Outlook for the Texas Economy | September 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 expanded for the second consecutive month, but the unemployment rate remained steady at 4.1 percent for the third month in a row. The inflation rate continues to make progress with the Consumer Price Index (CPI) dropping to 2.4 percent year over year (YOY) in September from 2.5 percent YOY in August. Home sales bounced back after falling in August.

Overall Inflation Shrinks, Core Inflation Grows 

Over the past 12 months, the CPI has grown by 2.4 percent before seasonal adjustment, marking the smallest 12-month rise since February 2021. The seasonally adjusted CPI for all items rose by 0.2 percent in September, matching the increases seen in both August and July. 

Food prices increased by 2.3 percent from September 2023 to September 2024, compared to a 3.7 percent rise from September 2022 to September 2023 and an 11.2 percent surge from September 2021 to September 2022. Over the same period, consumer energy prices dropped by 6.8 percent, marking the largest decline since January 2024. Meanwhile, prices for all items excluding food and energy rose by 3.3 percent (referred to as core inflation). Since July, the growth in core inflation has been stubborn and has not declined like overall inflation. 

Texas Payroll Sees Modest Growth 

In September, Texas nonfarm employment grew by 29,200 workers, representing a 0.2 percent month-over-month (MOM) increase. The state’s four major metropolitan areas continued to experience employment growth, though the changes were modest compared to the previous month. Austin recorded the largest increase, adding 4,800 positions, a 0.4 percent rise. Dallas and Houston saw moderate gains, with 5,900 and 5,200 new positions, reflecting increases of 0.1 and 0.2 percent, respectively. San Antonio remained relatively stable, with a slight increase of 800 positions from August. 

In September, the trade, transportation, and utilities sector added 7,200 workers, reflecting a 0.3 percent increase. The professional and business services sector also expanded, with a gain of 10,500 workers, marking a 0.5 percent rise. Additionally, the education and health services sector grew by 10,400 jobs, representing a 0.5 percent increase. 

Worker sentiment in Texas improved slightly in September, with the labor force participation rate rising by 0.1 percentage points from August to reach 64.5 percent. The unemployment rate held steady at 4.1 percent, unchanged since July 2024. Additionally, continued unemployment claims averaged approximately 144,546 per week, reflecting a 2,145 increase over August. 

Texas Home Sales Rebounded 

Total Texas home sales increased by 4.8 percent in September, reaching 26,165 transactions, signaling a rebound from August (see table). Among the Big Four metro areas, only San Antonio declined, with a 10.3 percent drop to 2,523 transactions. In contrast, Houston had the sharpest rise, with sales up by 11.6 percent to 7,149 transactions. Austin continued its modest upward trend from August, registering a steady 2.6 percent increase to 2,331 transactions. Dallas also recorded growth, with sales rising 4.6 percent to 7,202 transactions. 

Service Sector Has Another Strong Month 

The state’s private service sector added 33,100 jobs in September. While not nearly as strong as the previous month’s gain of 63,900, it was the second consecutive month of strong growth following negative growth in both June and July. According to the Dallas Fed Texas Service Sector Outlook Survey, the employment index for September was at 2, reflecting minimal growth in job numbers. The six-month outlook suggests more hiring growth even though that sentiment has deteriorated since November 2021, when hiring optimism was at its highest.  

The general business activity index improved to -2.6, indicating a less severe decline despite remaining in negative territory. The company outlook index rose by four points to 1.2, suggesting a slight uptick in business sentiment, while the outlook uncertainty index decreased by five points to 9.4, indicating reduced uncertainty among businesses.  

Positive contributing factors included the revenue index, which climbed to 10.1, reaching its highest level in 13 months. In general, the revenue index has been increasing since April of this year. Price movements were mixed: the selling price index was largely unchanged at 5.4, while the input price index dropped by five points to 23.3, hinting at some easing in cost pressures. The wages and benefits index decreased by two points to 12.3, pointing to a modest slowdown in compensation growth. 

Retail employment grew at a slower pace than the overall service sector, adding only 2,100 jobs in September. Most firms are still reporting month over month decreases in revenue according to the Dallas Fed Texas Retail Outlook Survey. Even though most firms are also reporting less and less wage pressure, general business activity and company outlook remains positive. As a result, most firms reported fewer hires six months from now. 

Texas Export Growth Stagnates Amid Declining Oil Demand 

Texas’ total commodity exports rose by 1.2 percent MOM in August, while YOY growth remained nearly flat. Despite this slight monthly gain, the demand for Texas oil and natural gas exports, the state’s leading export, continued to decline—falling by 5.1 percent MOM and 3.7 percent YOY. Meanwhile, petroleum and coal exports increased 5.8 percent MOM but declined 1.5 percent YOY.  

Select Econo​mic Indicators

• The Texas Leading Economic Index rose slightly to 126.9 in September, indicating modest improvement in the state’s economic outlook, though growth remains cautious. 
• Nominal average hourly earnings remained unchanged from August at $33.25, reflecting a 4.1 percent YOY increase. 
• Earnings fluctuated across the four major metro areas, with Austin increasing by $0.54, DFW increasing by $0.47, Houston increasing by $0.07, and San Antonio decreasing by $0.38. 
• Texas consumer confidence declined by 12.3 percent MOM in September, reaching 102.9. 
• The ten-year U.S. Treasury bond fell 15 basis points, standing at 3.72 percent. 
• The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate fell by 32 basis points to 6.18 percent. 
• The West Texas Intermediate (WTI) crude oil spot price declined by 8.4 percent MOM to $70.24. The Henry Hub natural gas spot price increased by 14.6 percent MOM from $1.99 to $2.28 per million British thermal units (BTU).