April 26, 2022
Texas service sector activity slows in April
What’s new this month
For this month’s survey, additional questions were asked of Texas business executives about labor market conditions and remote work. The results of these questions from the Texas Manufacturing Outlook Survey, the Texas Service Sector Outlook Survey and the Texas Retail Outlook Survey have been published together. Read the results of the special questions.
Activity in the Texas services sector slowed in April, according to business executives responding to the Texas Services Sector Outlook Survey. The Earnings Index, a key measure of conditions in the utilities sector, rose from 23.4 in March to 11.2 in April, with 30% of respondents reporting increases in their monthly earnings, down from 19.0% reporting declines.
Labor market indicators point to sustained growth in hiring and hours worked compared to March. The employment index remained unchanged at 14.5, although the part-time employment index fell from 7.0 to 2.9. The hours worked index remained stable at 9.5.
Perceptions of general business conditions were positive, albeit mixed compared to the start of the year. The general activity index fell from 10.6 to 8.2, while the business outlook index remained at 2.4. Uncertainty remained high, with the outlook uncertainty index dropping slightly from 22.5 to 19.2.
In April, upward pressure on wages and prices continued, although growth in wages and input prices slowed slightly. The wage and benefits index fell from 36.5 to 33.0, still near a record high. The selling price index remained unchanged at 33.7, with 37% of respondents noting monthly price increases, while the input price index fell five points to 54.2.
Respondents’ expectations for future business activity remained positive but have moderated significantly from March. The future general business activity index plunged from 15.4 to 6.5 – its lowest level since mid-2020 – while the future income index fell nine points to 47.0. Other indices of future service sector activity, such as employment and capital spending, have weakened, suggesting somewhat lower growth expectations over the next six months.
April 26, 2022
Texas retail sales weaken in April
April Retail sales activity deteriorated further from March, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, weakened five points to -7.9 in April. Retail inventories stabilized, with the inventory index falling from -8.3 to -0.4.
Retail labor market indicators signaled continued growth in April. The employment index rose seven points to 9.3, while the part-time employment index remained stable at 5.7. The hours worked index slipped two points to 2.5, suggesting a slowing pace of growth in hours worked by retail trade workers.
Retailers’ perceptions of general trading conditions remained somewhat pessimistic compared to March. The general business activity index rose from -9.8 to 1.4, a neutral reading suggesting little net change in perceptions. The Business Outlook Index improved but remained in negative territory at -4.9, with nearly 20% of respondents noting a deteriorating outlook. Uncertainty surrounding the outlook increased further, with the index rising from 7.5 to 14.6.
Pressures on retail prices and wages remained very high in April. The selling price index rose six points to a five-month high of 54.6, while the input price index slipped from 59.7 to 55.3. The pay and benefits index held steady at 34.2, with 37% of respondents noting an increase in labor compensation, compared to just 3% reporting a decrease.
With weaker retail activity in recent months, expectations for the future were somewhat mixed. The future general business activity index weakened from 3.0 to -1.5, while the future sales index fell from 37.9 to 34.9. Other indices of future retail activity also showed mixed moves, suggesting heightened uncertainty surrounding growth in the second half of 2022.
The Texas Retail Outlook Survey is a component of the Texas Services Sector Outlook Survey that uses information only from respondents in the retail and wholesale industries.
Next release: June 1, 2022
The data was collected April 12-20, and 280 Texas service industry executives, 48 of whom were retailers, completed the survey. The Dallas Fed conducts a monthly Texas Service Sector Outlook Survey to get a timely assessment of service sector activity in the state. Businesses are asked whether revenue, employment, prices, general business activity and other indicators rose, fell or were unchanged from the previous month.
The 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 companies reporting an increase exceeds the share reporting a decrease, the index will be above zero, suggesting that the indicator has increased from the previous month. If the share of companies reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting that the indicator has decreased compared to the previous month. An index will equal zero when the number of companies reporting an increase is equal to the number of companies reporting a decrease. Data have been seasonally adjusted where necessary.