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THE BUSINESS
SITUATION
Robert H. Ryan
IN TEXAS
Texas business activity registered its largest month-to-
month increase on record between June and July of this
year. The 16-percent gain brought the seasonally adjusted
index to an all-time high, as charted below, and raised the
year-to-date average for the index to a level 14 percent
above that of January-July 1967.
Not all Texas cities have participated equally in this
summer's striking upward movement, but almost all major
cities in the state have shared to some degree in the ex-
pansion of business activity. Dallas has been the dynamic
leader, with Austin and Houston not far behind, as shown
in the accompanying table of indexes for 20 cities. San
Antonio, too, has gained strongly, partly because of the
increase in tourism revenues due to HemisFair. High
growth rates are shown also for El Paso and Fort Worth
but from somewhat lower bases than in preceding cities.
The increase in business volume as a whole has been
supported by expansion in most major phases of the state's
economy. Petroleum production and refinery inputs for
January through July were 8 percent higher than they
were in the corresponding period last year, with gasoline
prices showing solid strength. Altogether, Texas' July in-
dustrial production was up nearly 10 percent from July
1967. Additionally, average weekly earnings in manufac-
turing were up 6.9 percent, compounding the effect of the
expansion in industry.
Texas' civilian labor force has grown by 139,600 since
July 1967, according to Texas Employment Commission
estimates for this July. Yet unemployment has decreased
in the state as a whole and in several major cities. July
average unemployment in the major labor-market areas
equaled only 2.9 percent of the labor force, with even
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lower levels in the largest cities: Houston 2.3 percent, and
Dallas 1.8 percent. These unemployment figures are so small
as to require some qualification. Undoubtedly a substantial
number of the 30,000 persons ostensibly "unemployed" in
Dallas and Houston together are only casual jobseekers or
workers between jobs. Even more are underskilled workers
who cannot meet the increasing technical requirements for
employment. In short, these cities and many others may be
witnessing virtually full employment, or as full as the
present labor force can sustain.
Rapid urbanization, high building costs, and tight money
have combined to bring Texas a remarkable boom in apart-
ment construction. Structures containing three or more
family dwelling units accounted for most of the gain in
building permits during the first seven months of this year.
In June and July alone more than $38 million worth of
multiplex residential construction was authorized. Even the
construction of one-family homes, while inhibited some-
what by the credit situation, has moved well ahead of the
1967 year-to-date total. To the extent that homebuilding
has been depressed by high-cost money, activity may re-
spond to the slight softening in interest rates. On the other
hand, buyers show some inclination to postpone their
commitments to purchase new homes. The building season
will probably be over before easier money can provide much
stimulus, though in Texas the building season is a good
deal longer than in most of the country. At least there is
reason to look for a substantial increase in homebuilding
for 1969.
Texas retailing exhibited some curious shifts in pattern
as 1968 passed its midpoint. In this state, as nationally,
automobile sales held up better than expected. Bureau of
TEXAS BUSINESS ACTIVITY
Index Adjusted for Seasonal Variation-l957-1959=1OO
1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968
NOTE: Shaded areas indicate periods of decline of total business activity in the United States.
SOURCE: Based on bank debits r eported by the Federal Re serve Bank of Dallas and adjusted for
seasonal variation and changes in the price level by the Bureau of Business Research.
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