Federal bank releases new Texas business survey data

The Federal Reserve Bank of Dallas announced that for this month’s survey, Texas business executives were asked supplemental questions on wages, prices and costs. The results for these questions are from the Texas Manufacturing Outlook Survey, the Texas Service Sector Outlook Survey and the Texas Retail Outlook Survey.

According to the survey, growth in Texas service sector activity continued in May, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, was unchanged at 6.9, suggesting activity grew at the same rate as the previous month.

Labor market indicators pointed to continued employment growth and a slight decline in part-time employment and workweeks. The employment index edged down one point to 4.2, indicating a slight moderation in employment growth in May. The parttime employment index rose three points to -1.0, while the hours worked index fell from -0.3 to -1.4.

Perceptions of broader business conditions continued to worsen in May. The general business activity index remained negative and fell three points to -17.3. The company outlook index remained the same at -9.5, while the outlook uncertainty index was flat at 15.8—close to its series average of 13.6.

Price and wage pressures eased in May. The input prices index ticked down from 35.5 to 31.8, and the selling prices index fell two points to 13.8, though both indexes remained above their series averages. The wages and benefits index inched down two points to 16.6—near its average reading of 15.7.

Respondents’ expectations regarding future business activity were mixed in May. The future general business activity index remained negative but largely unchanged at -13.2. The future revenue index stayed positive and increased three points to 28.5. Other future service sector activity indexes such as employment and capital expenditures remained in positive territory, reflecting expectations for continued growth in the next six months.

Retail sales declined in May, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, fell six points to -3.2. Retailers’ inventories increased at a faster rate than last month, with the index jumping from 2.8 to 17.0.

Retail labor market indicators reflected a contraction in employment and continued shortening of workweeks in May. The employment index fell five points to -3.3 while the part-time employment index dropped 10 points to -9.3. The hours worked index remained in negative territory but rose five points to -2.2.

Retailers’ perceptions of broader business conditions continued to worsen in May, though pessimism waned. The general business activity index remained negative but rose five points to -22.3. The company outlook index increased from -16.1 to -9.2, and the outlook uncertainty index ticked up from 11.8 to 12.9.

Price pressures eased, but wage pressures increased considerably in May. The selling prices index fell nine points to 8.7, and the input prices index dropped 13 points to 24.6.

However, the wages and benefits index jumped 12 points to 21.6.

Expectations for future retail growth worsened in May. The future general business activity index fell five points to -25.6, and the future sales index dropped 19 points to -3.6. Other indexes of future retail activity such as employment and capital expenditures also fell but remained in positive territory, reflecting expectations for slower growth in retail activity later in the year.

The Texas Retail Outlook Survey is a component of the Texas Service Sector Outlook Survey that uses information only from respondents in the retail and wholesale sectors.

Next release: June 27, 2023 Data were collected May 16–24, and 306 Texas service sector business executives, of which 64 were retailers, responded to the survey.

The Dallas Fed conducts the Texas Service Sector Outlook Survey monthly to obtain a timely assessment of the state’s service sector activity. Firms are asked whether revenue, employment, prices, general business activity and other indicators increased, decreased or remained unchanged over the previous month.

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 firms reporting an increase exceeds the share reporting a decrease, the index will be greater than zero, suggesting the indicator has increased over the prior month.

If the share of firms reporting a decrease exceeds the share reporting an increase, the index will be below zero, suggesting the indicator has decreased over the prior month.

An index will be zero when the number of firms reporting an increase is equal to the number of firms reporting a decrease.

Data have been seasonally adjusted as necessary.