If you're new here, welcome! We post weekly summaries on market trends and updates. This week, we've uncovered an intriguing report on the current status of the Texas economy. To read the original report, click here or continue reading for our detailed summary.
Despite facing high interest rates, the Texas economy has shown remarkable resilience. May's employment growth was primarily driven by the professional and business services sector, maintaining a steady unemployment rate of 4 percent since the beginning of 2024. Core inflation has gradually decreased from 3.9 percent YOY at the start of the year to 3.4 percent in May, even as the federal funds interest rate remained at approximately 5.38 percent. The Consumer Price Index (CPI) stayed unchanged in May, reflecting a moderate decline in inflation.
The Texas service sector experienced modest growth in May, with a 0.3 percent MOM increase similar to April’s performance. According to the Dallas Fed’s Service Sector Outlook Survey, the revenue index rose, indicating improved sentiment, while employment saw slight gains. However, retail sales continued to decline, with the sales index dropping significantly. Meanwhile, Texas home sales fell by 4.2 percent MOM, with mixed results across different cities; Austin and Dallas saw declines, while San Antonio and Houston experienced slight increases.
Texas’ all-commodity exports declined by 1.8 percent MOM in May but grew by 5.6 percent YOY. Demand for oil and natural gas exports remained subdued, yet other top exports like petroleum and coal products and chemicals showed minimal fluctuations. Key economic indicators presented a mixed outlook: the Texas Leading Economic Index slightly declined, average hourly earnings rose marginally, and consumer confidence increased in May but has been falling since January 2024. Overall, the Texas economy demonstrated modest expansion, supported mainly by the service sector and steady employment growth.
Key Points:
Employment Growth: Professional and business services drove May's employment growth, keeping the unemployment rate steady at 4 percent since early 2024.
Inflation Trends: CPI unchanged in May; core inflation decreased from 3.9 percent to 3.4 percent YOY with a stable federal funds rate at 5.38 percent.
Service Sector Gains: Modest growth with a 0.3 percent MOM increase, improved sentiment per Dallas Fed, but retail sales declined.
Home Sales Mixed: Texas home sales dropped 4.2 percent MOM in May, with declines in Austin and Dallas, slight increases in San Antonio and Houston.
Export Stability: All-commodity exports dipped 1.8 percent MOM but grew 5.6 percent YOY; oil and natural gas demand remained subdued.
Source:
Outlook for the Texas economy. Texas Real Estate Research Center. (2024, July 16). https://trerc.tamu.edu/article/outlook-for-the-texas-economy/
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