Austin Economic Indicators
July 8, 2022
Austin’s economy continued to grow in May, though at a slower pace. The Austin Business-Cycle Index expanded at a moderated rate, as the unemployment rate ticked down to a new low since the pandemic, but Austin’s employment growth slowed from April’s pace. COVID-19 hospitalizations increased notably ahead of the Fourth of July weekend. Permits for new-home construction flattened out in May, while continued increases in home prices pushed affordability further below the national average.
The Austin Business-Cycle Index—a broad measure of economic activity—moderated to an annualized 4.9 percent in May, its slowest pace in two years (Chart 1). This follows a revised 9.9 percent growth rate in April.
Unemployment Rate Falls Further
Austin’s unemployment rate declined to a revised 2.9 percent in May—a new low since the beginning of the pandemic (Chart 2). This compared with the state’s jobless rate of 4.2 percent and the nation’s rate of 3.6 percent. Growth in the metro labor force rose an annualized 1.6 percent in May, slowing slightly from April’s 1.9 percent. Year to date, the Austin labor force has grown 3.2 percent, slower than the state’s labor force increase of 4.0 percent.
Payroll Gains Positive Across Most Sectors
Austin employment increased at a 4.5 percent annualized pace, or by 13,600 net jobs, for the three months ending in May (Chart 3). Growth was led by manufacturing (up 10.6 percent, or 1,700 jobs), followed by leisure and hospitality (up 8.4 percent, or 2,600 jobs), and professional and business services (up 7.3 percent, or 4,500 jobs). Construction and mining remained weak, seeing a net decline in employment (down 8.0 percent, or 1,500 jobs). As of May, all major sectors except leisure and hospitality, government and other services were above prepandemic levels, and Austin payrolls overall were 7.7 percent above prepandemic (February 2020) levels.
The number of people hospitalized with COVID-19 in Austin and Texas saw a notable increase in June (Chart 4). While COVID-19 hospitalizations remain far below their January peak, Austin saw a doubling in the seven-day moving average of hospitalizations between the end of May and early July. As of July 6, 180 people in Austin and 2,641 in the state were hospitalized with COVID-19.
Housing Permits Level Off in May
Permits for new housing in Austin were roughly flat in May, with the five-month moving average falling 1.2 percent, while statewide permits inched down 0.9 percent (Chart 5). Year to date, Austin housing permits are down 5.7 percent compared with a year ago, while Texas permits are up 7.7 percent. However, this is partly attributable to a moderation after Austin’s significant run-up of nearly 30 percent in 2021 permits.
Home Affordability Fell Sharply in First Quarter 2022
Home affordability continued to plunge in Austin, as first quarter 2022 data suggest that less than half of homes sold are affordable to the median-income household (Chart 6). This was lower than the national average of 56.9 percent. April showed median home prices reaching a new record of $529,959 in Austin, nearly 53 percent higher than the state’s median home price.
NOTE: Data may not match previously published numbers due to revisions.
About Austin Economic Indicators
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Austin Economic Indicators is released on the first Thursday of every month.