Dallas Federal Reserve Releases January’s Austin Economic Indicators

The Austin economy saw mixed performance in January. The Austin Business-Cycle Index decelerated and remained below its long-term trend. Job growth by sector was mixed; the information and financial activities sectors posted strong growth, while government jobs continued to decline.

Hourly wages increased, and residential construction permits contracted slightly.

Business-Cycle Index

The Austin Business-Cycle Index expanded at an annualized rate of 3.7 percent in January, below the long-run average of 6 percent (Chart 1). The unemployment rate ticked up, and jobs grew at a moderate pace.

Labor Market

Unemployment Edges Up

Austin’s January unemployment rate ticked up to 3.2 percent—below Texas’ rate of 3.8 percent and the U.S. rate of 4.0 percent (Chart 2). This is likely due to the partial government shutdown (the U.S. unemployment rate fell to 3.8 percent in February).

The metro’s labor force expanded at a sturdy annualized rate of 2.4 percent in January, slower than the state’s 3.1 percent.

Employment Growth Slow Through January

Austin employment expanded at an annualized rate of 0.4 percent in the three months ending in January and a moderate 2.4 percent in 2018 (Chart 3). Performance by sector was mixed.

Growth was primarily led by financial activities and information sectors, both of which grew at an annualized rate of close to 10 percent.

While leisure and hospitality also experienced healthy gains, government payrolls continued to decline, shedding slightly under 1,100 jobs.

The professional and business services and construction and mining sectors also contracted.

Hourly Wages Rise

Austin’s three-month centered moving average for private sector hourly wages increased mildly in January but remained above state and national averages (Chart 4).

Year over year, Austin wages grew 1.5 percent, below the nation’s 3.1 percent and the state’s 2.8 percent increase.

Real Estate

In December, the five-month moving average for total housing (single family and multifamily) construction permits contracted 0.1 percent in Austin and expanded 1.6 percent in Texas (Chart 5).

The total number of permits issued in 2018 relative to 2017 increased 11 percent in Austin and 8.6 percent in Texas.

As of January, Austin’s median home price was $306,711 versus $234,751 in Texas and $264,580 in the U.S.

Austin Purchasing Managers Index

The Austin Purchasing Managers Index indicated strong growth in the area’s manufacturing sector in February.

The six-month moving average of the headline index decelerated to an index reading of 63.5, though it remained well above the postrecession (January 2010–December 2017) average of 56.4 (Chart 6).

The production, new orders and order backlog indexes signaled growth in February, while the inventory, employment, supplier and prices indexes were unchanged.