Outlook for the Texas Economy | December 2024

Outlook for the Texas Economy summarizes significant state economic activity and trends. All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise. Click here to receive email notifications each time this report is published.

Texas total nonfarm employment finished the year with strong growth. December’s unemployment rate and labor participation rate held steady at November levels. Overall inflation continued to expand. However, core inflation contracted, signaling mixed progress in price growth. Additionally, Texas exports had a strong month due to strong oil and gas exports. 

Inflation Continues to Rise

The Consumer Price Index (CPI) grew by 2.9 percent year over year (YoY) before seasonal adjustment. On a seasonally adjusted basis, the CPI rose by 0.4 percent month over month (MoM), up slightly from November’s 0.3 percent increase, signaling a modest acceleration in monthly price growth.  

Core inflation, which excludes the more volatile food and energy components, decreased by 3.2 percent YoY. Core inflation increased by 0.2 percent MoM, a slower pace than the consistent 0.3 percent increase in prior months. This deceleration suggests a potential easing of underlying inflationary pressures despite persistent challenges in certain sectors.   

Texas Employment Finishes Strong

Texas nonfarm employment finished the year strong, expanding by 37,500 jobs in December—a 0.3 percent MOM and 2 percent YoY gain. December was the strongest month for job growth since August, which had a 0.7 percent MoM growth rate. All four major metros saw slight employment growth during the month. Austin led with a 0.3 percent MoM increase, followed by Dallas and San Antonio, both rising by 0.2 percent. Houston remained largely unchanged from November, edging up by just 0.1 percent. 

The trade, transportation, and utilities sectors added 10,400 jobs, rebounding from the previous month. The professional and business services sector saw the largest gain, adding 17,800 jobs—a 0.8 percent MoM increase. Meanwhile, the education and health services sector grew by 0.1 percent, maintaining relative stability. 

The labor force participation rate held steady at 64.7 percent in December after climbing in September, October, and November. Meanwhile, the unemployment rate remained unchanged at 4.2 percent. Continued unemployment claims averaged approximately 159,099 per week, 1,138 more than in November. This suggests lingering challenges in certain job sectors. However, the stable participation and unemployment rates indicate a resilient labor market, with steady workforce engagement despite minor shifts in jobless claims. 

Texas Homes Sales Slightly Increased

Total Texas home sales rose by 1.6 percent in December, with 28,868 transactions recorded statewide, signaling a modest recovery in the housing market. However, performance varied significantly across major metro areas. Dallas had the steepest decline, with sales dropping 21 percent to 6,671 transactions. Similarly, Houston recorded a 4.9 percent decline, with 6,804 transactions. 

In contrast, Austin posted a 4.9 percent increase, reaching 2,573 transactions. San Antonio remained stable with 3,018 transactions, demonstrating steadier market dynamics than those in other metros. This mixed performance across the state underscores the localized nature of Texas’ real estate trends, shaped by varying economic conditions, affordability levels, and demographic shifts in different regions. 

Service Sector Employment Expands

Texas’ service sector activity for December expanded at a faster pace than it did in November. Private service sector employment added 33,400 jobs, resulting in 0.33 percent MoM growth. The increase made up for the prior two months of job-growth stagnation. According to business executives surveyed in the Texas Service Sector Outlook Survey, both revenue and company outlook have been growing and are expected to continue growing. 

The combination of rising revenue and steady business activity suggests demand in the service sector remains robust. Business executives have reported less concern over uncertainty, which may indicate businesses are gaining clarity on economic conditions, potentially supporting further investment and expansion in the coming months. 

Texas Petroleum and Coal Products Exports Boosted

Texas, a key player in U.S. energy exports, saw total commodity exports grow by 3.7 percent MoM and 7.4 percent YoY, reflecting the state’s continued dominance in international trade. Leading exports—oil and natural gas—experienced a notable surge of 6.6 percent MoM and 5.5 percent YoY, underscoring the volatility of global energy markets shaped by shifting supply dynamics and geopolitical tensions. Notably, petroleum and coal exports from Texas surged by 10.5 percent MoM and 14.1 percent YoY, showcasing the sector’s resilience and growing international demand. 

In October 2024, the U.S. achieved record-high crude oil production of 13.5 million barrels per day, signaling an increase in the availability of petroleum products for export in November. This rise in production was driven by improved industry productivity, particularly in the Permian region, and was reflected in a 9 percent YoY increase in crude oil output in November. Completion of the Trans Mountain pipeline and other major projects further bolstered the country’s export capacity, enabling greater volumes of petroleum products to reach international markets. 

Global factors also played a role in shaping Texas’ energy exports. The rise in U.S. coal exports to India, Morocco, and European nations was driven by increased global power demand, with buyers securing cargoes ahead of winter. Meanwhile, imported fuel prices increased in October, likely continuing into November, enhancing the competitiveness of U.S. petroleum exports on the global stage. 

Additionally, some Texas refineries resumed production following maintenance shutdowns, contributing to increased petroleum product output. Geopolitical risks also influenced energy markets in November as the possibility of an Iranian attack on Israel from Iraqi territory heightened crude oil prices. This led countries to increase imports to hedge against potential supply disruptions. 

These combined factors highlight Texas’ pivotal role in meeting global energy needs while emphasizing the ongoing challenges and opportunities presented by volatile energy markets. As global energy demands evolve, maintaining export growth will require Texas to navigate geopolitical uncertainties, adapt to shifting market conditions, and explore emerging opportunities in alternative energy sources. 

Select Econo​mic Indicators

• In December, the Texas Leading Economic Index rose to 125.9, up from 125.5 in November, marking a 0.4 MoM increase. 
• Nominal average hourly earnings increased to $34.15 in December, reflecting a 6 percent YoY increase. 
• Earnings rose across all four major metro areas in December, with Houston leading the gains at $0.83 per hour. Dallas followed with a $0.67 increase, while Austin and San Antonio saw more modest wage growth of $0.53 and $0.20, respectively. 
• Texas consumer confidence increased by 12.2 percent MoM in December, reaching 133.4. 
• The ten-year U.S. Treasury bond rose by 3 basis points (bps), standing at 4.39 percent. 
• The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate decreased 9 bps to 6.72 percent. 
• The West Texas Intermediate (WTI) crude oil spot price increased by 0.2 percent MOM to $70.12. The Henry Hub natural gas spot price increased by 41.98 percent MoM from $2.12 to $3.01 per million British thermal units (BTU). 

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2024: January, February, March, April , May, June, July, August, September, October, November

2023: January, February, March, April, May, June, July, August, September, October, November, December

2022: January, February, March, April, May, June, July, August, September, October, November, December

2021: January, February, March, April, May, June, July, August, September, October, November, December