Texas Economic Indicators

Texas economic growth was robust in November. The state posted strong job gains, and the unemployment rate fell to a record low for the second month in a row. The Dallas Fed’s Texas Business Outlook Surveys indicated expansion in manufacturing and service sector activity in November and December. Texas oil production resumed growth in September, and the state’s exports and construction activity have improved this year.

Labor Market

Employment Strengthens

Texas employment expanded an annualized 4.7 percent in November, faster than the nation’s 1.9 percent increase. Year to date, Texas employment has grown at a 2.6 percent annual rate. The Dallas Fed’s Texas Employment Forecast suggests 2.5 percent job growth in 2017 (December/December).

Payroll expansion was broad based across the major metros in November, led by Austin’s 8.2 percent surge and followed by Dallas’ 6.4 percent growth (Chart 1). Employment has expanded in all Texas major metros year to date, with Austin leading at 3.5 percent.

Unemployment Drops to Record Low

The Texas unemployment rate dipped to 3.8 percent in November—once again setting a record low for the series, which dates back to 1976 (Chart 2). Unemployment ticked up in Austin, Dallas, El Paso and Houston but held steady in Fort Worth and San Antonio.

Texas Business Outlook Survey Indexes

The headline indexes of the Dallas Fed’s Texas Business Outlook Surveys indicated continued expansion in the manufacturing, service and retail sectors in December. The three-month moving average of the Texas Manufacturing Outlook Survey (TMOS) production index strengthened to its highest point since mid-2006. The three-month moving average of the Texas Service Sector Outlook Survey (TSSOS) revenue index ticked up while that of the Texas Retail Outlook Survey sales index fell but remained strongly positive. All three are well above their 2010–16 post-recession averages.

Upward pressure on prices continued in December (Chart 3). The three-month moving average of the TMOS prices paid index inched down after reaching its highest point since 2011 in November, while the three-month moving average of the TMOS prices received index held steady. The three-month moving averages of the TSSOS input prices and selling prices indexes rose again in December. All four indexes are above their post-recession averages.

Energy Sector Activity

Texas daily crude oil production, representing 37.7 percent of all U.S. production, increased 5.7 percent in September to 3.6 million barrels per day (Chart 4). Texas’ average daily production this year through September was 5.0 percent above the average production during the same period last year.

Daily oil production in the Permian Basin, representing 26.6 percent of U.S. oil production, was 2.5 million barrels per day in September, and the Energy Information Administration (EIA) forecasts production to reach 2.8 million barrels per day in January 2018. The Permian Basin’s average daily production this year through September was 17.5 percent higher than average production during the same period last year.

Daily production in the Eagle Ford, representing 12.9 percent of U.S. oil production, was 1.2 million barrels per day in September, and the EIA forecasts production to remain nearly flat. The Eagle Ford’s average daily production this year through September was 6.3 percent below average production during the same period last year.

Exports

Texas exports increased 10.1 percent in October—the largest jump since October 2008—while U.S. exports edged down 0.3 percent (Chart 5). Year to date through October, Texas exports have expanded 9.4 percent, and U.S. exports were up 3.5 percent compared with the same period in 2016.

The Texas trade-weighted value of the dollar rose 2.4 percent in October but remained 4.8 percent below year-ago levels. A lower trade-weighted value of the dollar supports growth in exports by making domestic products more affordable to consumers abroad.

Construction

The five-month moving average of total Texas construction contracts fell 4.0 percent in November after a 6.8 percent increase in October (Chart 6). The five-month moving average of Texas nonresidential construction contracts dropped 5.6 percent in the month, that of nonbuilding construction declined 4.7 percent and that of residential construction dipped 1.9 percent.

Year to date through November, the value of Texas total construction contracts is 2.0 percent higher than the same period last year. While nonresidential construction contract values climbed 21.6 percent in the first 11 months of 2017 compared with the same period in 2016, nonbuilding construction declined 15.8 percent and residential construction dipped 1.8 percent.