The Texas economy appears to be losing momentum, with recent indicators pointing to a slowdown in job creation and continued softness in the housing market. According to the October Texas Business Outlook Surveys, employment in the manufacturing sector showed minimal gains, while the service industry experienced a contraction in hiring. The three-month moving average of the manufacturing employment index dipped to 2.5, below its 10-year average of 8.1, signaling only modest expansion. Meanwhile, the service sector’s employment index fell to -2.7, marking a reversal after three months of slight improvement.
Wage growth remained steady but subdued. The manufacturing survey’s wages and benefits index stood at 14.2, down from the previous month, while the service sector index declined slightly to 10.7. Both figures remain below their historical averages, suggesting that compensation increases have not accelerated significantly across either sector.
In the housing market, activity stayed sluggish. Single-family housing permits dropped by 3.5 percent in August on a three-month moving average basis, while existing-home sales edged up just 0.8 percent in September. Although mortgage rates have trended downward recently, they were still high enough in September to constrain affordability. Housing inventory also tightened, falling to 5.1 months of supply.
On a brighter note, Texas sales tax collections hit a record $5.4 billion in September, a 1.3 percent rise from August and 3.2 percent higher than the same month in 2024. This reflects sustained strength in consumer spending despite broader economic headwinds.
— news from Federal Reserve Bank of Dallas
— News Original —
Texas Economic Indicators
Growth in the Texas economy appears to be slowing. The October Texas Business Outlook Surveys indicated subdued job growth in manufacturing but contracting employment in the service sector. Wage growth remained modest. The housing market remained sluggish in September, while sales tax revenue rose to a record high. n nTexas Business Outlook Surveys n nSurvey data suggest weak employment n nThe October Texas Business Outlook Surveys indicated weakening employment (Chart 1). The three-month moving average of the Texas Manufacturing Outlook Survey employment index ticked down to 2.5, below its 10-year average of 8.1, indicating only a slight increase in manufacturing sector employment. The three-month moving average of the Texas Service Sector Outlook Survey employment index fell to -2.7, reflecting declining employment following three consecutive months of slight increases. n nWages continue expanding n nThe Texas Business Outlook Surveys indicated continued growth in wages in October (Chart 2). The Texas Manufacturing Outlook Survey wages and benefits index came in at 14.2, below September’s reading. The Texas Service Sector Outlook Survey wages and benefits index also ticked down, though it remained positive at 10.7. Both indexes are below their series averages, suggesting modest wage growth in the manufacturing and service sectors. n nHousing n nActivity in the Texas housing market remained slow. The three-month moving average of single-family housing permits fell 3.5 percent in August, while the three-month moving average of existing-home sales ticked up 0.8 percent in September (Chart 3). Mortgage rates have been trending down over the past few months but remained elevated in September, continuing to impact housing affordability. Existing-home inventories in Texas ticked down to 5.1 months of supply in September. n nSales tax revenue n nTexas sales tax collections reached a record $5.4 billion in September, up 1.3 percent from August (Chart 4). Compared to September 2024, sales tax collections were up 3.2 percent, reflecting strong consumer spending.