June 1, 2022
Texas service sector growth weakens further in May
What’s new this month
For this month’s survey, additional questions were asked of Texas business leaders about supply chain disruptions and costs. 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 slowed in May, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of conditions in the utilities sector, fell from 11.2 in April to 6.3 in May, with the share of companies reporting a drop in revenue falling from 18.5% to 21%. .
Labor market indicators have moderated, with growth in employment and hours worked declining from April. The employment index fell from 14.5 to 8.1, its lowest level since February 2021, while the part-time employment index remained unchanged at 3.0. The hours worked index fell three points to 5.6, tied with a September 2021 low.
Perceptions of general business conditions remained largely unchanged in May, although uncertainty rose sharply. The general business activity index fell from 8.2 to 1.5, a reading indicating almost no net change, as the 20% share of businesses noting a deterioration in business activity nearly matched the share reporting improvement in activity. The business outlook index fell from 2.4 to 0.9, while the outlook uncertainty index jumped six points to 25.2, its highest level since July 2020.
Price pressures remained near record highs in May, while wage growth picked up slightly. The selling price index fell one point to 32.6, with 36% of respondents noting monthly price increases, while the input price index remained unchanged at 53.5. The wages and benefits index added two points to 35.0, slightly below a record high of 37.4 in January 2022.
Respondents’ expectations for future business activity were significantly less optimistic than in April. The future general business activity index fell into negative territory at -3.9, its first negative reading in nearly two years, and the future earnings index fell nearly 12 points to 35.5. Other future service sector activity indices, such as employment and capital spending, remained in positive territory, suggesting expectations of continued growth in the second half of the year.
June 1, 2022
Texas retail sales continue to decline in May
May Retail sales activity continued to deteriorate, according to business executives who responded to the Texas Retail Outlook survey. The sales index, a key measure of state retail activity, weakened four points to -11.9 in May. Retail inventories were roughly flat, with the inventory index holding steady at -1.3.
Retail trade labor market indicators plateaued in May. The employment index fell more than eight points to 0.8, suggesting no net change in jobs, while the part-time employment index also fell to a neutral reading. of 0.2. The hours worked index slipped one point to 1.4, suggesting little net change in hours worked for retail employees.
Retailers’ perceptions of general trading conditions were negative compared to April. The general business activity index lost almost five points to -3.2, while the business outlook index remained in negative territory at -4.1. The outlook uncertainty index rose from 14.6 to 18.2, with 32% of respondents noting greater uncertainty.
Pressures on retail prices and wages eased, but remained at historically high levels in May. The selling price index fell 12 points to 42.5, while the input price index fell five points to 50.1. The wages and benefits index fell three points to 31.1, although 36% of respondents still reported an increase in labor compensation during the month, compared to only 5% reporting a decrease.
With a third straight month of declining retail activity, expectations for future growth have continued to ease. The future general business activity index fell two points to -3.5 – its worst reading in nearly two years – while the future sales index plunged 17 points to 18.3. Other indices of future retail activity remained mostly flat, suggesting expectations of continued growth for the remainder 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 28, 2022
The data was collected from May 17 to 25, and 274 Texas service industry executives, 44 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 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.