News Column

Dallas Fed: Texas service sector kept rolling in August

August 26, 2014

By Dan Zehr, Austin American-Statesman



Aug. 26--

Sales at Texas retailers rose at a slightly slower pace in August, but the state's broader service sector kept up the pace of its rapid expansion and spurred more hiring, according to a monthly report released Tuesday by the Federal Reserve Bank of Dallas.

The state revenue index, a key measure of activity at private service-providing firms, held essentially steady with a reading of 21.0 in August, just a tick lower than the 21.5 reading in July, according to the Texas Service Sector Outlook Survey.

Positive numbers generally indicate expansion, with greater figures suggesting a faster rate of growth.

The steady rate of growth in the service sector belied a decline in the expansion of the manufacturing sector. In a similar report issued Monday, the Dallas Fed said factory activity continued to expand in August, but it had scaled back from the blistering pace it set the month before.

Another strong month of retail sales growth helped extend July's service-sector growth into August. The state sales index dipped to 20.6 this month from 22.0 in July, marking the 14th consecutive month of accelerating activity, according to the Texas Retail Outlook Survey, a subset of the broader sector report.

The strong month for the state's retailers matched the rising confidence of consumers around the country. The Conference Board said Tuesday that its national Consumer Confidence Index increased to 92.4 in August, up from a reading of 90.3 last month.

The onset of summer Texas warmed up sales across the service sector in July, but the continuation of that expansion into August also sparked a surge in hiring, the reports noted. Measures of employment levels surged at both retailers and the sector as a whole, with retailers posting a double-digit gain after reporting essentially no payroll growth in July.

Texas' private service-sector companies provide about two-thirds of all nonfarm jobs in the state, according to data from the Texas Workforce Commission. The same firms account for about 60 percent of the state's economic output, according to the Dallas Fed.

Retailers and managers at other service-providing firms noted a somewhat less optimistic take on business conditions around the state, although those declines came off some of the highest readings ever recorded by the Dallas Fed surveys. All the surveys' measures of current and future business outlooks remained in solidly positive territory.

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(c)2014 Austin American-Statesman, Texas

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Source: Austin American-Statesman (TX)


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