Texas Economic Indicators

July 26, 2024

In June, employment contracted slightly in Texas, while hourly earnings rose in the state and in most major metros. The unemployment rate was unchanged in Texas but ticked up for the nation. The June Texas Business Outlook Surveys headline indexes showed stabilization in factory production and a continued mild pace of expansion in the service sector. Home sales showed signs of softening in June after rising earlier in the year, while oil prices and rig count dipped in mid-July.

Labor market

Texas employment contracts in June, but up in Q2

Texas employment was little changed at an annualized -0.2 percent in June (-1,200 jobs) after increasing an upwardly revised 3.2 percent in May. Second-quarter growth was 2.1 percent annualized, slightly slower than the first quarter's 2.5 percent increase. Compared to the first quarter, the state's construction and trade, transportation and utilities sectors had stronger job gains, while oil and gas employment continued to contract (Chart 1). The Dallas Fed's Texas Employment Forecast was revised down to 1.9 percent job growth this year (December/December).

Hourly earnings expand in major metros

In June, private hourly earnings rose in Texas and most major metro areas (Chart 2). McAllen posted the strongest increase, growing 10.5 percent year over year, followed by San Antonio. Houston climbed 3.9 percent, Fort Worth 3.4 percent, Dallas 2.9 percent and Austin 2.8 percent, while El Paso was little changed, declining -0.1 percent.

Unemployment rate stable

The Texas unemployment rate held steady at 4.0 percent in June, while the U.S. jobless rate ticked up to 4.1 percent (Chart 3). Unemployment rates in Texas were 3.0 percent for white workers, 4.5 percent for Hispanic workers and 6.5 percent for Black workers. Among the state's metro areas, Beaumont-Port-Arthur and McAllen-Edinburg-Mission posted the highest unemployment rates at 6.2 percent, while Midland had the lowest unemployment rate at 2.7 percent.

Texas Business Outlook Surveys

The Texas Business Outlook Surveys headline indexes indicated manufacturing output remained stable while service sector activity expanded modestly in June (Chart 4). The manufacturing survey production index was 0.7, up from -2.8 in May, whereas the service sector input revenue index slowed to 1.9 from 6.7 in May.

Housing

Texas housing demand softened in June amid high mortgage rates (Chart 5). Texas existing-home sales declined 3.4 percent compared with May. Mortgage rates remained elevated, averaging 7.4 percent in June, and continued to impact housing affordability. Texas single-family housing construction permits fell 7.0 percent in June. Inventories in Texas were 4.4 months of supply, the highest level since April 2013.

Energy

Oil prices ticked down in mid-July following a run-up in the prior five weeks (Chart 6). As of the week ending July 12, West Texas Intermediate crude was $83.44 per barrel, $1.17 lower than the first week of July. Natural gas (Henry Hub) increased $0.19 to $2.26 per million British thermal units. The number of active rigs in Texas has been declining since the end of 2023 and fell to 276 in mid-July.

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