Austin Economic Indicators
May 8, 2020
The Austin economy slowed in March as the impacts of the coronavirus (COVID-19) began to surface. The Austin Business-Cycle Index grew well below trend. Jobs declined, the unemployment rate increased and initial unemployment claims surged. Real estate activity in the metro slowed, home sales prices increased and building permits fell.
The Austin Business-Cycle Index expanded 2.9 percent in March, the lowest month-over-month change since December 2009 (Chart 1). The decline in index growth was due to the recent job contraction and higher unemployment rate.
Unemployment Rate Increases
Austin’s unemployment rate rose to 3.4 percent in March, the highest level since February 2017 (Chart 2). The state unemployment rate increased to 4.7 percent, also the highest since February 2017, and the U.S. rate rose to 4.4 percent, the highest since August 2017. Because unemployment data are measured for the week that includes the 12th of the month, the effect of the coronavirus in Austin was not fully represented in the March data.
Payroll Growth Negative in First Quarter
Austin jobs contracted an annualized 1.3 percent during the first quarter (Chart 3). The job loss was concentrated in March, when total jobs declined 8.3 percent and private sector jobs fell 9.8 percent. Many sectors posted job declines during the quarter, although the construction, financial activities, manufacturing, government, information and other services sectors experienced gains. Leisure and hospitality saw the largest employment drop (-10.9 percent annualized, or 3,910 net jobs lost), followed by health and private education (-6.0 percent, or 2,020 jobs) and professional and business services (-4.0 percent, or 2,070 jobs).
Unemployment Claims Surge
Initial claims for unemployment insurance benefits for the week ending April 25 numbered 6,276 locally. Total initial claims filed from March 7 to April 25 (69,526) represented 9.3 percent of the labor force in Travis County, a lower share than Texas’ 11.6 percent (1.6 million total initial claims) over the same period (Chart 4).
In March, existing-home sales fell 7.5 percent in the Austin area and 4.5 percent in Texas (Chart 5). Relative to fourth quarter 2019, first-quarter sales decreased 3.2 percent in the metro but were up 1.0 percent in the state. The median price of homes sold in March was $338,143 in Austin, a 10.0 percent increase year over year, compared with $248,681 in Texas, a 4.3 percent increase from a year ago.
Home Construction Permits Dip
The five-month moving average for aggregate single-family and multifamily construction permits in March declined 6.1 percent in Austin but was unchanged in the state (Chart 6). Austin’s home inventory ticked up to 1.8 months, still considerably below the six months considered a balanced market.
NOTE: Data may not match previously published numbers due to revisions.
About Austin Economic Indicators
Questions can be addressed to Judy Teng at email@example.com. Austin Economic Indicators is released on the first Thursday of every month.