August 30, 2022
Texas service sector growth weakens in August
What’s new this month
For this month’s survey, Texas business leaders answered additional questions about supply chain disruptions. 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 grew at a slower pace in August, 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, weakened slightly from 9.5 in July to 7.2 in August, although the share of companies reporting rising revenue remained stable at 31%.
Labor market indicators suggest somewhat slower growth in employment and working hours compared to July. The employment index fell six points to 8.5, while the part-time employment index remained stable at 1.3. The hours worked index fell from 5.0 to 3.1, its lowest level since the start of 2021.
Perceptions of general business conditions remained negative in August, although they were less pessimistic than in July. The general business activity index fell from -10.9 to -5.7, with the share of businesses reporting a deterioration in activity falling from 27% to 20%. The business outlook index improved from -5.2 to -2.4, while the outlook uncertainty index fell two points to 20.1.
Price and wage pressures continued to moderate in August, although the corresponding indices remained well above historical averages. The selling price index rose from 25.7 to 23.5, while the input price index fell five points to 44.9. The salary and benefits index rose from 28.0 to 26.1.
Respondents’ expectations for future business activity were mixed in August. The future general business activity index improved from -7.5 to -0.9, suggesting little net change from July. The Future Earnings Index rose from 35.3 to 40.4, its best reading since April 2022. Other future service sector activity indices such as employment and capital spending remained positive, suggesting continued growth for the rest of the year.
August 30, 2022
Texas retail sales fall at a slower pace in August
August Retail sales activity declined, although at a slower pace than in July, according to business executives who responded to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, jumped 14 points to -5.4. While still indicative of a drop in retail net sales, this reading is the best since March 2022. Retail inventories continued to rise in net worth, although the inventory index fell by 13.2 at 2.5 suggests a significantly reduced rate of increase.
Retail trade labor market indicators reflected somewhat slower job growth and shorter work weeks in August. The employment index remained positive, although slipping from 5.4 to 4.1, while the part-time employment index fell further into negative territory from -1.1 to -4, 4. The hours worked index fell from 0.3 to -3.9, with the share of firms reporting an increase in average hours worked among employees from 10.6% to 7.3%.
Retailers’ perceptions of general business conditions remained negative in August, but were slightly less pessimistic than in July. The general business activity index rose four points to -18.6, while the business outlook index fell from -16.5 to -11.8. The outlook uncertainty index fell from 14.2 to 12.9.
Retail wage pressures eased in August, while pricing pressures were mixed. The selling price index rose slightly by one point to 32.9, while the intermediate consumption price index rose from 39.7 to 38.1. The wages and benefits index fell from 19.2 to 17.7, the lowest share of companies noting an increase in wages since February 2021.
Expectations for future retail growth were mixed in August. The future general business activity index remained negative but rose three points to -13.3, while the future sales index hit a four-month high of 22.1. Other indices of future retail activity were positive but weakened, suggesting growth expectations over the next six months. softened compared to last month.
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: September 27, 2022
The data was collected August 16-24, and 283 Texas service industry executives, 56 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.