Texas Economic Indicators

The Texas economy expanded in December. Employment growth was robust, and the unemployment rate was flat. The January Texas Business Outlook Surveys show continued expansion in the manufacturing and services sectors. Home sales, single-family construction permits and the Texas Leading Index rose in December.

Labor market

Texas employment expanded but below trend in 2024

Texas employment rose strongly at an annualized 3.1 percent in December (36,000 jobs). U.S. job growth was robust as well, at an annualized 1.9 percent. Texas employment expanded 1.7 percent in 2024, above the nation’s 1.4 percent increase (Chart 1). The expansion was slower than the state’s 2 percent trend growth and below 2023’s increase of 2.4 percent. Job gains were widespread, outpacing the U.S. in all sectors except government, education and health, and leisure and hospitality. Texas’ strongest gains were in oil and gas and financial activities, which grew more than 5 percent each.

Unemployment flat

The Texas unemployment rate held steady at 4.2 percent in December, while the nation’s unemployment rate ticked down to 4.1 percent (Chart 2). Over the week ending Jan. 18, initial unemployment claims declined 12.8 percent while the nation’s claims rose 2.8 percent compared with the previous week.

Texas wage growth outpaces inflation

The Texas private hourly earnings grew 6.0 percent year over year in December 2024, and the 12-month growth in the consumer price index (CPI) for Texas was 1.9 percent in November (Chart 3). Amid a period of high inflation from mid-2021 to late 2022, Texas wage growth lagged CPI but has outpaced price increases since early 2023.

Texas Business Outlook Surveys

The January Texas Business Outlook Surveys reported a strong expansion in manufacturing output and continued growth in the service sector (Chart 4). The manufacturing production index jumped to 12.2 after a 5.3 reading in December, indicating strong growth in the sector. The service sector revenue index ticked down to 5.7 from 13.9 but remained positive, indicating expansion. The manufacturing index exceeded its 10-year average, while the service sector index fell below its 10-year average.

Housing

Texas existing-home sales increased in December. The three-month moving average increased 2.5 percent (Chart 5). Mortgage rates have dipped recently but remained at an elevated 7.2 percent, continuing to impact housing affordability. The three-month moving average of Texas single-family housing construction permits ticked up 0.7 percent in November.

Texas Leading Index

The Texas Leading Index, a composite of eight leading indicators that sheds light on the future of the state’s economy, ticked up in December (Chart 6). However, the three-month change was flat, with several components dragging on the index, particularly a strong decline in the Texas value of the dollar.