US April Texas services sector outlook -10.6 vs -5.5 prior

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texas services sector survey
  • Prior was -5.5
  • Revenues index -0.3 vs +4.0 prior
  • Employment -2.6 vs -1.2 prior (lowest since 2020)
  • Wages and benefits +14.2 vs +19.5 prior
  • Selling prices +3.9 vs +7.7 prior

Comments in the report:

Truck transportation

  • We repair long-haul trucks. The volume just keeps going down,
    which means everyone is holding back on repairs, so we have no work.
    Inflation keeps driving our costs up. It’s not looking pretty for

Support activities for transportation

  • We are seeing an uptick in rates and activity. The excess capacity slowly bleeding out of the market is causing this.

Publishing industries (except internet)

  • Momentum is still based on intuitive smarter software revisions.
    Commercial interest is also finally increasing with better relationship
    contacts to speed credible traction and interest for adoption going
    forward. We are more focused now on marketing and sales.
  • The impact of the higher rate environment seems to be catching
    up, with general purchase intent among customers flattening out. At the
    same time, budget cuts and political uncertainty have impacted our
    public sector business as well, creating additional uncertainty across
    our business.

Credit intermediation and related activities

  • The stress of an election year adds to the concern citizens have about the direction of our economy.
  • We recently renegotiated our $600 million debt facility. Our
    cost of funds went from 9 percent to 14 percent—that’s a pretty big hit
    to our bottom line and resulted in us increasing prices to our
    customers. Our business focus has been on forecasted easing; however,
    the reality of rates staying higher longer is creating uncertainty.
  • Commercial real estate transactions are down by 70-80 percent
    according to the brokers we talk to, and our loan origination volume
    reflects that as well. Borrowers are concerned about future business
    prospects. We recently had a client decide not to take a loan to
    refinance a warehouse used in their business because they were concerned
    about their future business prospects. At the same time, the cost of
    everything we buy, from paper to electricity, is rising.
  • The Federal Reserve signaling it will hold the rate at the
    current level for longer has affected our outlook negatively. One of our
    biggest issues with inflation is the cost of housing. These high rates
    do not help that, and prices of everything else are not declining or
    remaining stable.

Securities, commodity contracts and other financial investments and related activities

  • Recent movement in long-term rates, combined with the Fed
    holding rates longer, have delayed the expected value of investment
    recovery until 2025 or later.

Insurance carriers and related activities

  • We are recruiting experienced insurance professionals, and there
    is a small pool to draw from, unfortunately. We will keep looking.
  • Property insurance and affordability are slowing our growth opportunities.

Real estate

  • The increase in treasury yields since last fall has negatively impacted deal-making activity in the income property industry
  • We are a real estate broker company and we have about 350
    agents. They are independent agents not salaried employees. Our business
    slows during election years, and high interest rates have hurt
    first-time buyers.
  • Cost of capital is weighing on our customers and decreasing volume.

Rental and leasing services

  • We are a construction machinery and material handling
    dealership. Our business in the first quarter of 2024 was down 2
    percent, and the industry was down 12.3 percent. Our manufacturing
    clients seem almost on the verge of panic, and there is stuff in
    inventory. We need a guest-worker program to meet our skilled-labor
    needs long term.

Professional, scientific, and technical services

  • Persistent inflation and the Fed potentially delaying rate cuts are causing uncertainty for the second half of 2024.
  • We are still worried about the election causing uncertainty in
    our clients and prompting a slowdown later this year. Some clients are
    still worried about inflation and are stalling projects because of the
    volatility in the supply market. Overall, it is tough to make any
    forecast right now. Our backlog is strong for the next couple of months,
    but not as far in the future as we would like.
  • The market was slower in the first quarter, but it is now in recovery.
  • We are increasingly seeing small professional firms shrinking or
    simply closing up shop. The labor shortage is a major reason for giving
    up the fight. There’s plenty of demand for professional services, but
    there is not enough trained staff. Retaining staff is a major headache.
    Owners nearing retirement are giving it up sooner rather than later.
  • Burdensome federal regulations are increasing the cost to do
    business, such as the so-called “Corporate Transparency Act” and minimum
    wage increases that just continue to drive inflation.
  • General outlook has improved primarily due to our increased
    investment in marketing and an increase in general business activity.
  • We see a slight uptick in transactional matters.
  • Trying to factor in how remote-work scheduling impacts the need for space and resources is challenging.
  • Competitive labor market remains; it’s harder to recruit great talent; health insurance is increasing.
  • We have not been this slow since the Great Recession. This
    includes Covid. We cannot understate how terrible the prospective real
    estate market is. People are not filing zoning cases, meaning in two
    years there will not be construction. Volumes have gone down in the
    automotive industry. It seems they are beginning to turn around, so
    we’re hoping.
  • This real estate market is hard to figure out. With the 10-year
    rate still moving in the wrong direction, and the likelihood of a rate
    cut not coming this year due to inflation and the strength of the
    economy, we just can’t see the market improving until next year.
  • The Fed is now unlikely to cut interest rates; concerns over recession continue.

Management of companies and enterprises

  • Overregulation takes away a lot of time and money.

Administrative and support services

  • Continued high interest rates, inflation and general economic
    malaise has caused employers to be very reluctant to hire professional
    level talent. They may replace talent if they have attrition, but in
    general, they are very slow to make any new hire decisions.
  • There has been a marked decline in requests for quotes for the month. This decline does not fit in our normal seasonal changes.
  • The intensity of international conflict and increasing long-term rates certainly raise concerns.
  • Geopolitical tensions are creating an uncertain environment.
    Also, upcoming elections and how this may affect the Fed’s monetary
    policy is a concern.
  • High interest rates have drastically hindered our ability to grow our
    business, and it looks like a rate cut is not likely happening in 2024.

Texas Retail Outlook Survey


  • Between increasing inflation, high interest rates and
    instability in the Middle East, we are growing more concerned that the
    upcoming summer travel season will be depressed compared to prior years.
  • March 2024 is viewed as a contradiction in that we had several
    areas perform at or close to expectations and others that were far
    below. That seems to be the same in April. Difficult to understand what
    is happening.

Food services and drinking places

  • The stalled return to office and the decline of weekday business
    travel to downtown remain drags on revenue. We see a softening in other
    meal periods, and we believe it is due to the increase in menu prices.
    Hiring experienced staff with knowledge remains very difficult. Where
    did seasoned workers go? Cost of goods sold continues to increase.
  • We are still hanging on by a thread after closing one business last month.
  • The energy sector continues to be strong, which positively
    affects my business. Midland continues to attract a younger population.

Motor vehicle and parts dealers

  • The margin on new vehicles sold per unit declined 50 percent
    year over year in March 2024, which was a direct benefit to the
  • We are continuing to see labor shortages in the workforce and a
    lack of effort to pursue the positions available from those applicants
    responding to open positions.

Electronics and appliance stores

  • Building activity is down still and looks to be getting worse.

This article was written by Adam Button at

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