Austin economy continued to expand in February

The Austin economy continued to expand in February, albeit at a slower pace. The Austin Business-Cycle Index grew at a moderate clip. While jobs were added at a healthy pace, the unemployment rate increased slightly.

COVID-19 hospitalizations declined further since peaking in mid-January, and regional consumer spending has been strong. Existing-home sales weakened sharply in February, likely impacted by Winter Strom Uri.

Business-Cycle Index

The Austin Business-Cycle Index—a broad measure of economic activity—expanded an annualized 4.9 percent in February, lower than the 9.2 percent in January and 9.8 percent in December.

This marked the 10th consecutive month of growth, which suggests a continued but slowing recovery in the Austin economy (Chart 1).

Labor Market

Unemployment Rate Climbs

Austin’s unemployment rate ticked up to 5.3 percent in February from 5.1 percent in January (Chart 2).

This is well below the state’s jobless rate of 6.9 percent and the nation’s 6.2 percent.

Recent Job Growth Positive in Most Sectors

Austin payrolls grew an annualized 4.8 percent, or by 12,915 net jobs, in the three months ending in February (Chart 3)

The “other services” sector led the job expansion (20.0 percent, or 1,945 jobs), followed by professional and business services (17.7 percent, or 8,390 jobs) and construction and mining (12.7 percent, or 2,180 jobs).

Two sectors declined—government (-11.3 percent, or 5,585 jobs) and manufacturing (-4.9 percent, or 800 jobs).

As of February, 76.3 percent of the 135,520 jobs lost at the onset of the pandemic in March and April of last year have been recovered.

Consumer Spending

Except for a dip in late November 2020 and during Winter Storm Uri in mid-February, consumer spending (measured by credit and debit card spending) has surpassed January 2020 levels in Travis County since late July.

As of March 14, 2021, spending in the county that includes Austin was up a strong 31.2 percent relative to January 2020, while spending in Texas was up 4.9 percent (Chart 4).

COVID-19 Hospitalizations

The number of individuals currently hospitalized with COVID-19 in Austin has trended downward since peaking Jan. 18 at 714 (Chart 5).

At the state level, the number currently hospitalized peaked on January 17 at 13,977. As of March 29, 201 people were hospitalized in Austin and 3,287 in Texas.

Real Estate

Existing-home sales in Austin declined a sharp 22.3 percent in February, likely impacted by Winter Storm Uri (Chart 6).

The state experienced a steep decline of 16.3 percent. In 2020, metro home sales for the year were up 8.9 percent relative to 2019. At the state level, sales were up 9.6 percent for the year.

The median price of homes sold in February was $407,443 in the metro, a 24.6 percent rise year over year, compared with $282,004 in Texas, a 15.2 percent gain.

Source: Federal Reserve Bank of Dallas