Texas Business Outlook for June 2012

by CoyDavidson on June 28, 2012

Service Sector

Texas service sector activity increased in June, according to business executives responding to the Texas Service Sector Outlook Survey. The revenue index, a key measure of state service sector conditions, held steady at 10.9, suggesting revenue growth in June was about the same as last month.

Labor market indicators reflected slower labor demand growth and little change in the average workweek. The employment index fell from 11.1 to 7.8 in June, and the hours worked index dropped to 1 from 7.7.

Perceptions of broader economic conditions were mixed in June. The general business activity index edged up from 5.3 to 7.3 after falling for three consecutive months. The company outlook index posted its lowest reading in nine months, moving down to 2.6 from 8.5, with 20 percent of respondents reporting their outlooks improved from last month and 18 percent noting they worsened.

Read the complete report here.

Retail Sector

Retail sales increased at a slower pace in June, according to business executives responding to the Texas Retail Outlook Survey. The sales index fell from 10.9 to 7, its lowest reading since July 2011. Inventories rose.

Labor market indicators reflected more hiring and shorter workweeks. The employment index rose from 10.8 in May to 13.3 in June. The hours worked index declined 13 points to -8.2, its first negative reading in nine months.

Perceptions of general business conditions were less optimistic in June. The general business activity index came in at 4.6—roughly 4 points below its reading last month. The company outlook index fell sharply from 8.6 to 0.7, its lowest reading since August 2011. Fifteen percent of respondents noted their company’s outlook had improved from the prior month, compared with 14 percent who reported their outlook had worsened.

Read the complete report here.

Manufacturing Sector

Texas factory activity surged in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 5.5 to 15.5, posting its strongest reading in 15 months.

Other measures of current manufacturing conditions also indicated strengthening activity in June. The new orders index rose to 7.9, following three readings around zero, suggesting demand finally grew after staying flat since February. Similarly, the shipments index rebounded to 9.6 after two months of near-zero readings. The capacity utilization index rose from 5 to 13.3, reaching its highest level since early 2011.

Perceptions of broader economic conditions improved in June. The general business activity index had been negative in April and May but increased to 5.8 this month. Twenty-four percent of firms noted improvement in the level of business activity in June, up from 15 percent last month. The company outlook index edged up from 4.7 to 5.5.

Read the complete report here.

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