Texas' services sector activity witnessed a slight decline in December despite an uptick in a crucial revenue gauge, as reported by the Federal Reserve Bank of Dallas. The overall business activity index dipped to 9.6 this month, down from 9.8 in November, signifying a cooling in the sector. In contrast, the revenue index, which serves as a vital measure of state service sector conditions, experienced an increase to 13.8 from 10.9, indicating some resilience in the market.
However, the employment index showed a decrease, falling to 2.4 from 5.1. Dallas Fed Senior Business Economist, Jesus Canas, shared insights, stating that "Labor market measures suggested a slight slowing in employment growth and little change in workweeks." He further explained that while price pressures were on the rise, wage pressures remained steady, a key point for stakeholders in evaluating labor costs moving forward. A broader retail survey indicated notable developments, with the sales index surging nearly 13 points to 17.3, reaching its highest level since late 2021.
"Retail sales activity accelerated in December," remarked Canas. However, he pointed out that retail labor market indicators suggested only flat employment levels and slightly reduced workweeks, presenting a mixed picture for retail businesses. Looking ahead, six months out, the general business activity index slightly eased to 29.5 from 29.8, yet the future revenue index saw a rise of 4.5 points to 48.5, showcasing positive expectations amongst businesses.
This optimism suggests that many are anticipating sustained growth in the near future. Canas noted that other future service sector activity indexes, such as those tracking employment and capital expenditures, remained in positive territory, reinforcing this outlook. Additionally, data released by the Dallas Fed indicated that Texas manufacturing activity made an unexpected return to growth territory in December, marked by a rebound in production, while expectations regarding the six-month horizon took a downturn, underlining the volatility currently being experienced in the economic landscape of Texas..