Texas Service Sector Outlook Survey

Historical data are available from January 2007 to the most current release month.

Historical data are available from January 2007 to the most current release month.

*Shown is the number of consecutive months of expansion or contraction in the underlying indicator. Expansion is indicated by a positive index reading and denoted by a (+) in the table. Contraction is indicated by a negative index reading and denoted by a (–) in the table.

**Shown is the number of consecutive months of improvement or worsening in the underlying indicator. Improvement is indicated by a positive index reading and denoted by a (+) in the table. Worsening is indicated by a negative index reading and denoted by a (–) in the table.

Data have been seasonally adjusted as necessary.

Texas Service Sector Outlook Survey

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Texas Retail Outlook Survey

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Texas Service Sector Outlook Survey

Comments from survey respondents

These comments are from respondents’ completed surveys and have been edited for publication.

• The oil and gas markets are slowing slightly. This could be just a slowdown during the final time of the election, but that cannot be determined at this time. Federal Reserve monetary policy actions have also slowed many of the mergers and acquisitions in the oil and gas markets. Many of the major companies in the Permian Basin are involved, directly or indirectly, in mergers and acquisitions affected by the Securities and Exchange Commission's regulations.

• We are seeing a seasonal uptick in market activity and rates. This is good, since our industry lost a measure of seasonality since the pandemic. It indicates a movement back toward normal for our market. However, there is still too much capacity in the market.

• We have seen a pickup in business, particularly on the export side, over the past six weeks that has pointed to a recovery over the first four months of the year, when there seemed to be some uncertainty in the air.

• There is an increase in interest for advanced tech software and related platforms for education and general task automation with better quality and productivity than humans can provide.

• The economic environment is maintaining a sluggish pace, and part of the challenges for retail and consumer markets relate to high interest rates and inflation. Rural markets seem to be affected the most as evident from a slowdown in home and land sales. The sales-tax receipts have gradually declined monthly and are below the previous year-to-date amount.

• People are adjusting to new economic realities. Few are expecting salary increases and are instead making lifestyle adjustments to deal with higher living costs. Reality is also setting in for the apartment owners we serve. They understand rents aren't going up and interest rates aren't coming down. As rate caps expire and loans mature, lenders are having to adapt as well. Ultimately, a lot of private equity (much in the form of individual retirement savings put into syndications) is getting wiped out.
• We need a rate cut before we will see any revenue improvement from home sales.
• Lower interest rates in the second half of the year should improve capital market conditions in commercial real estate, both for equity and debt.

• Please note that our business is highly seasonal since we provide HVAC rental equipment. Overall, our business is going great.
• After five months, we are down 5 percent compared with 2023. We are a company that has grown over 20 percent per year for the last three years, and we take this as evidence that the overall economy has slowed down this year. As a result, we have implemented a freeze on hiring and expenses.

• It feels like things might be bottoming out as demand has improved slightly.
• We are unwilling to commit additional growth capital expenditures until after the election, when the regulatory outlook should be clearer.
• We're seeing pricing pressure from our competitors. It looks like they are getting slower and starting to lower their prices. We will eventually feel this pressure also, but not yet. Our biggest concern is the uncertainty from the election. Our third and fourth quarters might get slow if the election gets too bad.  Our clients will start to put projects on hold.
• General business activity has slowed over the past couple of months. Although our real estate orders have increased slightly over the past couple of months, these deals are becoming more difficult to close due to the complexity and the lending environment. Hopefully the next round of numbers will start showing how slow the economy really is.
• This is a period of apparent stability covered with a veil of high uncertainty.
• The Federal Reserve’s recent announcement of no rate cuts in the near future is concerning regarding the immediate and lag effect it could have on the local economy. We have received direct feedback from many of our clients in various industries, and they are increasingly concerned. They are freezing hires and spending, with many reducing spending. The primary reason is the economic stagnation locally and nationally affecting their businesses.
• While we are obtaining a small amount of work for June, longer term it is not clear how much future work this will evolve to.
• After a yearlong search, we finally found a highly qualified consultant to fill our open search. We are still in growth mode and in need of a part-time administrative position; however, we wanted to be sure the revenue would be there. Our pipeline has certainly gotten deeper and wider, but some of that work won't come to fruition until 2025.
• With the higher cost of goods and economic uncertainty, we are seeing clients lower their monthly retainers and new business opportunities have slowed significantly.

• High interest rates are still the major issue.
• As elections draw near, the political environment worsens, creating more uncertainty in our business.
• We remain uncertain about the last two quarters of 2024. Although hiring is picking up slightly, clients still take longer to make decisions than in the past, and it remains difficult to find qualified candidates. We're seeing an increase in hiring for skill sets we have not seen in several months, including human resources and marketing roles. Accounting, finance and sales roles continue to be in demand, but other roles are now appearing, which is positive.
• The corporate aviation sector has slowed down this month, which is consistent with our normal cycle. Requests for quotes in the commercial aviation sector have decreased for the third month in a row. Requests for quotes in the industrial machine shop have stayed low for the past four months.

• Outlook and uncertainty levels have changed since last month due to election uncertainty, a change in institutional leadership and fluctuations in high school enrollment levels and business in- and outmigration in Texas.

• Wage and supply costs continue to rise with no improvement of insurance reimbursement or ability to raise self-pay pricing. There has been a shift in the labor market, and we believe it has shifted toward a buyer’s or employer's market, with more qualified candidates available to work and requesting more reasonable wages.

• In general, our summer is beginning soft, with no signs this will change in the next two months.
• The storms in Houston played a large part in the increase in revenue. We were sold out multiple days and had an increase in occupancy.

• We feel inflation and fear of more inflation plus the rise in cost of living are holding consumers back. Hopefully we will adapt to the new realities soon.
• June and July are awful months. Our clients are on vacation, no one is in the office and there’s less dining out.
• We have seen some pushback on menu prices; however, customer counts continue to increase slightly.

• Customers are concerned about the election, so they are holding off on large purchases.

• Fuel prices seem to have stabilized, which helps us stabilize pricing (no change to fuel surcharges).  However, oil prices increased over the last 30 days, and fuel surcharges are typically adjusted as a 30-day historical average. If oil stays high, we expect fuel surcharges to increase in July.

• Inventories continue to swell, and interest rates remain high. Our grosses are off, and margins continue to decline. Profits are down 20 percent from the prior year.
• We continue to be surprised at how vehicle sales volume continues to be strong in spite of interest rates.
• Affordability has become an ever-increasing problem for new car dealers. The price increases of new cars combined with higher interest rates have put new cars out of reach for more and more people.
• The economy is slowing. The consumer is more cautious and more reluctant to purchase at higher prices and payments.

• The lack of building activity is shutting down the appliance industry.

• Poor national leadership and lack of confidence have eroded the business environment.

• Our outlook depends heavily on the presidential election.