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Economy in Brief

Texas Service Sector Business Conditions Improve
by Tom Moeller  June 26, 2019

The Federal Reserve Bank of Dallas reported in its Texas Service Sector Outlook Survey that the General Business Activity Index rose to 3.2 during June from -0.3 in May. It remained below the 25.7 peak in September of last year.

The revenue index recovered its May decline while the employment measure held steady. An improved 17% of firms planned to increase employment versus 15% in May. The part-time employment reading increased to the highest level since November. The wages & benefits measure weakened to its lowest point since September 2017.

The selling prices index improved slightly m/m but remained down sharply y/y. The 14% of firms which were raising prices remained down from 21% twelve months earlier. Input prices also improved m/m but were down sharply y/y.

The index of expected business conditions in six months also increased m/m but was significantly below the December 2016 peak. Expected revenue improved m/m but was below the late-2016 high. Expected employment also increased along with expected wages.

The index of expected selling prices was little changed m/m and remained depressed versus the late 2017 high. Thirty-one percent of firms were planning to raise prices versus 44% late in 2017. An increased seven percent were lowering prices. The future wages & benefits reading rose slightly but was well below the late-2017 peak.

Each index is calculated by subtracting the percentage reporting a decrease from the percentage reporting an increase. When all firms report rising activity, an index will register 100. An index will register -100 when all firms report a decrease. An index will be zero when the number of firms reporting an increase or decrease is equal. Items may not add up to 100% because of rounding. Data for the Texas Service Sector Outlook can be found in Haver's SURVEYS database.

Texas Service Sector Outlook Survey (SA, % Balance) Jun May Apr Jun'18 2018 2017 2016
Current General Business Activity Index 3.2 -0.3 5.7 22.2 17.1 14.7 -2.0
   Revenue 13.6 2.7 13.9 18.5 19.0 17.3 11.4
   Number of Employees 6.9 6.8 11.6 14.2 12.9 7.8 4.3
   Wages & Benefits 16.9 19.0 20.3 24.8 22.8 18.1 15.9
   Selling Prices  6.9 4.6 10.4 16.8 16.2 11.2 4.2
 General Business Activity Index Expected in Six Months 9.0 0.7 12.3 26.9 22.6 25.9 7.7
   Revenue 37.2 27.7 41.3 44.1 45.4 46.7 39.2
   Number of Employees 24.6 16.9 19.4 29.2 30.3 27.0 21.3
   Wages & Benefits 38.6 36.3 37.7 47.4 45.7 41.3 38.2
   Selling Prices 23.4 22.2 26.8 31.5 32.4 28.3 22.2
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