Retailers:
Decline hurts overall service sector, which drops to a 3-year low.
Retail sales in Texas plunge to the lowest level in four years, the Dallas Fed reports.
Texas retail sales plummeted in May, falling to their lowest level in four years and slowing the growth of the state’s overall service sector, according to a report released Wednesday by the Federal Reserve Bank of Dallas.
The state’s revenue index, a key measure of state service sector conditions, dropped from 14.6 to 3.8, its lowest reading in almost three years, according to the Texas Service Sector Outlook Survey. The lesser, positive figure suggested that service-sector activity increased, but at a slower pace.
In the labor market, the employment index rose slightly, edging up from 7.9 to 8.9, as private service-providing firms collectively expanded their payrolls in May, the report showed. Service sector companies also reported slightly longer workweeks for their employees.
Private, service-providing companies account for 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.
Real estate and construction jobs continued to thrive, according to anonymous notes compiled in the report, but some industries expressed concerns about the ongoing impact of lower oil prices on the state’s energy sector.
In the retail sector, sales fell significantly and hiring also declined, according to business executives responding to the Texas Retail Outlook Survey, a subset of the sector-wide report.
The state’s retail sales index plunged into negative territory, dropping 31 points to -10.7, according to the survey. The em- ployment index fell into negative territory to -0.9, an indication that retail jobs decreased. The hours worked index also fell from 6.4 to -5.8, according to the survey.
Still, retailers expressed optimism that the declines would be temporary. The index of future general business activity rose from 13.3 to 14.6, its highest reading of the year.
On Tuesday, the Dallas Fed also reported that a measure of manufacturing activity in Texas dropped to a six-year low in May.
The state production index, a key measure of factory activity in Texas, dropped to a reading of -13.5 in May from -4.7 the prior month, according to the Texas Manufacturing Outlook Survey. The lower negative value suggests that statewide manufacturing production contracted more sharply this month than last.