Service sector

Texas service sector growth strengthens in June

June 28, 2022

Texas service sector growth strengthens in June

What’s new this month

For this month’s survey, Texas business executives answered additional questions about wages, prices and income restrictions. 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 picked up slightly in June, according to business executives who responded to the Texas Service Sector Outlook Survey. The revenue index, a key measure of conditions in the utilities sector, rose from 6.3 in May to 9.4 in June, with the share of businesses reporting an increase in revenue rising to 31%.

Labor market indicators continued to suggest steady growth in employment and hours worked compared to May. The employment index remained roughly unchanged at 7.6, although the part-time employment index fell one point to 1.9, its lowest level since the start of 2021 The hours worked index held steady at 4.9, with about 10 percent of companies increasing employee hours compared to 5 percent cutting hours.

Perceptions of general business conditions plunged in June as companies noted an increase in uncertainty about the outlook. The general business activity index plunged from 1.5 to -12.4, with the share of businesses noting a deterioration in activity falling from 20% to 27%. The Business Outlook Index also fell into negative territory at -14.7, its worst reading since July 2020. The Outlook Uncertainty Index jumped 16 points to 41.2, approaching its all time high. during the initial outbreak of COVID in April 2020.

Price and wage pressures remained close to record levels in June. The selling price index fell three points to 29.4, while the intermediate consumption price index rose two points to 55.8. The wages and benefits index remained roughly flat at 34.6, although nearly 40% of companies noted higher wages compared to May.

Respondents’ expectations for future business activity weakened further in June. The future general business activity index fell deep into negative territory at -24.0, while the future income index fell nearly 17 points to 19.0. Other future indices of service sector activity, such as employment and capital spending, declined, pointing to weaker growth in the second half of the year.

June 28, 2022

Retail sales deteriorate in Texas in June

June 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, remained roughly unchanged at -11.0 in June. Retail inventories remained virtually flat for a third consecutive month, with the inventory index posting a reading close to zero.

Retail trade labor market indicators weakened in June. The employment index dipped into negative territory for the first time since July 2021, falling four points to -3.3, while the part-time employment index dipped eight points to -8 ,1. The hours worked index also fell eight points to -6.1, its lowest reading in a year.

Retailers’ perceptions of general trading conditions have turned markedly pessimistic this month compared to May. The general activity index lost 22 points to -25.2, while the business outlook index fell from -4.1 to -22.2; just 12% of retailers noted an improving outlook, compared to 35% expecting conditions to worsen. The outlook uncertainty index jumped to 42.3, its highest level since March 2020.

Pressures on retail prices and wages remained very high in June. The selling price index fell five points to 37.1, although a majority of businesses continued to note that they had raised their selling prices over the past month. The intermediate consumption price index remained stable at 49.9, while the wage and benefits index was also stable at 30.4.

Expectations for future retail growth deteriorated significantly in June. The future general business activity index fell 23 points to -26.8, while the future sales index fell 17 points to 0.9. Other indices of future retail activity also declined, suggesting lower growth expectations for the rest 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 sectors.

Next release: July 26, 2022

The data was collected from June 14-22, and 284 Texas service industry executives, 55 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 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.