Surveys

Special Questions

June 26, 2023

Special Questions

For this month’s survey, Texas business executives were asked supplemental questions on outlook concerns, employment and capital expenditures. Results below include responses from participants of all three surveys: Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey.

Texas Business Outlook Surveys

Data were collected June 13–21, and 363 Texas business executives responded to the surveys.

1. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Sep. '22	Dec. '22	Mar. '23	Jun. '23
Weakening demand/potential recession	45.8	54.4	55.6	54.8
Higher labor costs	40.0	42.9	32.2	39.3
Higher cost of credit/interest rates	17.4	31.8	34.0	35.7
Elevated input costs/inflation	46.1	36.1	36.4	33.4
Labor shortages/difficulty hiring	46.3	38.3	34.6	31.5
Increased taxes and regulation	21.3	18.1	15.7	17.1
Supply-chain disruptions	31.3	22.4	16.2	12.1
Geopolitical uncertainty/Russia-Ukraine war	7.6	11.1	10.6	9.0
Other	4.7	4.0	6.1	5.3
None	1.8	2.2	3.2	3.4

NOTES: 356 responses.

2. What is your assessment of your firm’s current employment situation in light of your six-month outlook?

	Oct. '22 (percent)	Jan. '23 (percent)	Jun. '23 (percent)
We are understaffed and looking to hire for new positions	30.8	27.8	25.2
We are understaffed and looking to hire for replacement only	19.7	18.6	19.0
We are understaffed but opting not to hire at this time	12.3	14.0	11.8
We are at our ideal staffing level	21.2	23.0	28.6
We are overstaffed but opting not to lay off workers at this time	4.8	6.8	10.6
We are overstaffed and laying off workers	3.6	3.9	2.8
Other	7.7	5.8	2.0

NOTE: 357 responses.

3. What are your firm's expectations for capital expenditures in 2023 compared to last year?

	Jun. '23
Significantly higher	10.7
Slightly higher	27.0
No change	37.1
Slightly lower	15.2
Significantly lower	10.1

NOTE: 356 responses.

3a. What are the primary factors behind the increase in your capital expenditures this year? Please select up to three.

	June '23
Updating equipment or technology	59.1
Demand for your product or service	34.8
Capacity utilization (need for more/less space)	23.5
Profitability/cash flow	17.4
Broader economic conditions	9.8
Economic uncertainty (change in ability to forecast future conditions)	8.3
Tax/regulatory considerations	6.8
Cost or availability of external finance	5.3
Other	11.4

NOTES: 132 responses. This question was only posed to those expecting higher capital expenditures this year.

3b. What are the primary factors behind the decrease in your capital expenditures this year? Please select up to three.

	June '23
Economic uncertainty (change in ability to forecast future conditions)	61.1
Profitability/cash flow	44.4
Demand for your product or service	31.1
Broader economic conditions	30.0
Cost or availability of external finance	21.1
Capacity utilization (need for more/less space)	15.6
Tax/regulatory considerations	10.0
Updating equipment or technology	5.6
Other	5.6

NOTES: 90 responses. This question was only posed to those expecting lower capital expenditures this year.

Survey respondents were given the opportunity to provide comments, which can be found in the Comments tab above.

Texas Manufacturing Outlook Survey

Data were collected June 13–21, and 82 Texas manufacturers responded to the survey.

1. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Sep. '22	Dec. '22	Mar. '23	Jun. '23
Weakening demand/potential recession	55.2	61.9	63.7	68.3
Labor shortages/difficulty hiring	56.3	40.5	38.5	40.2
Higher labor costs	36.8	36.9	35.2	35.4
Elevated input costs/inflation	58.6	40.5	41.8	30.5
Higher cost of credit/interest rates	9.2	32.1	24.2	23.2
Increased taxes and regulation	20.7	21.4	16.5	22.0
Supply-chain disruptions	40.2	32.1	19.8	17.1
Geopolitical uncertainty/Russia-Ukraine war	5.7	10.7	12.1	12.2
Other	3.4	0.0	5.5	7.3
None	0.0	0.0	1.1	0.0

NOTES: 82 responses.

2. What is your assessment of your firm’s current employment situation in light of your six-month outlook?

	Oct. '22 (percent)	Jan. '23 (percent)	Jun. '23 (percent)
We are understaffed and looking to hire for new positions	29.8	29.0	23.2
We are understaffed and looking to hire for replacement only	21.3	19.0	23.2
We are understaffed but opting not to hire at this time	13.8	17.0	8.5
We are at our ideal staffing level	14.9	17.0	26.8
We are overstaffed but opting not to lay off workers at this time	8.5	9.0	13.4
We are overstaffed and laying off workers	4.3	3.0	2.4
Other	7.4	6.0	2.4

NOTE: 82 responses.

3. What are your firm's expectations for capital expenditures in 2023 compared to last year?

	Jun. '23
Significantly higher	13.6
Slightly higher	27.2
No change	30.9
Slightly lower	12.3
Significantly lower	16.0

NOTE: 81 responses.

3a. What are the primary factors behind the increase in your capital expenditures this year? Please select up to three.

	June '23
Updating equipment or technology	72.7
Demand for your product or service	45.5
Capacity utilization (need for more/less space)	24.2
Profitability/cash flow	24.2
Broader economic conditions	6.1
Cost or availability of external finance	3.0
Tax/regulatory considerations	3.0
Economic uncertainty (change in ability to forecast future conditions)	0.0
Other	6.1

NOTES: 33 responses. This question was only posed to those expecting higher capital expenditures this year.

3b. What are the primary factors behind the decrease in your capital expenditures this year? Please select up to three.

	June '23
Economic uncertainty (change in ability to forecast future conditions)	65.2
Profitability/cash flow	39.1
Demand for your product or service	30.4
Broader economic conditions	26.1
Capacity utilization (need for more/less space)	21.7
Cost or availability of external finance	21.7
Tax/regulatory considerations	13.0
Updating equipment or technology	8.7
Other	0.0

NOTES: 23 responses. This question was only posed to those expecting lower capital expenditures this year.

Texas Service Sector Outlook Survey

Data were collected June 13–21, and 281 Texas business executives responded to the survey.

1. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Sep. '22	Dec. '22	Mar. '23	Jun. '23
Weakening demand/potential recession	43.0	52.3	53.0	50.7
Higher labor costs	41.0	44.6	31.2	40.5
Higher cost of credit/interest rates	19.8	31.7	37.2	39.4
Elevated input costs/inflation	42.3	34.8	34.7	34.3
Labor shortages/difficulty hiring	43.3	37.6	33.3	28.8
Increased taxes and regulation	21.5	17.1	15.4	15.7
Supply-chain disruptions	28.7	19.5	15.1	10.6
Geopolitical uncertainty/Russia-Ukraine war	8.2	11.1	10.2	8.0
Other	5.1	5.2	6.3	4.7
None	2.4	2.8	3.9	4.4

NOTES: 274 responses.

2. What is your assessment of your firm’s current employment situation in light of your six-month outlook?

	Oct. '22 (percent)	Jan. '23 (percent)	Jun. '23 (percent)
We are understaffed and looking to hire for new positions	31.1	27.5	25.8
We are understaffed and looking to hire for replacement only	19.3	18.5	17.8
We are understaffed but opting not to hire at this time	11.8	13.1	12.7
We are at our ideal staffing level	23.0	24.9	29.1
We are overstaffed but opting not to lay off workers at this time	3.7	6.1	9.8
We are overstaffed and laying off workers	3.4	4.2	2.9
Other	7.8	5.8	1.8

NOTE: 275 responses.

3. What are your firm's expectations for capital expenditures in 2023 compared to last year?

	Jun. '23
Significantly higher	9.8
Slightly higher	26.9
No change	38.9
Slightly lower	16.0
Significantly lower	8.4

NOTE: 275 responses.

3a. What are the primary factors behind the increase in your capital expenditures this year? Please select up to three.

	June '23
Updating equipment or technology	54.5
Demand for your product or service	31.3
Capacity utilization (need for more/less space)	23.2
Profitability/cash flow	15.2
Broader economic conditions	11.1
Economic uncertainty (change in ability to forecast future conditions)	11.1
Tax/regulatory considerations	8.1
Cost or availability of external finance	6.1
Other	13.1

NOTES: 99 responses. This question was only posed to those expecting higher capital expenditures this year.

3b. What are the primary factors behind the decrease in your capital expenditures this year? Please select up to three.

	June '23
Economic uncertainty (change in ability to forecast future conditions)	59.7
Profitability/cash flow	46.3
Demand for your product or service	31.3
Broader economic conditions	31.3
Cost or availability of external finance	20.9
Capacity utilization (need for more/less space)	13.4
Tax/regulatory considerations	9.0
Updating equipment or technology	4.5
Other	7.5

NOTES: 67 responses. This question was only posed to those expecting lower capital expenditures this year.

Texas Retail Outlook Survey

Data were collected June 13–21, and 61 Texas retailers responded to the survey.

1. What are the primary concerns around your firm’s outlook over the next six months, if any? Please select up to three.

	Sep. '22	Dec. '22	Mar. '23	Jun. '23
Higher cost of credit/interest rates	19.0	40.3	41.3	53.3
Weakening demand/potential recession	39.7	51.6	54.0	48.3
Higher labor costs	39.7	43.5	42.9	45.0
Labor shortages/difficulty hiring	32.8	29.0	28.6	31.7
Supply-chain disruptions	51.7	32.3	27.0	25.0
Elevated input costs/inflation	44.8	35.5	39.7	23.3
Increased taxes and regulation	22.4	19.4	12.7	10.0
Geopolitical uncertainty/Russia-Ukraine war	5.2	12.9	9.5	6.7
Other	5.2	3.2	6.3	0.0
None	1.7	3.2	3.2	3.3

NOTES: 60 responses.

2. What is your assessment of your firm’s current employment situation in light of your six-month outlook?

	Oct. '22 (percent)	Jan. '23 (percent)	Jun. '23 (percent)
We are understaffed and looking to hire for new positions	31.8	24.3	26.7
We are understaffed and looking to hire for replacement only	19.7	24.3	18.3
We are understaffed but opting not to hire at this time	9.1	11.4	8.3
We are at our ideal staffing level	22.7	31.4	33.3
We are overstaffed but opting not to lay off workers at this time	7.6	8.6	13.3
We are overstaffed and laying off workers	3.0	0.0	0.0
Other	6.1	0.0	0.0

NOTE: 60 responses.

3. What are your firm's expectations for capital expenditures in 2023 compared to last year?

	Jun. '23
Significantly higher	10.0
Slightly higher	30.0
No change	33.3
Slightly lower	20.0
Significantly lower	6.7

NOTE: 60 responses.

3a. What are the primary factors behind the increase in your capital expenditures this year? Please select up to three.

	June '23
Demand for your product or service	41.7
Updating equipment or technology	41.7
Capacity utilization (need for more/less space)	37.5
Profitability/cash flow	16.7
Cost or availability of external finance	12.5
Tax/regulatory considerations	12.5
Economic uncertainty (change in ability to forecast future conditions)	8.3
Broader economic conditions	0.0
Other	12.5

NOTES: 24 responses. This question was only posed to those expecting higher capital expenditures this year.

3b. What are the primary factors behind the decrease in your capital expenditures this year? Please select up to three.

	June '23
Economic uncertainty (change in ability to forecast future conditions)	50.0
Demand for your product or service	37.5
Broader economic conditions	31.3
Profitability/cash flow	25.0
Capacity utilization (need for more/less space)	18.8
Updating equipment or technology	12.5
Cost or availability of external finance	6.3
Tax/regulatory considerations	0.0
Other	6.3

NOTES: 16 responses. This question was only posed to those expecting lower capital expenditures this year.

Special Questions Comments

These comments have been edited for publication.

Texas Manufacturing Outlook Survey

Chemical manufacturing

We are concerned with ongoing tensions with China and the potential dire effects to supply chains at a time when global business activity is slowing.

Computer and electronic product manufacturing

Interest rates are making a huge dent in industrial production, especially the capital equipment industry.

Food manufacturing

We are pulling back on capital expenditures until we see how things progress on the demand side.

Machinery manufacturing

We’ve taken the opportunity in the current market to terminate some underperformers that we probably would keep in a stronger market. Some have been with us for several years and have either just grown seemingly complacent or just settled into a routine that doesn't merit retaining their service. We are not officially having a layoff. The terminations have been more surgical than across the board.

Texas Service Sector Outlook Survey

Administrative and support services

To remain competitive, we are faced with a constant need to upgrade and enhance technology.
As our facility ages and its uses increase, its maintenance needs also increase.

Texas Retail Outlook Survey

Merchant wholesalers, nondurable goods

We are not sure if higher costs in the United States are adversely affecting our export business to restaurants in Central and South America. Last year, with steep monthly increases in commodities prices, our customers were looking for alternatives. However, some of that business seems to be returning to U.S. brands (beef and chicken).

Motor vehicle and parts dealers

We are still in need [of applicants] for technical positions such as certified mechanical and body techs.

Food services and drinking places

We will move the location of one restaurant which has an aging infrastructure, since it no longer makes sense to renovate.

Questions regarding the Texas Business Outlook Surveys can be addressed to Emily Kerr at emily.kerr@dal.frb.org.