Texas Service Sector Outlook Survey

Texas Service Sector Activity Moderates in April

What's New This Month

For this month's survey, Texas business executives were asked supplemental questions on labor market conditions and remote work. Results for these questions from the Texas Manufacturing Outlook Survey, Texas Service Sector Outlook Survey and Texas Retail Outlook Survey have been released together. Read thespecial questionsresults.

Activity in the Texas service sector decelerated in April, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, declined from 23.4 in March to 11.2 in April, as 30 percent of respondents reported increases in monthly revenues compared with 19.0 percent reporting declines.

Labor market indicators point to steady growth in hiring and hours worked relative to March. The employment index was unchanged at 14.5, although the part-time employment index weakened from 7.0 to 2.9. The hours worked index was flat at 9.5.

Perceptions of broader business conditions were positive, though muted compared with earlier in the year. The general business activity index slipped from 10.6 to 8.2, while the company outlook index held steady at 2.4. Uncertainty remained elevated, with the outlook uncertainty index falling just slightly from 22.5 to 19.2.

April saw continued upward pressure on wages and prices, though growth in wages and input prices eased slightly. The wages and benefits index fell from 36.5 to 33.0-still near a record high. The selling prices index was unchanged at 33.7, with 37 percent of respondents noting monthly price increases, while the input prices index declined five points to 54.2.

Respondents' expectations regarding future business activity remained positive but moderated significantly compared with March. The future general business activity index plunged from 15.4 to 6.5-its lowest reading since mid-2020-while the future revenue index declined nine points to 47.0. Other future service sector activity indexes such as employment and capital expenditures weakened, suggesting somewhat lower expectations for growth over the next six months.

April 26, 2022

Texas Retail Sales Weaken in April

Aprilretail sales activity deteriorated further compared with March, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, weakened by five points to -7.9 in April. Retailers' inventories stabilized, as the inventories index rose from -8.3 to -0.4.

Retail labor market indicators signaled continued growth in April. The employment index rose seven points to 9.3, while the part-time employment index held steady at 5.7. The hours worked index slipped two points to 2.5, suggesting a slower pace of growth in retail workers' hours worked.

Retailers' perceptions of broader business conditions remained somewhat pessimistic compared with March. The general business activity index increased from -9.8 to 1.4-a neutral reading suggesting little net change in perceptions. The company outlook index improved but remained in negative territory at -4.9, with nearly 20 percent of respondents noting a worsening outlook. Uncertainty surrounding the outlook increased further, with the index rising from 7.5 to 14.6.

Retail price and wage pressures remained highly elevated in April. The selling prices index rose six points to a five-month high of 54.6, while the input prices index slipped from 59.7 to 55.3. The wages and benefits index held steady at 34.2, with 37 percent of respondents noting an increase in labor compensation compared with just 3 percent reporting a decrease.

With weaker retail activity in recent months, expectations for the future were somewhat mixed. The future general business activity index weakened from 3.0 to -1.5, while the future sales index declined from 37.9 to 34.9. Other indexes of future retail activity also showed mixed movements, suggesting increased uncertainty surrounding growth going into the second half of 2022.

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 1, 2022

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