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 feel like economic activity is slowing a little.

• Clarification of OSHA [Occupational Safety and Health Administration] requirements following Supreme Court rulings alleviate uncertainty, even if the federal contractor mandate—which we are subject to—is still on hold subject to Supreme Court review. Although we have made progress on vaccination and documented exemptions, we still have to continue the drive if we need to be compliant with the federal mandate. It would help to have Texas be unified in pushing for vaccination to close that gap.

• Inflation is hitting everything. It creates so much uncertainty about prices.

• Omicron is expected to peak and shift to an endemic phase. Global demand continues to grow.

• 2021 was our best year ever, and 2022 looks very promising.

• We were able to offer COLA [cost of living adjustment] increases to our employees for the new year and are also taking a small PPI [producer price index]-based increase in the prices to our customers. We are expecting the inflationary pressures we've faced for the past six months to stabilize over the next six months and keep our input prices flat.

• Costs for qualified skilled labor and availability as well as support services continue to increase significantly. The hope is that pricing power will be able to cover most of these increases, but that is still to be determined.

• Wage pressure and availability of workforce is a concern for both our company and our customers.
• Our clients are becoming somewhat cautious with high inflation and expected interest rate increases. [There is] hesitation on capital spending.
• We have been around too long to be "uncertain." We are very concerned about the effect of inflation on our staff. As the Federal Reserve should know, 80 percent of economics is psychological—rising or falling expectations. In this environment, rising expectations are not possible except in the government and government-funded nonprofits.
• The driving factor in the business activity slowing down is the uncertainty of more contentious regulations and the impact of the current pandemic. This round of COVID has certainly affected our normal workforce as with many businesses.

• Sales volume is low. Employees are leaving for so-called better wages. It is hard to hire any kind of replacements with skills. It is a tough market and also [there are] tough production problems (employees), and raw materials and supply prices continue to increase significantly.
• Labor market remains tight. Supply-chain issues persist.
• Interest rates and inflation are quickly becoming the topic of conversation. I don't think many are surprised, so I suspect the markets will calm down as uncertainty wanes.
• We are watching the personal savings rate to see if consumption is under pressure and, hence, [we see] a slowdown in hiring.

• COVID is placing a number of industries at financial risk including but not limited to travel, hospitality and tourism.
• There is a big uptick in employee positive COVID tests.

• [There is a] shortage of inventory.
• We are seeing continued strong demand for space and improved occupancy; however, pricing pressures on construction and renovations continue to slow or prevent some deals from happening.
• The Federal Reserve's plan to raise interest rates is anticipated to negatively impact the value of income properties and developable land.

• Heavy equipment and material handling equipment is basically on allocation from our manufacturers although they do not use that term. If they can even get the equipment made, they cannot get it across the ocean. Example: I need 1,200 construction equipment units for 2022, plus I need to replenish my badly depleted rental fleet we have sold out of for the past two years by 400 units. My estimated units is 991 for 2022. Transitory inflation was B.S. from the day that term was first used, and every businessman in the world knew it. Inflation and the Fed [Federal Reserve] increases will kill the economy this year or the next. I'm betting on this year.

• [There has been] increased productivity disruptions and staff absences due to COVID-19 infections. In January, COVID has impacted over 30 percent of our staff—either the employee was infected or a member of their household was infected or they were exposed by close contact to someone who later tested positive. 
• Omicron has put a damper on trials going into January but it has only pushed them out (not canceled). We expect spring to be unbelievably busy based on court schedules. 
• The real estate market has remained strong in spite of the inflation numbers and the increase in the 10-year rate. We feel at some point this will slow the growth of the market but will not kill it. There is still a lot of money chasing deals and even with the rise of the 10-year, it is still cheap money. If inflation settles down once the supply chain gets back to normal, we could be in for another great run. 
• Inflation is impacting business. All prices for supplies, etc., are higher. I hope prices will stop going up.
• Clients have new and improved annual budgets in January and have started allowing contracts. 
• Supply-chain constraints are a major issue for us. [There were] over $11 million in orders we couldn’t fulfill as of the end of December
• COVID-related supply and staffing shortages are still causing sales delays and adding cost.

• If Russia invades Ukraine, that could change things, but trends appear to be continuing to improve, and clients across the board are reflecting improving market conditions. Rising interest rates are not an issue as most clients have strong liquidity.
• Historically high inflation is causing great uncertainty around transaction activity outside of a few key sectors.
• We are a travel service provider for the Department of Defense, and our contracts have been very active in the last month.
• Labor shortage continues to be the primary concern for our clients and our own business. Clients have started to broaden the requirements for candidates they want to hire. For instance, originally they wanted industry experience, now they no longer require industry experience, or they originally required five years’ work experience and now are considering recent college graduates. 

• I think the Federal Reserve did not support its dual mandate of stable prices and stable employment. Monetary policy has caused a mess.

• [We are] seeing temporary challenges in terms of coverage related to the COVID omicron variant. Overall, business for January is better than historic volumes. [There is] incredible pressure on salaries and wages with severe hiring challenges. Basically, we have to give in or lose an employee. Since we are a deflationary business, this will adversely affect margins and profitability.
• The health care sector continues to struggle with a severe shortage in the nursing area that is evident in the hospitals. In a physician's office, a significant number of subspecialists have "retired" during the present pandemic/endemic. HR cost is the single biggest expense (65 percent) of the total expenses for home health and hospice services. Therefore, the labor shortage is a critical touch point for health care service providers.
• Private practice in health care is increasingly stressed: Relentless increase in COVID expenses, increased wages, increased long COVID, increased lost days due to exposure, decreased efficiency and early retirements are compounded by decreases in Medicare reimbursement.
• Omicron has resulted in diminished consumer visits, resulting in lower revenue. Our hope is that things will normalize and stabilize over the next several months.

• Labor and supply costs are exploding, with little clarity regarding future relief.

• We have seen an increase in sickness and [employee] time not at work.

• Omicron has resulted in group and individual traveler cancellations as far into the future as June. Staffing is being challenged by the high number of employees either testing positive or being quarantined. 
• Omicron has been identified as the cause of some recent groups’ [cancellations]. At the moment, omicron looks like a very near-term issue, but first quarter will be off from budget. We are still anticipating the remainder of the year to be better than last year. Inflation is causing higher prices for textiles and guest supplies. Ultimately, cost will be passed on to consumers.

• Until we are back to work and business travel resumes, we are stuck.
• We are experiencing shortages, price gouging and lack of qualified employees.

• Unfortunately, we have been dealing with the impacts of omicron. We were already short staffed and are now dealing with employees getting omicron and having to miss work for a week and a half to two weeks while recovering.

• In some respects, it is difficult to plan activities and events, either because COVID is requiring we change or because partners in other locations are still adjusting/have not returned to prepandemic ways of operating.

• The latest omicron strain has increased uncertainty in how quickly businesses are opening.

• Omicron has thrown us all for another loop. The supply-chain issues are not being resolved, and container shortages (for outbound shipment) are still tight, as in congestion in receiving parts. This does not seem to be something that will resolve in 2022. While parts are hard to come by, staffed shops are also. While they were short staffed for the last two years, now they have seemingly everyone out sick. This seems to be temporary. I tried to order new equipment, and trucks and arrivals are eight-to-12-plus months [out]. This will drive inflation and stifle productivity.
• My outlook on revenues is projected to increase as we are planning to hire more, but I am not optimistic about the gross increasing.

• We have been dealing with supply-chain (trucking) issues since early 2021. My outlook has not changed (it's still very pessimistic), and I don't see it moderating anytime soon. I thought the surge in third-quarter/fourth-quarter demand would slacken in first quarter 2022, and the West Coast ports (LA–Long Beach) would start to catch up. Instead, it looks like the situation will persist. As ships are unloaded, the demand for trucking is so high, and the international carriers are willing to pay a premium to get their goods off-loaded; it's putting extreme pressure on the rest of the United States’ trucking capacity (and driving up trucking costs).

• Inventories remain short.
• COVID is having an effect on business and employees being absent.

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.