, cost increases must be absorbed until volume picks up or competitors begin to lose money and the weaker ones begin to go broke. Volume is low now, so we are absorbing the cost increases.
• Raw aluminum prices are down somewhat this year vs. last, with supply over demand.

• We have just started to get some pushback on recent price increases we implemented. Sometimes it’s all from input costs going up; other times it’s a combination of the two [wages and input costs].

• We cannot easily implement price changes or increases (we have several customer segments: department stores, retail stores, direct-to-consumer website, etc.). We did a modest (5–10 percent) price increase at the beginning of 2021 and don’t anticipate a price increase in the near term.

Texas Service Sector Outlook Survey

• It is harder to pass along costs. Some companies are, but we have not.

• For the past two years, if you had it, you could sell it, and you could sell it at substantial profit. Our inventories and our competitors' inventories are increasing significantly because customers have choices again, and they are buying the cheapest. In addition, retail financing is a roadblock to sales today versus the last two years. It is becoming increasingly difficult to pass price increases along to the customer since there are many alternatives and competition today.

• In the architecture industry, we often have fixed fees for multiyear projects. Pricing in high wage inflation will get pushback from our clients and make us less competitive.
• We are having to combine higher cost for our staff with lower cost of near-shore staff to balance out the pricing. This means the client gets more for less, but we must share the revenue/work with a near-shore affiliate. Price and wage increases were implemented Jan. 1. No further increases are planned this calendar year.

• Liquidity is simply unavailable. If we were to acquire a property in a healthy market, we would expect 15 debt equity partners to provide debt proposals. In today's market, we are lucky to receive a single proposal. This does not just hamper acquisition/disposition; it places enormous pressures on the real estate labor chain. Surveyors, environmental engineers, architects, civil engineers, brokers and countless other trades are currently quietly unemployed. This will present slowly in the unemployment and economic growth numbers.

• Customers are experiencing their own cost increases—in particular, the hospitality/restaurant industry. We have seen the most reluctance to any increase in our pricing in this category.
• We charge a fee for assets under management, and that fee does not change. We will see a lagging impact from inflation in that we will see an increase in nominal revenue from the nominal increase of our clients' assets. This nominal increase will not necessarily be a real increase in revenue, but we are currently growing faster than inflation.
• Our sales have increased 60 percent during this year—no need to pass higher prices to our customers,

• Only food costs are passed on.

• Sales prices being up or down don’t really matter because we are commission based.

• As licensed insurance brokers, we pass along insurance pricing as required by regulators.
• The insurance industry faces specific challenges in passing along higher premiums due to higher claims costs and higher insurance company operating expenses. Also affecting premiums are higher reinsurance costs, less capacity and stricter underwriting guidelines trying to ensure profitability.

• We are passing minimal costs [on]. Customers are becoming increasingly price sensitive in their criteria for selection.

• Business has slowed, and customers are very cost conscious now.

• The market will not support increased prices. This is the price we are charging to stay in business, with the hope of being able to recoup later in the year.

• Decreasing demand and purchasing conservatism due to general recessionary concerns are driving our prices down. Although we have seen some input costs decline, it is demand erosion that is of more concern for our business.

• We are currently at our peak prices for what we can charge clients. Raising prices again will negatively impact our business.

• We have not experienced a deceleration in input costs so far this year, but we are expecting some moderation later this year depending on the service. It is difficult for us to increase our selling price due to competition in our market.
• As our multiyear client contracts come due for renewal, we increase prices moderately to absorb the higher cost of wages, benefits, rent, services and supplies. That said, because most of our client contracts are multiyear, we must absorb all the increases until the time of the next renewal. As inflation/costs continue to rise, our margins are much lower, we have to use loans/lines of credit and have had to pull back on hiring. The increased workload on current employees is also a concern.

• Our decrease in wages is from layoffs.
• Inflation is becoming a more obvious factor in slowing business activity due to the increase in the cost of conducting business.

Texas Retail Outlook Survey

• We are at the price point that any increases in pricing would have a significant impact on the total number of customers visiting our store. We believe that any more increases would reduce our customer numbers significantly.

• Restaurants have no choice but to pass [on] cost increases. They must increase prices quickly to stay in business. Labor affects everything we do. Product costs are up steeply as well. The main issue is that our guests don't have to eat out; they can eat at home or buy prepared food from the grocery store. In that sense, we are a luxury. We need to add perceived value somehow.

• Trimming cost is the only way to balance out the drop in the retail price.

• New-car transaction prices are controlled by factory incentives. Those incentives are still very small in addition to continued new-model price increases.

• Even though prices continue to drift upward, our customers are challenging even the smallest of increases. Wage pressure in the Austin area seems to be higher; competing for high-end employees is difficult. Commodities are falling in price, and lower fuel costs are helping.

• We haven't been able to increase costs and remain competitive.

• We are restricted to what the health insurance companies are willing to reimburse for the cost of prescription drugs. However, we are seeing increased prices on our purchases.