Issue 3, May/June 2005
Federal Reserve Bank of Dallas

Regional Update

Texas continued its steady rebound in the first four months of the year, posting a 1.3 percent employment gain to match the state’s 2004 rate. The Texas Coincident Index, an aggregate measure of statewide economic activity, rose at an annualized 2.1 percent, compared with 1.9 percent in 2004.

Although still lagging the nation, Texas reported broad-based employment increases. All major sectors posted gains for January–April, although manufacturing and government reported the weakest growth, at 0.1 percent each. Professional and business services jobs sharply increased, growing 4.6 percent for the period, the highest rate for any sector. Other areas showing strong gains were other services, leisure and hospitality services, and information.

Rising crude oil prices may have pushed some prices higher, but the Texas consumer price index remained reasonably low, up 2.6 percent year-over-year in January. The core CPI—which excludes gasoline and food—was up 1.8 percent. Higher energy prices are apparently not impacting pricing in other industries significantly.

The Texas Leading Index showed continued positive growth of 1 percent in the first quarter. Real oil prices and average weekly hours posted sizable gains. Based on the index, Texas can expect job growth of 2 percent in 2005. Temporary- employee hiring, a leading indicator, also picked up sharply, growing at an annualized 9 percent in the first four months. Overall, Texas appears poised for moderate, broadbased growth this year.

—Kristen Hamden

Note For more information on employment data, see “Reassessing Texas Employment Growth” [PDF] (Southwest Economy, July/August 1993). For TIPI, see “The Texas Industrial Production Index” (Dallas Fed Economic Review, November 1989). For the Texas Leading Index and its components, see “The Texas Index of Leading Indicators: A Revision and Further Evaluation” (Dallas Fed Economic Review, July 1990). Online economic data and articles are available on the Dallas Fed’s Internet web site, www.dallasfed.org. About Southwest Economy Southwest Economy is published six times annually by the Federal Reserve Bank of Dallas. The views expressed are those of the authors and should not be attributed to the Federal Reserve Bank of Dallas or the Federal Reserve System. Articles may be reprinted on the condition that the source is credited and a copy is provided to the Research Department of the Federal Reserve Bank of Dallas. Southwest Economy is available free of charge by writing the Public Affairs Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas, TX 75265-5906, or by telephoning (214) 922-5254.