Texas Economic Indicators

November 21, 2024

The Texas economy softened in October. Employment fell while unemployment was flat. The October Texas Business Outlook Surveys headline indexes show expansion in both the manufacturing and services sectors. Home sales and Texas' sales tax collections rose, while the Texas Leading Index dipped in October.

Labor market

Texas employment contracts in October

Texas employment fell an annualized 0.6 percent in October (-6,600 jobs) while the U.S. was little changed (Chart 1). The largest declines were in professional and business services, contracting 9 percent. Employment also fell in trade, transportation and utilities, education and health and construction. However, the oil and gas, information and financial activities sectors posted strong job growth. The Dallas Fed's Texas Employment Forecast for 2024 was revised down to 2.2 percent (December/December). The unemployment rate in Texas held steady at 4.1 percent.

Job growth weakens in most major metros

October employment growth was weak across most major Texas metros (Chart 2). San Antonio led job growth, growing 2.2 percent, followed by Austin at 1.3 percent. Employment in Fort Worth was flat, while it contracted in Dallas (-0.3 percent), El Paso (-0.5 percent), Houston (-1.8 percent) and McAllen (-1.9 percent).

Texas Business Outlook Surveys

The October Texas Business Outlook Surveys reported a strong rebound in manufacturing output and continued solid growth in the service sector (Chart 3). The manufacturing production index jumped from -3.2 to 14.6, above its 10-year average. The service sector revenue index ticked down from 10.1 to 9.2 but remained near its long-run average.

Housing

Texas existing-home sales increased in October. The three-month moving average rose 2.2 percent (Chart 4). Mortgage rates remained elevated in October, continuing to impact housing affordability. Existing-home inventories in Texas held steady at 4.3 months of supply for the fourth straight month. The three-month moving average of Texas single-family housing construction permits was up 1.4 percent in September.

Texas Leading Index

The Texas Leading Index, a composite of eight leading indicators that sheds light on the future of the state's economy, ticked down in October (Chart 5). The three-month change was negative too, with several components dragging on the index, particularly a strong decline in average hours worked.

Consumer spending

Texas sales tax collections reached a record $5.2 billion in October (Chart 6). Statewide sales tax collection was 1.6 percent above its 2024 peak in March. Compared with October 2023, inflation-adjusted sales tax collections were up 5.3 percent, reflective of strong consumer spending.

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