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Texas service revenue grows again as wage pressures rise

Texas service companies returned to revenue growth in the Dallas Fed’s October survey. Business conditions and company outlooks also improved, while the hiring measure declined. Wage and benefit increases became more widespread, reaching their strongest survey reading since January 2023. Respondents were more optimistic about future revenue, with price pressures remaining above their historical averages.

Economics & Markets··Midday
Workers fold clean white towels at a station beside stainless-steel machines in a Texas commercial laundry.

More Texas service firms report rising revenue

Texas service businesses returned to revenue growth in October, according to the Federal Reserve Bank of Dallas, a regional US central bank. Its revenue index rose to 4.4 from minus 0.9 in September. The survey combines companies’ reports of increases, declines or unchanged revenue into a balance measure. Positive readings indicate that firms reporting increases outnumber those reporting decreases.[1], [2]

Revenue increased at 22.3 per cent of respondents, remained unchanged at 59.8 per cent and declined at 17.9 per cent. General business conditions improved from minus 1.8 to 4.0, while the company-outlook index rose from minus 3.2 to 3.0. Outlook uncertainty eased from 21.4 to 16.3.[1]

Wages and selling prices rise more broadly

The employment measure declined from 4.1 to 2.8, while hours worked rose from 0.1 to 2.2. The wages-and-benefits index increased from 15.1 to 20.5, its highest level since January 2023. Selling prices rose from 14.9 to 18.2, above a historical average of about 7.5. The input-price index edged down from 42.1 to 41.7 but remained above its long-run average of approximately 28. These indexes measure the balance of responses about changes.[1]

Companies raise their revenue expectations

The future-revenue index increased about 5 points to 43.6, and expected general business conditions advanced from 10.7 to 19.6. Future employment and capital-expenditure measures remained positive. Responses were collected from 13 to 21 October, with 224 of the 342 companies contacted participating. The next release was scheduled for 1 December.[1]

References

  1. News sourceFederal Reserve Bank of DallasTexas service revenue returns to growth in October↩1↩2↩3↩4
  2. News sourceTrading EconomicsTexas services revenue indicator turns positive again↩
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