Recently, the Federal Reserve Bank of Dallas released its Austin Business-Cycle Index and the report indicates that the Austin economy looks very strong. The Austin Business-Cycle Index, which is the Dallas Fed’s measure of the region’s economy, shows that the local economy grew by 7.4 percent in April, which is above the long-term average of 6 percent. It’s also above the growth rate the area has shown over the first few months of the year.
What’s Behind Local Economic Growth
A report about the index on Statesman.com highlighted the major factors behind economic growth in April: the low unemployment rate and strong job growth. In April, the unemployment rate fell to a seasonally adjusted 2.5% – its lowest point since December 1999. The Austin metro area (which includes Travis, Williamson, Hays, Bastrop and Caldwell counties) added jobs at an annualized pace of 3.5% during the three-month period that ended in April, compared to 3.3% for all of 2018.
Christopher Slijk, an economist at the Dallas Fed, said that the Austin economy “looks pretty robust from the data we have so far.” As for the local economic outlook, “There aren’t many signs of current slowing based on the indicators,” he said.
Economic Data from the Dallas Fed
- Local job growth early in the year was led by the industry category that includes the construction sector, which added 2,600 jobs from January through April.
- The increase in jobs in the construction sector equates to an annualized gain of 17.6%.
- Approximately 1,300 jobs were added in financial activities, for an 8.3% annualized gain.
- There were 3,100 were added in professional and businesses services — the sector that includes many high-tech professions — for an annualized gain of 6.6%.
- The three-month moving average of hourly wages in the Austin metro area slipped 0.7% in April to $29.07,
- Although local hourly wages slipped, it is still above the U.S. average of $27.71 and the statewide average of $26.16.
Slijk said the dip in Austin bears watching but could be a short-term anomaly, so “we’ll probably have to wait a few more months on that” to see if it’s a trend.
Jobs Decline in Just One Sector
The outlier in the report was the retail jobs industry, which saw jobs decline by about 1,850 through April. It’s uncertain what influenced the decline, although Slijk mentioned that retailers statewide have been reporting increasingly negative outlooks in 2019 amid rising global trade tensions.
In the Statesman report, it shows that the April data was collected before President Donald Trump imposed new tariffs on Chinese imports on May 10. Data were also collected before he threatened on May 30 to implement a tariff on all imports from Mexico unless the Mexican government agreed to stem the flow of undocumented immigrants into the United States. A deal to avert the tariff on goods from Mexico was announced Friday.
Austin’s Economic Outlook
Some economists fear that the extremely low unemployment rate in the Austin area has made it virtually impossible for employers to find workers. However, there’s little evidence that this has been the case.
According to Slijk, “The tightness in the labor market is probably the biggest potential headwind,” he said. But “we’re not seeing (a slowdown) now.”
With population growth still bringing in tens of thousands of newcomers every year, it’s possible that the current in-migration that’s fueling some of the economic expansion will likely help sustain strong local job growth.
Read more about the Austin economy.
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