MCALLEN, RGV – The McAllen area economy is fundamentally in good condition, even if some of the key drivers are sloping back, says McAllen Chamber of Commerce President Steve Ahlenius.
The McAllen Chamber issues a monthly “Economic Pulse” pamphlet that looks at certain indicators in the McAllen, Edinburg, Mission and Pharr area. Among the indicators are retail sales, dollars spent on auto purchases, lodging tax receipts, airline bookings, the value of construction permits, new home permits, home sales, the average home sale price, dollar volume of home sales, Hidalgo Bridge crossings, the Peso exchange rate, wage and salary employment, and the unemployment rate.
At the start of the year, the combined indicator for 2017 – 187.3 – was performing better than that for the same period in 2016 – 184.3. However, by April it had slipped below the 2016 figure. Although it has remained steady ever since April it is still below 2016. In August 2017, it stood at 185.9. In August 2016 it was at 188.8.
“When I make this presentation, basically, what I tell folks is when you look at retail sales, when you look at hotel occupancies, when you look at bridge crossings, some of those key drivers, you can see the sloping back,” Ahlenius told McAllen Economic Development Corporation’s board of directors.
“But, fundamentally, the economy is in a good condition. When you look at the median age of the population, when you look at the birth rate, when you look at the in-migration, when you look at the housing market, which continues to be stable, you have the foundation to overcome some of those key drivers that you normally measure an economy on that are sloping downwards.”
Ahlenius said the McAllen Chamber is continuing to work with the City of McAllen to market the region in the South Texas Triangle – Corpus Christi to Laredo and south – and Mexico.
“We have done focus groups in the Monterrey market and what they have told us is they will go to Laredo, they don’t enjoy going to Laredo, but that is where they will go because it is safer to go there. All the time it is not calm in Reynosa and northern Tamaulipas we will continue to see that migration over there,” Ahlenius said.
“Our goal is to keep McAllen top of mind awareness, even though they (Mexican visitors) may not be coming here now, there is a desire to come here. If we can figure out ways for them to come here, they will.”
Here is the McAllen Area Economic Pulse for August 2017:
McAllen Area Economic Pulse – McAllen, Mission, Edinburg, Pharr – August 2017
The McAllen Chamber of Commerce Economic Impulse
The McAllen Economic Index improved slightly in August for the second straight month, increasing to 189.9, up from 198.8 in July but slightly down 1.0 percent from the August 2016 MEI of 187.7.
If not for the residential real estate sector of the McAllen metro area economy, the index would almost certainly be in decline as most components of the index continue to register year-over-year weakness moving through the third quarter of 2017. However, existing home sales and prices, along with modest employment gains are propping up the index at present – but it may not last.
Home sales were sharply higher again in August with the number of closed sales up by 47 percent compared to August a year ago, up by 19 percent for the year to date. Both August monthly and year-to-date sales totals are records for those time periods. The August monthly average price was down slightly compared to August of a year ago, which in turn was up by over 12 percent year-over-year. The average through August, however, is over eight percent higher than the average price through August of a year ago.
The real (inflation-adjusted) total dollar volume of residential real estate activity is also at record levels in August and through the first eight months of the year, posting 42 percent and 26 percent year-over-year increases, respectively.
The metro area continues to add jobs at a modest pace according to current Texas Workforce Commission estimates, with payroll employment up by 1.8 percent in August compared to August of a year ago, reflecting the addition of an estimated 4,500 jobs over the last 12 months. Of that net job growth, 2,900 were added to the “education and health services” category, which likely means largely health services jobs (public education jobs are considered “state government” employment).
Elsewhere, however, most other components of the McAllen Economic Index continue to post year-over-year negatives. General real spending per August sales tax receipts in McAllen, Edinburg, Mission and Pharr down by over six percent year-over-year; for the year-to-date real taxable spending is off by nearly five percent compared to the first eight months of 2016.
Auto sales activity is on the wane as well with inflation-adjusted spending on new and used motor vehicles down by 8.8 percent for the month and 6.6 percent for the year-to-date.
Construction activity per monthly building permit valuations was down by double-digit percentage points in August for the fifth straight month, compared to huge numbers from a year ago. August real permit valuations were down by 23 percent compared to August of a year ago, which in turn was up by 36 percent compared to August of the previous year, and the total for the year-to-date was down by 29 percent compared to the first eight months of a year ago, which in turn was up by over 90 percent compared to the prior year.
Single-family housing construction is faring somewhat better with the number of new permits issued in the four cities unchanged through August 2017, compared to year-ago levels, and up very slightly for the month of August.