Texas Economic Indicators

Growth in the Texas economy appears to be slowing. The October Texas Business Outlook Surveys indicated subdued job growth in manufacturing but contracting employment in the service sector. Wage growth remained modest. The housing market remained sluggish in September, while sales tax revenue rose to a record high.

Texas Business Outlook Surveys

Survey data suggest weak employment

The October Texas Business Outlook Surveys indicated weakening employment (Chart 1). The three-month moving average of the Texas Manufacturing Outlook Survey employment index ticked down to 2.5, below its 10-year average of 8.1, indicating only a slight increase in manufacturing sector employment. The three-month moving average of the Texas Service Sector Outlook Survey employment index fell to -2.7, reflecting declining employment following three consecutive months of slight increases.

Wages continue expanding

The Texas Business Outlook Surveys indicated continued growth in wages in October (Chart 2). The Texas Manufacturing Outlook Survey wages and benefits index came in at 14.2, below September’s reading. The Texas Service Sector Outlook Survey wages and benefits index also ticked down, though it remained positive at 10.7. Both indexes are below their series averages, suggesting modest wage growth in the manufacturing and service sectors.

Housing

Activity in the Texas housing market remained slow. The three-month moving average of single-family housing permits fell 3.5 percent in August, while the three-month moving average of existing-home sales ticked up 0.8 percent in September (Chart 3). Mortgage rates have been trending down over the past few months but remained elevated in September, continuing to impact housing affordability. Existing-home inventories in Texas ticked down to 5.1 months of supply in September.

Sales tax revenue

Texas sales tax collections reached a record $5.4 billion in September, up 1.3 percent from August (Chart 4). Compared to September 2024, sales tax collections were up 3.2 percent, reflecting strong consumer spending.