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Texas Service Sector Outlook Survey

About the Texas Service Sector Outlook Survey

The Texas Service Sector Outlook Survey (TSSOS) is a monthly survey of area service sector businesses. Firm executives report on how business conditions have changed for a number of indicators such as revenue, employment, prices and company outlook. Respondents are also asked to report on how they perceive broader economic conditions to have changed (general business activity). For all questions, participants are asked whether the indicator has increased, decreased or remained unchanged. Answers cover changes over the previous month and expectations for activity six months into the future. Participants are given the opportunity to submit comments on current issues that may be affecting their business.

About 230 service-providing firms regularly participate in TSSOS, which began collecting data in January 2007. Respondents are broadly representative of service-producing industries in the private sector. TSSOS includes a breakout for respondents in the retail and wholesale sectors, called the Texas Retail Outlook Survey (TROS). TSSOS questionnaires are electronically transmitted to respondents in the middle of each month, and answers are collected over seven business days. TROS respondents receive a slightly different questionnaire, but the survey period and processing is the same.

Survey responses are used to calculate an index for each indicator. Each index is calculated by subtracting the percentage of respondents reporting a decrease from the percentage reporting an increase. When the share of firms reporting an increase exceeds the share of firms reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month. If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month. An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease. Indexes are seasonally adjusted as needed.

Importance of the Survey

The service sector makes up the bulk of the Texas economy, accounting for 73 percent of private-sector activity and employing over 12 million workers. Retailers and wholesalers make up 15 percent of Texas output and account for 2.1 million jobs. Despite the service sector's prominence, there are few timely measures of changes in service sector activity at the state level. TSSOS fills this regional data gap. TSSOS and its retail component, TROS, are highly correlated with monthly changes in regional economic indicators such as private service sector employment, retail employment and retail sales (see related article below).

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