Texas Service Sector Activity Flat, Outlooks Worsen

Texas Service Sector Outlook Survey

December 28, 2022

Texas Service Sector Activity Flat, Outlooks Worsen

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on wages, prices and outlook concerns. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey have been released together. Read the special questions results.

Texas service sector activity remained mostly flat in December, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, fell six points to near zero, suggesting little change in revenue from November.

Labor market indicators pointed to continued growth in employment, but at a slower pace than in November, and fewer hours worked in December. The employment index fell from 8.3 to 5.6, while the part-time employment index fell two points to -1.3. The hours worked index contracted from 4.6 to -1.7.

Perceptions of broader business conditions worsened further in December. The general business activity index fell from -11.0 in November to -19.8 in December. The company outlook index also fell, from -4.1 to -9.9, while the outlook uncertainty index remained elevated at 22.0, well above its series average of 13.2.

Growth in input prices and wages moderated in December, while growth in selling prices picked up slightly. The input prices index edged down from 46.2 to 43.3, while the wages and benefits index fell five points to 20.5, the lowest level since March 2021. The selling prices index increased from 17.6 to 20.1.

Respondents’ expectations regarding future business activity were mixed in December. The future general business activity index fell five points to -11.7. The future revenue index remained positive but dropped two points to 33.3. Other future service sector activity indexes such as employment and capital expenditures also decreased, suggesting waning optimism for growth next year.


Texas Retail Outlook Survey

Texas Retail Outlook Survey

December 28, 2022

Texas Retail Sales Continue to Decline

Retail sales continued to weaken in December, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, was little changed at -12.3—a 10th consecutive month in negative territory. Retailers’ inventories continued to increase but at a slower pace than in November, with the index falling from 15.7 to 13.5.

Retail labor market indicators reflected mostly steady employment and shorter workweeks in December. The employment index increased from -4.6 to -0.5, suggesting near-zero growth in employment. The part-time employment index was largely unchanged at -4.9. The hours worked index fell 12 points to -10.7, with the share of firms reporting an increase in employees’ average hours worked dropping from 15.2 percent to 3.9.

Retailers’ perceptions of broader business conditions continued to worsen in December as both the general business activity and company outlook indexes remained deep in negative territory. The general business activity index fell 11 points to -33.0, while the company outlook index edged down to -13.5. The outlook uncertainty index fell 10 points from 27.7 to 17.6.

Growth in selling prices and wages picked up in December, while growth in input prices moderated. The selling prices index rose three points to 16.7. The wages and benefits index jumped eight points from 10.9 to 18.9, while the input prices index decreased five points to 33.8.

Expectations for future retail growth were mixed in December. The future general business activity index decreased from -17.6 to -27.7, while the future sales index improved slightly to 10.0. Other indexes of future retail activity such as employment and capital expenditures also provided mixed signals, with the future employment index turning negative for the first time since April 2020 and the capital expenditures index remaining positive.

The Texas Retail Outlook Survey is a component of the Texas Service Sector Outlook Survey that uses information only from respondents in the retail and wholesale sectors.

Next release: January 31, 2023

Data were collected December 13–21, and 317 Texas service sector business executives, of which 68 were retailers, responded to the survey. The Dallas Fed conducts the Texas Service Sector Outlook Survey monthly to obtain a timely assessment of the state’s service sector activity. Firms are asked whether revenue, employment, prices, general business activity and other indicators increased, decreased or remained unchanged over the previous month.

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 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. Data have been seasonally adjusted as necessary.