The Austin metropolitan area has added more than 162,700 jobs since the end of Great Recession that ended in June 2009. As a result, the unemployment rate declined to 3.3 percent by March 2015. Austin had an extraordinary job creation rate of roughly 27,000 jobs per year, fueled by its business-friendly economic environment and healthy mix of skilled high-tech and less-skilled labor force growth. In recent months, the pace of job growth in the region has eased off slightly as the metropolitan area’s labor market tightened up. In March 2015, Austin lost a net of 400 non-farm payroll jobs month-over-month while the area still created an additional 22,800 jobs compared to March 2014. Most of the jobs came from education and health services (around 5,200) followed by trade, transportation and utilities (4,500), and then the leisure and hospitality industry (3,200). We expect Austin’s job growth to moderate this year before rebounding in 2016.
Although the labor market is tightening in the area, overall wage pressure is less than expected. As per the recent data from U.S. Bureau of Labor Statistics, average hourly earnings in the Austin area are around $23.2, with dentists getting the highest rate ($82.8) and fast food cooks getting the lowest ($8.7). The wage rate is about 0.52 percent higher than a year ago. Austin is one of the top-paying metro areas for high-skilled jobs, but not so for lower skilled jobs, thereby reducing overall wage gains.
Fueled by strong job and population growth, the area’s income growth has consistently outpaced the national average since 2009. Consequently, the housing market in Austin has gained significant momentum with home prices increasing by about 12 percent year-over-year in 2014. We expect home prices to appreciate at a slower pace moving forward with moderate job growth and increasing supply.
Click here for the complete Austin Regional Economic Update: Austin 2015Q2.