Page 10 - NBIZ Magazine August 2023

Nonetheless, more than half of the
responding firms in June noted some
degree of understaffing. The number
of firms reporting that they were
overstaffed also increased, but a sizable
share of overstaffed firms said they
would not lay off workers, indicative of
expectations that weakening demand
may be short-lived. Special questions
posed in July suggest difficulties
filling low- and mid-skill positions.
Services prices continue rising;
wage growth remains high
Overall, price pressures have eased
this year, though the cost of raw
materials rose from June to July, TBOS
respondents indicated. Service sector
firms continued to see increases in
input and selling prices through July.
Wage increases have slowed but remain
well above the historical average.
Official inflation data for Texas
metros tells a similar story. Although
the 12-month Consumer Price Index
(CPI) for Houston declined to 1.6 per-
cent in June, core CPI (all items except
food and energy) remained at 5.3
percent (Chart 4). Headline and core
CPI growth rates in Dallas–Fort Worth
exhibited a similar pattern in May.
Steeply declining energy prices
account for the gap between overall
and core CPI rates in recent months.
Relatively high core CPI indicates that,
energy prices aside, strong upward
price pressures continue in the region.

House prices rebound; inventory
levels improve Apartment rents have increased Texas employment (December to
Residential real estate lending slowly this year after declining in December) is forecasted to rise 2.5
has been stabilizing in the region. the second half of 2022. Vacancy percent this year, down from the 2.8
Additionally, Texas home prices have rates in Texas and the U.S. have percent estimate a month ago. The
rebounded since January 2023 after reached prepandemic levels, which July figure implies moderate job
declining in 2022, according to Core- may exert downward pressure on growth—a 1.8 percent annualized rate
Logic data (Chart 5). future rent growth. for the rest of the year. N
Housing inventories in Texas have Office vacancies in Texas remain
grown significantly above the lows of high, with a 25 percent vacancy rate in Aparna Jayashankar is a research
2021 and 2022—approaching prepan- Houston and a 23 percent rate in Dallas– analyst in the Research Department
demic levels—which may reduce Fort Worth versus 18 percent nationally. at the Federal Reserve Bank
some of the price pressure. The rise of Dallas. Yichen Su is a senior
in inventory levels since early last Texas economy likely to expand research economist in the Research
year contrasts with the nation, where further but more slowly Department at the Federal Reserve
inventories remain near historic lows. Texas economic growth will likely Bank of Dallas. The views expressed
Austin has the highest level of continue through year-end, although are those of the authors and should
inventory, while Houston, San Anto- evidence points to slower expansion not be attributed to the Federal
nio, and Dallas–Fort Worth inventories relative to the first half. That said, the Reserve Bank of Dallas or the Federal
remain below prepandemic levels. likelihood of a contraction remains low. Reserve System.

10 NBIZ ■ August 2023