Texas Service Sector Outlook Survey

What’s New This Month

For this month’s survey, Texas business executives were asked supplemental questions on the impacts of the coronavirus (COVID-19).

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 the special questions results.

This month’s data release does not include annual seasonal factor revisions, which have been postponed to May.

Read more information on seasonal adjustment.

The Texas service sector continued to see a dramatic contraction in April amid the coronavirus (COVID-19) pandemic and mitigation measures, according to business executives responding to the Texas Service Sector Outlook Survey.

The revenue index, a key measure of state service sector conditions, inched up just slightly from an all-time low of -67.0 in March to -65.4 in April.

The employment index fell from -23.8 to -35.2, its lowest reading on record. The hours worked index dropped over five points to -48.2, with over half of respondents now noting cuts in employee hours.

Perceptions of broader business conditions remained extremely pessimistic in April, while uncertainty continued to escalate.

The general business activity index declined nearly three points to a new low of -81.7, while the company outlook index improved nearly six points but remained deeply in negative territory at -69.5. Meanwhile, the outlook uncertainty index rose from 37.6 in March to a new high of 43.2.

Wages and prices saw significant downward pressures in April. The wages and benefits index declined over nine points to -21.7, a record low.

The input prices index fell from 0.1 to -3.8, it’s lowest reading on record, and the first negative reading since 2009. The selling prices index further declined into negative territory, from -44.5 to -47.8.

Respondents’ expectations regarding future business conditions remain very pessimistic, though somewhat less so than in March.

The future company outlook index, though still negative, improved nearly 18 points to -31.3.

The future general business activity index rose over 23 points to a reading of -27.1, though nearly half of respondents expected worsened conditions.

Other indexes of future service sector activity, such as revenue and employment, remained starkly negative but were slightly above last month’s all-time lows, suggesting some tempering in expectations of weakness over the next six months.

Texas Retail Sales Extend Declines

Retail sales continued to fall sharply in April, according to business executives responding to the Texas Retail Outlook Survey.

The sales index, a key measure of state retail activity, edged up from an all-time low of -82.6 in March to -78.5.

Inventories continued to decline sharply, with the inventories index weakening from -42.6 to -45.5.

Retail labor market indicators continued to reflect sharp cuts in employment and workweek hours in April.

The employment index shed over 20 points to hit an all-time low of -48.8. The hours worked index declined further from -58.1 to -64.9, with nearly 70 percent of respondents noting a cut in hours compared with March.

Retailers’ perceptions of broader business conditions remained bleak in April. The general business activity index was largely unchanged at -83.8, while the company outlook index remained near March levels, hitting a new low of -84.0.

The outlook uncertainty index fell over five points, although, at a reading of 41.0, it remains extremely elevated.

Retail prices and wages continued to fall in April. The input prices index fell from -12.0 to -24.4, while the selling prices index weakened three points to -38.5, a new low.

The wages and benefits index similarly fell to an all-time low reading of -35.4, shedding nearly 15 points.

While retailers’ perceptions of future conditions remain starkly negative, there was a notable moderation in the expectations of decline this month.

The future general business activity index gained over 45 points for a reading of -20.9, while the future company outlook index increased from -62.4 to -22.6.

Other indexes of future retail activity, such as sales and employment, were significantly less negative and, compared with March’s readings, suggest a less-negative outlook over the next six months.

Source: The Federal Reserve Bank of Dallas