Austin Economic Indicators
December 7, 2020
The Austin economy continued to recover in October. The Austin Business-Cycle Index accelerated as recent job growth was positive in most industries, and the unemployment rate declined. Regional consumer spending continues to increase and is well above pre-COVID-19 levels. Office space demand continued to weaken, building permits deteriorated slightly and home inventories were unchanged.
The Austin Business-Cycle Index—a broad measure of economic activity in the metro—expanded for the sixth consecutive month at an annualized rate of 22.2 percent in October, suggesting continued improvement in the Austin economy (Chart 1).
Unemployment Rate Falls
Austin’s unemployment rate declined to a still-evelated 5.3 percent in October (Chart 2). The jobless rate ticked down to 6.9 percent in the state and nation.
Most Sectors Post Job Gains
Austin payrolls expanded an annualized 10.7 percent, or by 27,340 net jobs, in the three months ending in October (Chart 3). Other services, which includes industries such as hair salons and household cleaning, led the expansion with 35.6 percent growth, or 3,140 jobs. This was followed by leisure and hospitality (30.7 percent, or 6,530 jobs), and professional and business services (21.1 percent, or 9,621 jobs). Government was the only sector that contracted (-1.8 percent, or -850 jobs). Financial activities and professional and business services were the only sectors to post positive job growth for the first 10 months of the year.
Since late July, consumer spending (measured by credit and debit card spending) in Travis County has surpassed January 2020 levels. As of Nov. 15, spending in the county was up 10.4 percent relative to January, while spending in Texas was down 2.4 percent (Chart 4).
Office Space Demand Down
Demand for office space continued to decline in Austin in the third quarter. Net absorption was -371,167 square feet, and the vacancy rate climbed to 14.3 percent—the highest since third quarter 2012, although still the lowest of all major Texas metros (Chart 5). Average asking rent increased 0.6 percent from the second quarter to $39.36 per square foot.
Recent Home Construction Permits Weaken Slightly
From September to October, the five-month moving average of total housing permits (single family and multifamily) declined a slight 0.1 percent in Austin, although it was up a strong 18.9 percent from October 2019. Texas permits improved 4.1 percent in October and were up 9.5 percent year over year. (Chart 6). Austin’s existing-home inventories remained at 1.1 months, the lowest level since the data series began in 1990, and considerably below the six months of supply considered to be 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.