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Texas Economic Indicators

Economic Indicators
October 23, 2017

Texas economic indicators were mixed in September. Employment contracted as a result of the impact of Hurricane Harvey, and exports and existing-home sales weakened in August. Unemployment declined last month across the state’s major metros. The Texas Leading Index strengthened, and the Texas Business Outlook Surveys suggested continued solid growth.

Labor Market

Employment Contracts After Hurricane Harvey

Texas employment decreased an annualized 0.4 percent in September, similar to the nation’s 0.3 percent decline (Chart 1). However, Dallas Fed analysis of Hurricane Harvey’s impact suggests that state employment will rebound in October. Year to date, Texas employment has grown at a 2.2 percent annual rate. The Dallas Fed’s Texas Employment Forecast suggests 2.6 percent job growth in 2017 (December/December).

Employment in the energy sector posted the fastest growth at an annualized 24.9 percent in the month, while the leisure and hospitality sector experienced the sharpest decline at 15.2 percent.

Payrolls in Houston contracted an annualized 8.9 percent in September, while employment in the other major metros rose. Employment has expanded in all Texas major metros year to date.

Chart 1

Unemployment Dips Further

Texas’ unemployment rate fell to 4.0 percent in September, its lowest level since December 2000 and lower than the U.S. unemployment rate of 4.2 percent (Chart 2). Unemployment in all major metros dipped in September. The jobless rate in Austin, which tends to be the lowest among the major metros, dropped to 2.7 percent.

Chart 2

Texas Leading Index

The Texas Leading Index, a composite of eight indicators that tend to change direction before the overall economy does, sheds light on the future of the state’s economy. In September, the estimated value of the index, adjusted for the effects of Harvey, ticked up 0.95 percent, and the three-month growth was 0.66 percent (Chart 3). The Texas value of the dollar was the largest positive contributor to the index in the three-month period, while well permits were the largest negative contributor.

Chart 3

Texas Business Outlook Survey Indexes

The Dallas Fed’s Texas Business Outlook Surveys indicated continued expansion in September (Chart 4). The three-month moving averages of the headline indexes for the manufacturing, service and retail sectors rose and were above their post-recession averages (2010 to 2016). The three-month moving average of the manufacturing sector production index is at its highest level since 2006. The three-month moving average of the service sector revenue index ticked up, and its more volatile retail component rose sharply in September.

Chart 4

Exports

Texas exports declined 3.3 percent in August, compared with the nation’s 0.8 percent increase (Chart 5). Year to date, Texas exports are 8.6 percent higher, and U.S. exports are 3.9 percent higher compared with the same period in 2016.

Chart 5

Existing-Home Sales

Texas existing-home sales declined 7.9 percent in August, and the five-month moving average dipped 1.7 percent (Chart 6). The five-month moving average of home sales expanded in Austin and San Antonio in August, edged down in Dallas and Fort Worth, and weakened 5.4 percent in Houston.

Home sales in Texas are 3.9 percent higher in the first eight months of the year compared with the same period in 2016. Year-to-date sales are ahead of the same period last year in all the major Texas metros, with Houston posting the slowest growth at 1.8 percent.

Chart 6

NOTE: Data may not match previously published numbers due to revisions.

About Texas Economic Indicators

Questions can be addressed to Stephanie Gullo at stephanie.gullo@dal.frb.org. Texas Economic Indicators is published every month on the Monday after Texas employment data are released.