Texas service sector activity grew at a slower pace in December, according to business executives responding to the Texas Service Sector Outlook Survey.
The revenue index, a key measure of state service sector conditions, fell more than 11 points to 10.1 in December. Positive readings in the survey generally indicate expansion of service sector activity, while readings below zero generally indicate contraction, according to a Federal Reserve Bank of Dallas news release.
“December was a softer month for growth in the state’s service sector as revenue and labor market indicators pointed to continued but slower expansion,” Christopher Slijk, Dallas Fed assistant economist, said in the news release. “Firms’ outlooks deteriorated notably, particularly in retail, where nearly a quarter of respondents noted a weakening in their expectations of business conditions.”
The future general business activity index plummeted nearly 22 points to -5.0 in December, its first negative reading in more than two years, while the future company outlook index fell from 17.3 to 1.6. Other indexes of future service sector activity, such as revenue and employment, also fell but remained positive.
Texas employment is forecast to grow between 0.9 and 1.9 percent in 2019, said Federal Reserve Bank of Dallas assistant vice president and senior economist Keith Phillips today in San Antonio.
The forecast means Texas should add 113,671 to 239,972 jobs in 2019. State employment grew at 2.4 percent, adding approximately 293,000 jobs in 2018 and outpacing the nation’s 1.8 percent job growth.
“After accelerating strongly in 2018, Texas job growth is likely to slow to about 1.4 percent in 2019 as labor constraints limit growth along I-35 corridor and low oil prices slow growth in oil-producing regions,” Phillips said.
Phillips presented the Bank’s annual Texas Economic Outlook before local business leaders at the Dallas Fed’s San Antonio Branch.
“Businesses are scrambling to find workers to meet growing demand,” he said. “In the meantime, new tariffs, trade uncertainty and a recent fall in oil prices have the state facing uncertain waters,” according to Phillips.
Among the state’s major metropolitan areas, job growth slowed in Dallas and San Antonio in 2018 but rebounded in the energy-dependent metros, including Houston, which experienced a faster pace of growth than the rest of the state.
They’re not predicting job losses yet. Oil better not fall further than it already has.
— jeroen blokland (@jsblokland) January 16, 2019