July 26, 2022
Texas service sector growth held steady in July
What’s new this month
For this month’s survey, Texas business leaders answered additional questions about labor market conditions. 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 service sector increased moderately in July, according to business executives who responded to the Texas Service Sector Outlook Survey. The earnings index, a key gauge of conditions in the utilities sector, remained roughly unchanged at 9.5 in July, and the share of companies reporting rising earnings was 31%.
Labor market indicators have been positive, with accelerating job growth and a continued increase in hours worked. The employment index jumped seven points to 14.5, with nearly a quarter of respondents noting an increase in payrolls from June. The part-time employment index remained stable at 1.6, while the hours worked index remained unchanged at 5.0.
Perceptions of general business conditions remained negative in July, although they were somewhat less pessimistic than in June. The general business activity index fell from -12.4 to -10.9, while the business outlook index improved from -14.7 to -5.2; the share of companies reporting a deteriorating outlook fell from 27% to 19%. The outlook uncertainty index fell sharply from 41.2 to 22.3.
Pressures on prices and wages eased slightly in July, although the corresponding indices remain well above historical averages. The selling price index fell four points to 25.7, while the input price index fell six points to 49.9. The pay and benefits index fell more than six points to 28.0, as the share of respondents reporting pay increases fell from 37% to 31%.
Respondents’ expectations for future business activity were mixed in July, with some indicators pointing to more optimism. The future general activity index improves by more than 16 points but remains in negative territory at -7.5. The future earnings index rebounded from 19.0 to 35.3, with more than half of respondents expecting higher earnings in six months. Other future activity indices in the service sector, such as employment and capital spending, have picked up, suggesting some recovery in growth expectations for the rest of the year.
July 26, 2022
Texas retail sales decline accelerates in July
July Retail sales activity continued to decline, according to business executives who responded to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, dipped eight points to -19.4, its weakest reading since July 2020. Retail inventories rose for the first time since the end of 2021, with the stocks index rising from a near-zero reading to 13.2.
Retail labor market indicators were mixed in July. The employment index rebounded from negative territory to 5.4, while the part-time employment index rose seven points to -1.1. The hours worked index fell from -6.1 to 0.3, suggesting little net change in the average number of hours worked by employees.
Retailers’ perceptions of general business conditions remained negative in July. The general business activity index rose by almost three points but remained negative at -22.6, while the business outlook index recovered from -22.2 to -16.5. The outlook uncertainty index fell to a three-month low of 14.2.
Pressures on retail prices and wages eased in July. The selling price index fell five points to 31.9, while the input price index plunged 10 points to 39.7, its lowest level in more than a year. The wages and benefits index fell from 30.4 to 19.2, with just over a quarter of companies noting an increase in labor compensation costs this month, compared to almost 40% of companies in June.
Expectations for future retail growth were mixed in July. The future general activity index picked up more than 10 points but remained negative at -16.3, while the future sales index rebounded somewhat, rising from 0.9 to 17.6. Other indices of future retail activity were mostly positive, pointing to a recovery in growth over the next six months from the slow pace seen recently.
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: August 30, 2022
The data was collected July 12-20, and 287 Texas service industry executives, 58 of whom were retailers, completed the survey. The Dallas Fed conducts a monthly Texas Service Sector Outlook Survey to obtain 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 compared to the previous month. If the share of companies reporting a decline exceeds the share reporting an increase, the index will be below zero, suggesting that the indicator has fallen from 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.