Page 15 - NBIZ Magazine April 2024

Service and Manufacturing Surveys Offer Mixed Signals
Texas service sector activity expanded at a modest pace in March as indicated by the Texas Service
Sector Outlook Survey revenue index. Meanwhile, Texas factory activity weakened in March as shown
by Texas Manufacturing Outlook Survey results (Chart 1). The surveys’ diffusion indexes indicate
growth when positive and contraction when negative. Three-month moving averages that smooth out
volatility are consistent with economic activity converging to long-run average growth.
Texas payroll employment growth
in February accelerated notably from
January levels. The number of Texas
jobs rose 4.3 percent in February
(month-over-month, annualized rate),
up from a downwardly revised Jan-
uary reading of 1.9 percent (initially
2.0 percent). Employment gains
were broad based and led by man-
ufacturing, leisure and hospitality,
professional and business services,
and financial activities. Employment
declined only in the trade, transpor-
tation, and utilities sector.
The Texas unemployment rate
remained at 3.9 percent, while the
labor force grew at a 2.1 percent
annualized rate.

Wage Growth Remains Elevated; Inflation Eases Slightly
Wage growth remains high, reflecting still-strong demand for labor, elevated inflation, and a low un-
employment rate. The Texas Employment Cost Index for wages and salaries rose from 3.9 percent growth
year over year in third quarter 2023 to 4.3 percent in the fourth quarter. It had trended lower for more
than a year.
TBOS wage indexes plateaued during the first three months of 2024 after having receded from
highs in mid-2022. Survey respondents in March expected wages to increase 3.6 percent over the next
12 months.
Inflation in Texas, however, appeared to slightly ease at the start of 2024. The 12-month change
in the Texas consumer price
index (CPI) was 4.8 percent in
January, down from 5.0 percent
in December. This reflects a break
from second half of 2023 when
the Texas CPI accelerated even
as the comparable U.S. measure
slowed (Chart 2).
The TBOS selling price index,
a weighted average of manu-
facturing and service sector
price indexes, indicated slight
moderation of price pressures in
January and February. However,
the index doesn’t show the level
of inflation, only the direction
of change.

NBIZ ■ APRIL 2024 15