Texas Service Sector Outlook Survey

Historical data are available from January 2007 to the most current release month.

Historical data are available from January 2007 to the most current release month.

*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.

**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.

†Added to survey in January 2018.

Data have been seasonally adjusted as necessary, with the exception of the outlook uncertainty index which does not yet have a sufficiently long time series to test for seasonality.

Texas Service Sector Outlook Survey

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Texas Retail Outlook Survey

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Texas Service Sector Outlook Survey

Comments from Survey Respondents

These comments are from respondents’ completed surveys and have been edited for publication.

• I believe that we are in a temporary lull and things will pick up in the fourth quarter.

• Supply-chain issues are disrupting revenue.

• As players in the global supply chain, the global equipment imbalances and congestion at ports and terminals have a chokehold on our ability to generate revenue. If we are not moving, we are not generating revenue. We are not able to remain moving consistently due to global supply-chain issues, although the demand is at a peak.

• The continued rise in COVID cases in Texas seems almost certain at some point to reduce our customers’ ability to provide product, and further worldwide demand reduction will limit the need, so our uncertainty has increased over what had previously looked like a very healthy economic recovery. As far as input prices, while the general view seems to be that inflation is going to be transitory, we don't expect it to moderate in the near term (next six months).

• In-person meetings as a practical alternative have faded again with the Delta variant. That limits in-person closing leverage on orders and puts budgets more at risk of delay. In addition, supply-chain issues and the inability to hire qualified workers at affordable costs has everyone more conservative in making decisions.

• Inflation, increase in the cost to provide services and the lack of talented workers are the top concerns of the company right now.

• With the end of the CARES (Coronavirus Aid, Relief and Economic Security) Act, Paycheck Protection Program revenue will normalize. Business activity had increased, but the effect of COVID is starting to have an impact on some business activity. The supply chain for many items continues to create some issues with purchasing items.
• A continued tight labor market and wage increase pressures are negatively impacting profit margins.
• Regulations are increasing, interpretation of regulations is changing, and inflation is continuing to increase. All these factors decrease businesses’ ability to conduct profitable business.

• [We face] increases in costs of making tenant improvements to commercial lease spaces without the ability to pass these costs through in the form of higher rental rates.
• The labor situation is critical. We cannot grow anymore without additional labor force.
• Issues around capital gains taxes are creating a lot of uncertainty and action. I'm getting a lot of calls from sellers of small businesses.
• As a financial services company, we are impacted by, and closely monitor, economic and investment market changes.
• The tight labor market is the top problem, but future tax increases are moving up as a major concern.

• We are still worried about the pandemic's effect on the economy, mostly driven by the "unvaccinated."

• The continuing focus on COVID and the Delta variant I view as dampening optimism for the future. I believe any pending legislation on this issue will just divert attention from the infrastructure bill that would be a huge boon for the economy and for consumer sentiment that drives so much of our retail economy.
• Our sales are better than last year, but the inventory continues to be tight. Prices for high-end properties continue to go up, causing concern from my agents.

• Obviously, as is everyone's No. 1 issue, we cannot get product to sell; we are ordering for 2023 right now! Our No. 2 issue is we cannot find anyone to work. Thanks to the government subsidies, people have saved money and maybe paid off all their credit card debt. They are living off their cash, credit and whatever our government [keeps] paying them not to work. Until they exhaust that pool, this generation isn't interested in going back to work. It is going to be a be a rude awakening when they decide they do need a job.

• [Gov. Greg Abbott] has signed laws/executive orders (abortion, "constitutional" carry of handguns and "no-mask mandates") that will work against companies doing business with Texas companies and any that are considering opening a business in Texas.
• The business climate is not improving as we expected. Things are getting worse it seems. We increased software support prices for the first time in 12 years to get more revenue from existing and new customers.
• Working in person continues to present challenges due to the Delta variant (and possible new variants) and a desire by many employees to continue working remotely more because of convenience than health concerns. Employers will soon have to adopt policies that may well represent an office environment with a substantial remote-working component. This in turn will have serious repercussions to providers of goods and services to those businesses.
• Some uncertainty is creeping in although we are trying to remain optimistic for now. We will continue to monitor demand closely as the year progresses. August was slightly slower when we would have liked, but [activity] evened out in September. Now all eyes are on the fourth quarter and how year-end shapes up.
• The residential and commercial real estate markets are on fire! The commercial market is being fueled by low interest rates and the fear of what the capital gains rate will be next year. The residential market is being fueled by lack of supply and low interest rates as well. The first quarter of next year will give us a good indication of where the real estate market is going to land, but we feel confident that it will remain robust.
• We are an automotive Tier 2 company. The chip shortage crisis has hit us hard. This is the fifth week that we are down because of low volumes.
• We continue to struggle with entry-level labor. Despite all efforts, we have been unable to reach full staffing levels since last fall.
• COVID is still wreaking uncertainty on the courts, although they have been able to pivot more with the proficiency of Zoom proceedings, allowing more trials and business to move forward. In-person proceedings are hit and miss (about 25 percent go forward).

• The current White House administration and related impact on personal and corporate income taxes is creating major uncertainty and has definitely negatively impacted future hiring.
• We need to get people back to work to cure the supply chain. We are now having problems hiring people because of all the government money that has been sent to them.
• With 2022 proposed income taxes and removal of or edits to the 1031 [tax-advantaged real estate] exchange, prices should come down on investment grade assets, which is a lot of what we do.

• Seeing continued strengthening in clients’ financial performance. PPP [Paycheck Protection Program] forgiveness is adding additional capital to the equation and serving as an added stimulus. Clients have more discretionary capital.
• We are very concerned about the labor market. We are very concerned with the out-of-control spending by Congress. The bills before Congress are insane and will destroy the economy and likely the country. Especially new taxes! We are concerned about illegal immigration. If these people are here, why are they not working? Or in the labor pool? It's getting out of control.
• The demand for labor is fueling our growth; however, the shortage of labor is hampering our ability to grow. Finding new candidate engagement and sourcing tools to spark conversations with passive candidates thinking about a job change is more important than ever. We are adding automation tools that use AI [artificial intelligence] to provide front-end interactions with potential candidates in an effort to strengthen our pool of candidates and allow our recruiters to focus more on the personal conversations with professionals.

• Filling positions with people who want to work, who show up and who are committed to staying with the company is challenging. The turnover of new employees is extremely high. If new hires don't follow best practices and violate company policies, your choice is to let them go and slog through the challenging hiring process, or keep someone that fills an opening on assembly line.

• We are seeing more positive COVID cases as students return, which is worrying, but we are hopeful that it is near the peak and will begin to decrease.

• We hadn't been hit by employee turnover during/after the COVID outbreak but had our first case of "poaching" by another dental practice this month and are experiencing the shortage of available replacements for a high-skill position.
• Monthly economics limerick: Brilliant work due to Federal Reserve expertise; purchase/sell/raise rates/or continue with ease? eco[nomic] growth can be strong; due to issues of COVID long; stop the nonsense with the fed gov [federal government], if you please.
• The world is on fire; lots of anxiety among patients and employees. The vaccine mandate recently proclaimed by President Biden is a challenge; I have two physician members and about 30 employees who will not accept the vaccine. Most have had COVID previously and/or are very young and afraid of potential risks. One of our young employees, a 23-year-old female, experienced unstable ventricular tachycardia necessitating a 9-1-1 call a day after the second vaccination; lab tests demonstrated massive clotting. She has fully recovered. I hope that a combination of natural immunity, vaccination or regular testing is eventually accepted. (Green Pass in Israel uses these criteria.)

• The Delta variant is impacting hospitality.
• Unfortunately, we were seeing cancellation of group business in Q4 2021 and Q1 2022, primarily due to the Delta variant of COVID. Groups are getting very low responses from potential attendees. In the last week, the new legislation regarding abortion and restricted voting rights have been a topic of discussion with groups. (As of this date, no group has canceled citing this reason.) With the LGBTQ [lesbian, gay, bisexual, transgender and questioning and/or queer] question regarding participation in athletics, this will be a third divisive issue customers will want to discuss. Hopefully, the positivity rates will start to decrease, and we will see groups move forward with their plans. From a leisure perspective, with schools back in session, demand has dropped. [There are] No signs of business travel.

• While we still believe and hope that this inflation/lack of labor is a temporary dislocation, the longer it persists, the stickier it will become. Governments need to reduce barriers to full employment, including losing these vaccine mandates and unemployment benefits. Additionally, unfriendly tax policies being discussed will reduce future capital spending and investment.
• Uncertainty with the Delta variant, crazy price increases, shortages, supply-chain issues for deliveries and shortages of employees make for an awful work environment. Customers don’t understand what is happening.
• Huge cancellations and slowed business—COVID, COVID, COVID. Giant supply-chain issues—COGS [cost of goods sold] are high if we can even find items.
• Delta's effect on business travel and meetings continues to be a drag on our business. Hiring employees is improving somewhat, but we're still far below our need and continue to turn away business because we can't fully staff.
• The actions of the government are becoming worrisome for business owners and causing uncertainty.

• [We are experiencing] supply-chain issues.

• The U.S. should seriously consider biotechnology as a solution to controlling COVID-19.

• Our increase in revenue in September versus August is related to the use of our products for clean-up efforts related to Hurricane Ida. Our outlook six months from now has worsened as the political agenda to frivolously spend and increase taxes has me concerned about my ability to continue to invest in growth at the pace we have been investing.
• We have to stop spending to get out of this. Right now, we should just take the hit so we can start to recover.
• We have finally seemed to have found the balance between hiring/wages; however, we are still close to 10 percent off [from] being fully staffed. On hiring/staffing, this is the best outlook we have had in close to two years. Transportation is the main limiting factor we face in output. Product is available to ship but both road and rail are the pinch point. This is the worst transportation shortage we have ever experienced. We do not expect there to be any immediate solution. We see this as a great threat to our economy in general. Action needs to be taken.

• As long as COVID is front-page news, it will generate uncertainty in the restaurant business. Ironically, if the first round of vaccine doesn't work to the degree it was expected, I can't imagine a booster of the same formula will have a different outcome. That's the definition of insanity.
• Supply-chain issues are hurting our business.
• Most of our business activity is steady to a little better, but sales per transaction have increased by almost 10 percent. Also traffic patterns have changed as more people are out and about.

• Low inventory due to the chip shortage continues to limit our sales volume. Demand is good, but supply is inadequate.
• We are seeing "consumer pushback" on the high cost of new and used vehicles.
• [We are seeing] supply-chain and continued COVID issues.
• Lack of inventory and parts have hampered sales.
• Microchip and other supply-chain issues have severely impacted the automobile business. New-car inventories are less than 15 days’ supply currently, with little optimism for near-term improvement.

Historical Data

Historical data can be downloaded dating back to January 2007.

Indexes

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All Data

Download indexes and components of the indexes (percentage of respondents reporting increase, decrease, or no change). For the definitions of all variables, see Data Definitions.