Texas economy continues to grow despite labor shortage and supply chain issues

The economic recovery in Texas is progressing broadly as business and hiring activity increases, despite the lingering challenges of the COVID-19 pandemic, according to the Federal Reserve Bank of Dallas.

The state’s economy has grown at a steady pace in recent months, as the manufacturing and service sectors have grown, according to the Dallas Fed’s analysis of several indicators. Employment grew at a solid annual rate of 4.3% in June, following growth of 4.4% in May. This rate, meanwhile, should accelerate; Dallas Fed economists forecast job growth of 5.6% for all of 2021.

The Labor Department reported Thursday that first claims for unemployment benefits – a leading indicator of the labor market – fell for the second week in a row in Texas. Initial claims slipped below 30,000 last week, down 4,400 from the previous week.

“The Texas economy continued to grow at a steady pace, even as businesses continued to face supply chain disruptions, hiring problems and upward pressure on prices. “said Yichen Su, research economist at the Federal Reserve Bank of Dallas.

Business leaders pointed to a positive outlook in the Dallas Fed’s monthly surveys, with manufacturing and services showing solid growth. An index of manufacturing activity rose to 31 in July from 29.4 in June, while another index measuring activity in the service sector rose to 21.7 from 16.7 in July. (Positive readings indicate expansion and negative index readings indicate contraction.)

Executives say supply chain disruptions, caused by increased demand that has followed increased vaccinations and consumer activity, have posed challenges for their businesses, but they expect what these problems improve soon. They expect the supply chain disruption to ease significantly over the next six months, but said rising material and labor costs could force them to increase costs. price.

Some companies have had to raise wages to attract workers, executives said in Dallas Fed investigations. Labor shortages and hiring difficulties slowed growth.

The state’s unemployment rate fell 0.1 percentage point to 6.5% in June, its lowest level since March 2020. But it remains above the national rate of 5.9% in June.

The Labor Department reported national employment and unemployment statistics for July on Friday. Texas employment and unemployment statistics for July will be released on August 20.

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