February 1, 2022
Texas service sector growth slows sharply in January
What’s new this month
For this month’s survey, additional questions were asked of Texas business leaders about the impact of COVID-19 and 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.
This month’s data release also includes annual revisions to seasonal factors. Once a year, the Federal Reserve Bank of Dallas revises historical data from the Texas Service Sector Outlook Survey after calculating new seasonal adjustment factors. The annual seasonal revisions lead to slight changes in the seasonally adjusted series. Learn more about seasonal adjustment.
The Texas service sector slowed significantly in January, according to business executives who responded to the Texas Service Sector Outlook Survey. The earnings index, a key measure of conditions in the utilities sector, fell from 20.4 in December to 2.8 in January.
Labor market indicators suggest a continued increase in hiring and hours worked, albeit at a somewhat slower pace. The employment index fell from 10.7 in December to 9.2, while the part-time employment index weakened by three points to 3.2. The hours worked index slipped from 10.0 to 7.4.
Perceptions of general business conditions plateaued in January. The general activity index plunged from 14.2 to 0.6, while the business outlook index fell from 14.0 to -0.4. Uncertainty rose more sharply, with the outlook uncertainty index rising from 10.4 to 19.7.
Wages and prices continued to climb in January, and the indices reached or nearly reached historically high levels. The wage and benefits index hit a new record high of 37.4. The selling price index rose from 28.3 to 29.7, while the intermediate consumption price index rose from 49.1 to 50.4.
Respondents’ expectations for future business activity continued to reflect optimism. The future general business activity index fell five points to 16.7 but remained above its series average, while the future income index remained stable at 53.4. Other indices of future service-sector activity, such as employment and capital spending, declined but remained firmly positive.
February 1, 2022
Texas retail sales down in January
January Retail sales activity fell notably from December, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, plunged 20 points to -8.1 in January, its weakest reading in three months. Businesses saw a sharp drop in inventories, reversing the previous month’s rise as the index fell from 15.8 to -10.0.
Retail labor market indicators were mixed in January. The employment index remained positive but fell slightly from 7.5 to 6.0, while the part-time employment index fell from 8.3 to 1.6. The hours worked index fell from 5.1 to -0.3.
Retailers’ perceptions of general trading conditions turned negative in January. The general business activity index fell 14 points to -7.2, while the business outlook index plunged nearly 27 points to -10.6, its lowest level since May 2020. Uncertainty about the outlook has increased, with the related index rising from 2.4 to 24.0.
Pressures on retail prices and wages eased somewhat in January, although the indices remained high. The selling price index slipped from 46.5 to 43.9, while the input price index remained roughly stable at 45.2. The wages and benefits index fell five points to 37.1.
Despite deteriorating current conditions, expectations for future retail activity remained optimistic. The future general business activity index fell from 10.9 to 4.2, while the future sales index remained stable at 44.5. Other indices of future retail activity were mixed but remained positive, suggesting continued strength in the first 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: March 1, 2022
The data was collected from Jan. 18-26, and 281 Texas service industry executives, 46 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 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.