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September 2024 Citizens National Bank Q3 Economic Report Summary

As we wrap up the third quarter of 2024, Citizens National Bank presents an economic snapshot reflecting the key insights from the Federal Reserve Bank of Dallas and other notable industry updates impacting our Central Texas communities. Here's a breakdown of the major highlights from recent months:

Modest Economic Growth

The economy in the Eleventh District, covering Texas and parts of neighboring states, experienced modest expansion during the past six weeks. Growth was steady in nonfinancial services, while other sectors, including manufacturing, retail, and finance, saw more stagnant or declining activity. Employment rose modestly, and wage growth remained moderate. However, outlooks were mixed, tempered by concerns about both domestic and international policy uncertainties.

Labor Market Shifts

Employment continued to grow, albeit at a slower pace. Notably, there was a shift in hiring practices from temporary roles to direct hires, and employers are becoming more selective. The push for remote work has plateaued, with 11% of firms even increasing remote options to improve recruitment and retention. Wage growth remains steady, with expectations of a modest increase over the coming year.

Sector-Specific Insights

• Manufacturing: Texas manufacturing faced some declines, particularly in durable goods like metals and machinery. However, food manufacturers reported increased demand, and some plastics producers were temporarily affected by supply chain interruptions.
• Retail: Retail sales declined, with auto sales particularly slow. Nonetheless, the health and personal care sector saw some improvement, signaling a varied outlook across retail.
• Nonfinancial Services: This sector saw an uptick, with leisure and hospitality rebounding from a slower summer. Other areas like transportation and information services experienced steady growth, but rising labor costs remain a concern.
• Construction & Real Estate: Residential demand held steady, though the market shows signs of a shift toward buyers' favor, with price reductions and interest rate buy-downs common. In commercial real estate, office leasing in Class A space improved, and apartment leasing remained solid.
• Financial Services: Loan volumes declined, and credit standards tightened further. However, optimism is growing, with bankers predicting improved loan demand and business activity within six months.

Housing Market Trends

The Central Texas housing market shows signs of balancing. In September, the Austin metro area saw a 6.6% dip in median home prices to $425,000, while pending sales jumped by over 20%. This aligns with a broader Texas trend toward more balanced housing, as inventory levels increase and both buyers and sellers adjust to current conditions.

Austin’s Business Appeal

Austin remains an attractive location for new businesses, recently being named the top U.S. city to start a business in 2024 by USA Today. The city’s strong economic metrics, including high employment in startups and robust GDP growth, underscore its status as a leading entrepreneurial hub.

Agricultural Outlook

Drought conditions have placed additional pressure on Texas farmers, especially for cotton and grain producers who are facing financial challenges. The livestock sector has fared slightly better, with high prices for cattle. However, water scarcity remains a growing concern in the Permian Basin for energy producers.

Conclusion

As we move forward, the Texas economy demonstrates resilience amidst both challenges and opportunities. Citizens National Bank remains committed to supporting our communities through these dynamic times. Our team is here to provide guidance and financial services tailored to meet your needs and help you thrive.

For further details or to discuss how these economic trends might impact your financial strategy, reach out to one of our knowledgeable lenders today.

For more details, check out the full report here.