The Dallas Fed’s Texas Service Sector Outlook for April reflected improved conditions. The general business activity index was up to 5.7 in April, a bounce back from -4.4 in March and the highest since 11.3 in November 2018. The six month expectations were also at their best since November at 12.3 in April from 4.3 in March. Uncertainty in the outlook was up somewhat as well with the index at 12.8 in April from 11.6 in the prior month. The report included annual revisions.
The report reflected moderately rising revenues. However, the measure for employment was flat and that for part-time employment up for a fourth month in a row which hours worked for lower. Increases for wages and benefits remained firm, but off the peaks of 2018.
The Dallas index has a good correlation to the ISM Non-Manufacturing Index. The rise in April portends an increase in the ISM index from the 56.1 in March when the report is released at 10:00 ET on Friday, May 3. This is reinforced by the sharp increase in the revenues index in the Richmond Fed’s Survey of Service Sector Activity which rose to 26 in April from 5 in March. This index has the best correlation with the ISM number.
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