Texas Service Sector Outlook Survey

Texas Service Sector Outlook Survey

Texas service sector activity holds steady

Special questions: Wages, prices, outlook concerns and artificial intelligence

Texas service sector activity was unchanged in December, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, ticked up three points to zero.

Labor market measures suggested little change in employment, though hours worked contracted this month. Both the employment and part-time employment indexes registered near-zero readings, suggesting little change in employment or part-time employment in December. Meanwhile, the hours worked index came in at -2.4.

Perceptions of broader business conditions continued to worsen slightly. Both the general business activity index and the company outlook index remained negative, registering -3.3 and -2.9 respectively. The outlook uncertainty index ticked down two points to 15.9, though it still remained above the series average of 13.8.

Prices and wages increased in December at about the same pace as in November. The input prices index was little changed at 26.2, and the selling prices index was also similar to November at 7.9. The wages and benefits index fell to 10.8 from 14.7.

Respondents' expectations regarding future service sector activity remained positive. Both the future revenue index and the future general business activity index held steady, registering 35.3 and 12.0, respectively. Other future service sector activity indexes, such as employment and capital expenditures, remained in solidly positive territory.

Texas Retail Outlook Survey

Texas retail sales contract further

Retail sales fell sharply in December, according to business executives responding to the Texas Retail Outlook Survey. The sales index, a key measure of state retail activity, fell 14 points to -20.6. Retailers' inventories were unchanged, with an index reading of zero signaling no change in inventories in December.

Labor market indicators suggested a decline in employment this month. The employment index fell 10 points to -6.2. The part-time employment index fell seven points to zero, suggesting no change in part-time employment in December. Meanwhile, the hours worked index was little changed with a reading of -6.3, suggesting a similar contraction in hours worked as last month.

Perceptions of broader business conditions worsened, and uncertainty in outlooks increased. The general business activity index fell three points to -15.9, and the company outlook index also dipped three points to -15.4. The outlook uncertainty index increased to 21.1 from 13.2 in November.

Input and selling prices climbed in December. The selling prices index jumped up 12 points to 28.2, while the input prices index rose 11 points to 38.5. The wages and benefits index also increased to 10.5 from 6.1 in November.

Expectations for future retail activity remained positive in December. The future sales index jumped 12 points to 18.8. Meanwhile, the future general business activity index came in at 2.2, similar to November. Other future retail activity indexes, such as employment and capital expenditures, remained in positive territory.

Next release: January 27, 2026