Page 9 - NBIZ Magazine August 2023

(Chart 1). Texas job growth has been
robust across sectors outside of leisure
and hospitality and manufacturing.
Slowing manufacturing employ-
ment is consistent with declining
manufacturing activity. Leisure and
hospitality softness reflects weakness-
es in the recreation industry (princi-
pally amusement parks) and the hotel
industry during May and June, which
were unusually hot months that may
have deterred family outings.
Despite overall healthy job growth,
the state unemployment rate remained
at 4.1 percent in June, compared with
3.6 percent nationally. Texas’s higher
labor market slack is largely attribut-
able to a relatively higher labor force
participation rate and faster-growing
labor force.

Weakening demand a concern
despite services strength
On the strength of the service
sector, economic growth in Texas
rebounded in July from a slower June,
according to TBOS respondents. The
service sector revenue index jumped to
12.9 in July from 3.6 in June, indicat-
ing that the rate of expansion picked
up. Meanwhile, the manufacturing
production index fell further into
contractionary territory.
While manufacturers grew more
pessimistic, the outlook among service
sector firms turned positive for the
first time since May 2022.
The indexes are calculated by
subtracting the percentage of respon-
dents reporting a decrease from the
percentage reporting an increase, with
positive numbers showing growth and
negative ones signaling contraction.
In June, TBOS participants were
asked about their top concerns
surrounding their business outlooks.
Weakening demand/potential reces-
sion was cited most, mirroring results
three months earlier (Chart 2).
Increasing labor costs were
another principal concern, while
supply-chain disruptions, inflation
and hiring difficulties have retreated
since last year. In July, more
businesses reported improved job
applicant availability than worsening
availability (Chart 3).

NBIZ ■ August 2023 9