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Texas Service Sector Activity Continues to Increase but At Slower Pace, Says Dallas Fed Survey

For immediate release: October 27, 2015

DALLAS—Texas service sector activity continued to reflect expansion in October, according to the Federal Reserve Bank of Dallas’ Texas Service Sector Outlook Survey.

The TSSOS revenue index—a key measure of state service sector conditions—remained positive but fell from 12.8 in September to 7.6 in October, its lowest level in five months.

“This report is fairly consistent with what we’ve seen for most of the year,” said Amy Jordan, Federal Reserve Bank of Dallas assistant economist. “The Texas services sector continues to grow. Service-providing sectors are driving growth, while goods-producing sectors have been a drag on the Texas economy.”

The survey is conducted monthly by the Dallas Fed to obtain a timely assessment of activity in the state’s service sector, which represents almost 70 percent of the state economy and employs close to 7.6 million workers.

Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction.

Labor market indicators reflected faster employment growth and longer workweeks in October. The employment index rose from 2.2 in September to 7 in October. The hours worked index ticked down from 4.3 in September to 3 in October.

Perceptions of broader economic conditions continued to reflect optimism in October. The general business activity index edged up 2 points to 5.6 in October.

Indexes of future service sector activity also reflected more optimism this month.

TSSOS also includes a component called the Texas Retail Outlook Survey, which uses information from respondents in the retail and wholesale sectors only.

Retail sales increased in October, according to business executives responding to the Texas Retail Outlook Survey. The sales index rose slightly from 7.1 in September to 8.9 in October.

The retail outlook indexes are at their highest level this year, according to Jordan.

Indexes of future retail sector activity remained in solid positive territory in October.
For this month’s Texas Business Outlook Surveys, respondents were asked supplemental questions on credit availability conditions in Texas.