Texas Service Sector Activity Falters Amid Increased Uncertainty

Published: 2025/09/30 17:45:31

Texas service sector activity contracted slightly in September, according to business executives responding to the Texas service Sector Outlook survey. The revenue index, a key measure of state service sector conditions, fell 11 points to -2.4.

Labor Market Trends

Labor market measures suggested employment declines and little change in hours worked this month. The employment index edged down to -3.6 from 1.2 in August. The part-time employment index improved to -0.6 from -2.7, while the hours worked index fell six points to -1.0, signaling little change in the length of workweeks.

Business conditions and Uncertainty

Perceptions of broader business conditions worsened in september, and uncertainty rose. The general business activity index dropped 12 points to -5.6, and the company outlook index fell seven points to -2.6. The outlook uncertainty index increased 11 points to 22.5.

Price and Wage Pressures

Input price and wage pressures remained elevated. The input price index rose to 16.8 from 14.1, while the wages and benefits index increased to 18.8 from 16.2. these readings suggest continued inflationary pressures within the service sector.

Special Questions: Key Findings

This month’s survey included supplemental questions on wages, prices, outlook concerns, tax reform, and remote work. Key findings from these special questions, along with results from the Texas Manufacturing Outlook Survey and Texas Retail outlook Survey, have been released together.

• Wages: Continued increases in wages and benefits were reported.
• Prices: Input prices continue to rise, contributing to inflationary pressures.
• Outlook Concerns: Businesses expressed growing concerns about the future economic outlook.
• Tax Reform: Responses regarding tax reform were varied.
• Remote Work: The prevalence of remote work arrangements remains a factor.

Key Takeaways

• The texas service sector experienced a slight contraction in September.
• Employment levels declined, while hours worked remained largely unchanged.
• Business uncertainty increased substantially.
• Inflationary pressures,driven by rising input prices and wages,persist.

Looking ahead, the increased uncertainty and contraction in activity suggest a challenging period for the Texas service sector. monitoring these trends will be crucial for understanding the state’s economic health in the coming months. Further analysis of the special questions will provide deeper insights into the factors influencing business decisions and expectations.