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First Cut: Dallas Fed service sector conditions improved in December on reduced uncertainty

The general business conditions index in the Dallas Fed’s Texas Service Sector Outlook rose sharply to 13.5 in December after 4.7 in November and was the firmest reading since 14.3 in In October 2018. The index for six months from now gained to 17.6 in December after 8.5 in November and was the highest since 19.2, also in October 2018. At least some of the improvement was in response to greatly reduced uncertainty. The uncertainty index fell to 1.4 in December, its second lowest reading after the -1.4 in January 2018 at the start of the series.

Also helping to boost perceptions of conditions was an improvement in the revenues index to 17.9 in December after 12.2 in November. Expected revenues in six months were more-or-less on trend at 37.8 after 36.3, and similar to recent months.

The index for employment remained positive, but softened to 5.5 in December after 7.0 in November. Part-time employment expanded once again at 2.3 after -2.2. The pace of increases for wages and benefits was up to 19.2 after 16.2. The number of hours worked were up a bit at 4.1 in December after 2.9 in the prior month.

The index for input prices showed a tick higher at 25.7 in December from 24.7 in November. However, upward price pressures were tame. Selling prices gained to 6.9 in December after 0.7 in November and perhaps reflected some end-of-year adjustments for upcoming contract renewals.

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