Texas Border Economy
Like last quarter, border employment grew in 3Q2024but not enough to prevent an increase in the unemployment rate. Housing sales had a worse second quarter this year than last year, and home prices increased in two of the four border metros.
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Texas Border Economy is a summary of important economic indicators that help discern trends in the housing markets along the Texas-Mexico border.
Like last quarter, border employment grew in 3Q2024 but not enough to prevent an increase in the unemployment rate. Housing sales had a worse second quarter this year than last year, and home prices increased in two of the four border metros. Inflation also continued to cool as the Federal Reserve’s interest rate increases showed more impact. However, the inflation rate was still above the Fed’s inflation target, showing continuing signs of decelerating.
Economy
According to the Dallas Fed’s Business-Cycle Index, El Paso experienced the strongest economic growth among the four border MSA areas, with a 4.9 percent year-over-year (YOY) increase. Brownsville followed, albeit at a slower pace, with 2.6 percent YOY growth. In contrast, Laredo saw a decline of 1.3 percent for the quarter, while McAllen registered a slight 0.1 percent increase, indicating a stable but minimal growth trajectory.
Overall, border MSA nonfarm employment grew by 7,100 positions, representing a 0.8 percent quarter-over-quarter (QOQ) increase (Figure 1). Brownsville led the gains with a 1.7 percent rise, adding 2,800 jobs. Both Laredo and McAllen followed with 0.6 percent increases, contributing 700 and 1,800 positions, respectively. El Paso experienced the smallest growth, with a 0.5 percent increase, also adding 1,800 jobs.
The border-wide unemployment rate inched up to 5.2 percent in 3Q2024, 0.1 above the previous quarter. Brownsville saw a slight increase, rising by 0.1 percent to 5.5 percent. McAllen reported the highest unemployment rate along the border at 6.1 percent. El Paso and Laredo maintained their previous rates of 4.4 percent and 4.2 percent, respectively, showing stable labor market conditions in these regions.
Border MSA average hourly earnings increased by 29 cents, reaching $21.65 in 3Q2024. Brownsville led the QOQ growth, with earnings rising by 6.0 percent to $21.11. El Paso also experienced wage growth, with hourly earnings increasing from $22.72 to $23. Notably, Brownsville’s hourly earnings saw a substantial YOY increase, climbing from $17.76 in 3Q2023 to $21.11 in 3Q2024.
Pedestrian border crossings increased by 4.4 percent QOQ and 6.5 percent YOY. Pedestrian border crossings are still almost a million people short of the pre-pandemic peak of 5.2 million in 4Q2019.
Personal vehicle passengers were up 2.7 percent from last quarter and 2.5 percent from last year. Unlike pedestrian traffic, vehicle passenger traffic is ahead of 4Q2019.
Mexican manufacturing and maquiladora employment1 along the southern border presents a mixed picture. The most significant QOQ decline was in Nuevo Laredo, where employment dropped 4 percent, followed by decreases in Matamoros and Chihuahua, at 2.2 percent and 0.2 percent, respectively (Table 1). Juárez, the largest maquiladora employment hub along the Texas border, saw a 1.2 percent QOQ increase in 3Q2024, though it still faced a substantial YOY decline of 10.4 percent. Reynosa reported modest growth, with a 1.4 percent QOQ increase and a slight 0.2 percent YOY increase. These figures reflect varied employment dynamics across key industrial cities, with some areas experiencing recovery, while others continue to face employment challenges.
1Mexican manufacturing and maquiladora employment is generated by the Nacional de EstadÃstica y GeografÃa.
In the currency market, the average peso-to-dollar exchange rate rose to $19.59 in the third quarter. The upward trend continued into the current quarter, pushing the exchange rate above the ten-year average of 19.04 pesos per dollar for the first time since December 2022.
Border trade was mixed in 3Q2024, resulting in a larger decrease in net trade. Total border imports increased $1.7 billion (2.3 percent) QOQ, while total exports decreased $0.8 billion (-1.7 percent QOQ). The larger rise in imports resulted in an expanded trade deficit of $29.2 billion from $26.7 billion in 2Q2024.
Real Estate
Border home sales totaled 4,247, reflecting a slight YOY decrease of 0.6 percent compared to 4,274 sales in the previous year (Table 2). Laredo recorded the most significant YOY decline, dropping by 8.5 percent. McAllen-Edinburg-Mission experienced a marginal decrease of 0.1 percent. In contrast, Brownsville-Harlingen was the only Metropolitan Statistical Area (MSA) with growth, achieving a modest 0.9 percent increase. El Paso held steady with a minor 0.1 percent YOY gain, indicating steady demand like the prior year.
Median home prices showed a mixed trend across the four border metros (Figure 2). Brownsville-Harlingen had the most significant YOY decline, with prices dropping 2.8 percent. Similarly, McAllen-Edinburg-Mission recorded a modest 1.2 percent YOY decrease. In contrast, El Paso saw the highest YOY growth rate at 3.9 percent. Laredo had a minimal price YOY increase of 0.7 percent, pointing to relatively stable conditions.
To see the previous report, click here. For the report from a year ago, click
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Outlook for the Texas Economy
Texas total nonfarm employment dipped in October after two months of growth. Despite the loss of jobs, the unemployment rate held steady at 4.1 percent and the labor force participation rate climbed to 64.6 percent. Inflation remained resilient and failed to decrease toward the 2 percent target rate.
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