Employment in Texas still growing, Fed says

The Texas economy continues to expand at a strong pace, despite a tight labor market, according to the latest update from the Federal Reserve Bank of Dallas.

Employment grew at a solid 2.8 percent rate in the third quarter, double the national job growth of 1.4 percent, the Dallas Fed reported.

Pia Orrenius, senior economist at the Dallas Fed, noted that job growth in Texas slowed from the second quarter, when the state added jobs at a “red-hot” rate of 3.5 percent. But, she added, “it’s still a very high rate — much higher than the nation.”

Orrenius said the slowdown was probably not the result of decreased demand for workers, but rather a tight labor market that is making it difficult for companies to find qualified workers. In August, the Texas unemployment rate fell to 3.9 percent, and many employers are reporting hiring difficulties, according to the Dallas Fed.

As a result, wages have begun to rise, especially in Houston.

Federal statistics show “record wage growth in Houston and Dallas over the last year — about three to four times the pace of wage growth for the nation on average,” Orrenius said.

The Federal Reserve Bank’s survey on business outlooks shows wage and benefits indexes are at record highs.

Higher interest rates, however, are beginning to weigh on the Texas economy. Texas home prices appear to be slowing as mortgage rates increase, recently reaching an average of 5 percent for a fixed 30-year mortgage in Houston, according to Bankrate, a financial services company that surveys interest rates in local markets.