Economic Conditions Outlook

September 2024

Welcome to the September 2024 issue of ECO, financed by First Horizon Bank, the Knoxville Chamber’s monthly economic outlook analysis.

Each month, we provide a varied list of economic indicators with subsequent insight into how the data and information may impact the region. A major component of this work is our quarterly survey of businesses in the manufacturing, retail, and service sectors, which we leverage to gauge current economic conditions and gain insights into the economic outlook for the next six months. We also include traditional labor market, housing, sales tax, and airport information as well as impromptu information as it becomes available.

We hope that ECO – financed by First Horizon Bank will help our regional business community make more informed decisions as they run their businesses.

Survey Note: Beginning January 2024 and going forward, the Economic Conditions Outlook (ECO) Survey is being conducted on a quarterly basis instead of monthly.

See Previous Issues

Jump to Analysis:

New Overtime Rule	Labor Market
Airport Freight and Passenger Trends	National Employment Report
Consumer Price Index/Inflation Rates	National Retail Sales
Housing Market	Recent Expansion Announcements
Job Market	State and Local Sales Tax
Knox County Business Licenses	UTK Research Foundation Ranking
Knoxville's Brain Drain is Worse than it Appears	Worker Shortage Update

Economic Survey Results by Industry

Based on the response to the Quarter 3 (July 2024) survey, the evaluation of the level of general business activity is split evenly between “improved” and “the same” while company outlooks are reported as “improved.” (In the last quarter, the evaluation of the level of general business activity and company outlooks were reported as being “the same.”)

The Quarter 3 current indicator responses show “no changes” for unfilled orders, delivery time, prices received for finished goods, and average employee workweek. Production, capacity utilization, volume of new orders, and growth rate of orders have “increased.” The volume of shipments, finished goods inventories, prices paid for raw materials, wages and benefits, number of employees, and capital expenditures are all split evenly between “increase” and “no change.” (In the last quarter, responses showed “increases” in production, capacity utilization, volume of new orders, volume of shipments, average employee workweek, and capital expenditures. “No changes” were reported for the growth rate of orders, unfilled orders, delivery time, finished goods inventories, wages and benefits, and number of employees. The prices paid for raw materials and the prices received for finished goods were evenly split between “increase” and “no change.”)

The six-month outlook in Quarter 3 anticipates “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, finished goods inventories, wages and benefits, and number of employees. “No changes” are expected for delivery time, prices received for finished goods, and average employee workweek. Unfilled orders, prices paid for raw materials, and capital expenditures are split evenly between “increase” and “no change.” (The six-month outlook in the last quarter expected “increases” in production, capacity utilization, volume of new orders, volume of shipments, and number of employees. “No changes” were forecasted for unfilled orders, delivery time, wages and benefits, average employee workweek, and capital expenditures. Prices paid for raw materials were evenly split between “increase” and “decrease.” The growth rate of orders, finished goods inventories, and prices received for finished goods were all split between “increase” and “no change.”)

Knoxville area retailers indicated in the Quarter 3 (July 2024) survey that their evaluation of the level of general business activity and company outlooks have mostly “worsened.” (In the last quarter, retailers expressed the same sentiment.)

The Quarter 3 current indicator responses show “no changes” in the number of part-time employees and average employee workweek. Input prices have mostly “increased.” The number of full-time employees, wages and benefits, capital expenditures, and inventories are mostly split between “increase” and “no change.” Net sales revenue, internet sales, and selling prices are mostly split between “decrease” and “no change.” (In the last quarter, responses showed mostly “no changes” in internet sales, the number of both full-time and part-time employees, the average employee workweek, and capital expenditures. There were mostly “increases” in wages and benefits and input prices. Inventories were split between “increase” and “no change.” Net sales revenue was “mixed.”)

The six-month retail outlook in Quarter 3 projects mostly “no changes” in the number of full-time and part-time employees as well as the average employee workweek. Input prices as well as wages and benefits are expected to “increase.” Net sales revenue and selling prices are mostly split between “increase” and “decrease.” Internet sales and capital expenditures are mostly split between “decrease” and “no change.” (The six-month outlook in the last quarter anticipated mostly “increases” in wages and benefits and input prices. Mostly “no changes” were expected in internet sales and the number of both full-time and part-time employees. Net sales revenue was forecasted to mostly “decrease.” The average employee workweek and inventories were mostly split between “increase” and “no change.” Capital expenditures were mostly split between “decrease” and “no change.” Selling prices were “mixed.”)

Knoxville area service sector businesses report in the Quarter 3 (July 2024) survey that their evaluation of the level of general business activity and company outlooks are mostly “the same.” (The evaluation of the level of general business activity was mostly “the same” and company outlooks were almost split evenly between “improved” and “the same” in the last quarter.)

The Quarter 3 current indicator responses show mostly “no changes” in the number of part-time employees, average employee workweek, wages and benefits, and selling prices. The number of full-time employees, input prices, and capital expenditures have mostly “increased.” Revenue is mostly split between “decrease” and “no change.” (In the last quarter, responses showed mostly “increases” in revenue and input prices. The number of full-time employees, wages and benefits, and capital expenditures were almost split evenly between “increase” and “no change.” The number of part-time employees and selling prices showed mostly “no changes.”)

The six-month outlook in Quarter 3 projects mostly “increases” in revenue, the number of full-time employees, input prices, and capital expenditures. Mostly “no changes” are expected in the number of part-time employees, average employee workweek, and wages and benefits. Selling prices are split between “increase” and “no change.” (The six-month outlook in the last quarter anticipated mostly “increases” in revenue, input prices, and capital expenditures. “No changes” were mostly expected in the number of both full-time and part-time employees and the average employee workweek. Selling prices were almost evenly split between “increase” and “no change.”)

Note: We are still growing the number of participating companies, so response totals in some areas may be fairly small. If you are interested in being a participant in our quarterly surveys, please register HERE.

Labor Market Information

The Knoxville MSA’s unemployment rate in August was 3.2% (unchanged from July and up from 3.1% in August 2023.) Knox County’s unemployment rate in August was 3.0% (up from 2.9% in July and up from 2.9% in August 2023.) Tennessee’s unemployment rate was 3.5% in August (down from 3.6% in July and up from 3.4% in last August.) The U.S. unemployment rate was 4.4% in August (down from 4.5% in July and up from 3.9% in last August.)

The size of the total labor force slightly decreased from July to August at the local, state, and national levels. The Knoxville MSA’s labor force decreased 0.9% from 453,425 in July to 449,321 in August. Knox County’s labor force decreased 0.9% from 258,647 in July to 256,417 in August. Tennessee’s labor force decreased 0.6% from 3,438,566 in July to 3,418,349 in August. The national labor force decreased 0.6% from 169,723,000 in July to 168,763,000 in August.

Below is the 13-month unemployment rates trending comparison for the four largest MSA’s in Tennessee –

(Source: U.S. Bureau of Labor Statistics; Tennessee Dept. of Labor & Workforce Development)

Job Market

For the month of August, there were 10,219 unique active job postings in the Knoxville MSA (up 4.1% from July and down 4.0% from last August.) There were 6,707 unique active job postings in Knox County (up 6.9% from July and down 7.1% from this time last year.)

The Top 10 industries (by number of job postings) in the Knoxville MSA in August were –

The Top 10 occupations (by number of job postings) in the Knoxville MSA in August were –

You can view the 13-month job postings trend for Knox County and the Knoxville MSA below.

(Source: Lightcast – formerly Emsi Burning Glass)

ADP National Employment Report®

Each month, ADP, a large-scale payroll and human resources company, in collaboration with the Stanford Digital Economy Lab, releases the National Employment Report®, which provides a high-level look at month-over-month private-sector employment changes across the country.

The September report shows a net gain of 143,000 in private-sector employment (up from the 99,000 net jobs gain in August.) Industry sectors showing positive job growth in September include Leisure and Hospitality (+34,000), Construction (+26,000), Education and Health Services (+24,000), Professional and Business Services (+20,000), Other Services (+17,000), Natural Resources and Mining (+14,000), Trade/Transportation/Utilities (+14,000), Financial Activities (+2,000), and Manufacturing (+2,000). The only industry sector showing negative job growth in September is Information (-10,000).

By establishment size, large businesses (with 500+ employees) gained 86,000 jobs, mid-sized businesses (with 50-249 employees) gained 49,000 jobs, mid-sized businesses (with 250-499 employees) gained 15,000 jobs, and “Other Small” businesses (with 20-49 employees) gained 5,000 jobs. The job gains were offset by “Very Small” businesses (with 1-19 employees), which lost 13,000 jobs.

(Source: ADP)

Worker Shortage Update

The labor shortages are persisting longer than many economists expected. There continues to be high job demand and slower workforce growth resulting in fierce competition for talent and many open jobs going unfilled. According to the latest data from the U.S. Bureau of Labor Statistics (BLS), the nation had 8.0 million jobs to fill and only 5.3 million hires in August, meaning there are 1.5 job openings for every unemployed person.

In August, the largest increases in U.S. job openings were in construction (+138,000), accommodation and food services (+88,000), transportation/warehousing/utilities (+77,000), professional and business services (+65,000), wholesale trade (+16,000), information (+11,000), and manufacturing (+1,000).

The largest decreases in job openings were in other services (-93,000), financial activities (-52,000), private educational services (-16,000), arts/entertainment/recreation (-8,000), health care and social assistance (-2,000), and retail trade (-1,000).

It will take time for this mismatch between labor demand and supply to align. In the meantime, wages will continue to rise as businesses compete to attract talent. You can read the latest job openings summary from BLS here.

University of Tennessee Drops Four Spots on U.S. News and World Report’s 2025 Best Colleges List

U.S. News and World Report recently released its annual rankings list of best colleges. The University of Tennessee, Knoxville (UTK) ranks #109 overall among all colleges (including both public and private colleges). This is a drop of four places from the 2024 list. UTK ranks #52 among all public universities, a drop of only one spot from last year.

UTK’s undergraduate programs in the College of Nursing made the largest leap of 41 spots to rank #26 overall among all schools and rose 32 spots to rank #19 among public universities. UTK’s supply chain management program ranks #4 overall and #3 among public universities. The Haslam College of Business ranks #40 overall and #25 among public universities. The Tickle College of Engineering ranks #66 overall and #37 among public universities. Overall, UTK also ranks #42 in accounting and #53 in computer science. You can read more here and here.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from August 2023 to August 2024 is 2.5%. This is down from 2.9% in the July 2023 to July 2024 period. Last year, the national inflation rate was 3.7% from August 2022 to August 2023.

The August CPI report marks the twenty-sixth straight month that year-over-year inflation is below the June 2022 CPI peak high of 9.1%. High prices for some items will likely linger longer.

From a year ago, auto insurance is up 16.5%, housing prices are up 5.2%, auto repair services are up 4.1%, eating out prices are up 4.0%, electricity costs are up 3.9%, groceries are up 0.9%, and apparel is up 0.3%.

From a year ago, used car prices are down 10.4%, gasoline prices are down 10.3%, airline fares are down 1.3%, new vehicle prices are down 1.2%, and natural gas prices are down 0.1%.

The Federal Reserve cut the target range for the federal funds rate by half a percentage point to 4 ¾ to 5 percent at its Federal Open Market Committee (FOMC) policy-setting meeting September 17-18. This interest rate cut was the first cut since 2020 and was higher than the quarter-point rate reduction most analysts were anticipating last month. The Fed made the higher rate cut due to the progress made on inflation moving toward the committee’s 2% objective and the balance of economic risks. The committee will continue to monitor economic data and make further adjustments to the federal funds rate in the future as appropriate. You can read more here.

Knoxville falls into the South Size Class B/C (population of 2.5 million or less) grouping. The current inflation rate for this region is 2.1% for the August 2023 to August 2024 period. This is down from 2.7% in the July 2023 to July 2024 period. Last year, the rate was 4.0% from August 2022 to August 2023.

(Source: U.S. Bureau of Labor Statistics; Consumer Price Index, not seasonally adjusted)

Housing Market

Home sales in East Tennessee increased 1.9% from July to August to a seasonally adjusted annual rate (SAAR) of 18,494. By comparison, home sales in Knox County increased 5.7% from the previous month to a seasonally adjusted annual rate (SAAR) of 7,311. Compared to the previous year, home sales were up 2.0% in the East Tennessee region.

The median home sales price across the East Tennessee region was $365,000 in August, up 4.29% from a year ago. Knox County’s median home sale price was $385,000, an increase of 0.05% from a year ago.

Half of the homes sold across the East Tennessee region went under contract in 20 days or less, up from 15 days the previous month.

Active inventory in the East Tennessee region increased in August, with the total number of active listings up 42.5% from a year ago.

Months of inventory, or the number of months it would take to exhaust active listings at the current sales rate, was 3.7 months.

Mortgage rates remained below 7% through all of September, reaching the lowest level since September 2022. According to Freddie Mac’s Primary Mortgage Market Survey, the 30-year fixed mortgage rate (30Y FRM) averaged 6.08% for the week ending September 26, 2024, compared to an average of 7.19% this time last year.

You can subscribe to the East Tennessee REALTORS® monthly Market Pulse Newsletter here.

East Tennessee REALTORS® reports monthly home sales patterns using a seasonally adjusted annualized rate (SAAR), an adjusted rate that takes into account typical seasonal fluctuations in data and is expressed as an annual total. Comparing month-over-month housing market data using this method provides a more accurate depiction of home sales.

(Sources: National Association of REALTORS®; East Tennessee REALTORS®)

(Sources: U.S. Housing & Urban Development – SOCDS – State of the Cities Data Systems; U.S. Census Bureau – Building Permits Survey)

National Retail Sales

The total advance monthly retail sales estimate for August 2024 was $736.604 billion (up 1.7% from July and up 2.4% from last August.)

The retail sectors that showed sales growth from last August were Food Services and Drinking Places (+6.2%), General Merchandise Stores (+5.8%), Furniture and Home Furnishings Stores (+4.7%), Health and Personal Care Stores (+4.4%), Non-store Retailers (+4.3%), Electronics and Appliance Stores (+2.7%), Food and Beverage Stores (+2.0%), Motor Vehicles and Parts Sales (+1.6%), Clothing Stores (+1.2%), and Miscellaneous Stores (+1.2%).

Retail sectors that showed a decline in sales from last August were Gasoline Stations (-5.2%), Sporting Goods/Books/Hobby/Music Stores (-3.9%), and Building Materials (-2.1%).

(Sources: U.S. Census Bureau; Advance Monthly Retail Trade Reports, not adjusted)

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $131.986 million in state sales taxes in August (up 1.2% from July and up 5.3% from last August) and Knox County collected $83.943 million in August (up 1.3% from July and up 4.6% from last August.) The state of Tennessee collected $1.223 billion in state sales taxes in August (down 1.2% from July and up 3.2% from last August.)

The Knoxville MSA collected $47.462 million in local sales taxes in August (up 1.9% from July and up 5.7% from last August) and Knox County collected $28.562 million (up 2.1% from July and up 5.3% from last August.)

(Source: Tennessee Department of Revenue)

Recent Business Expansions and New Business Announcements in the Knoxville Region

In this section of ECO, we share announcements of businesses that are expanding their existing operations or locating a new facility in the Knoxville region. If you would like to share your business expansion announcement with us, please send your info to [email protected].

New and existing industries continue to invest in the Knoxville region.

September 4, 2024 – Orano USA, a leading technology and services provider for the commercial and federal nuclear industries, announced plans to construct a new, multi-billion-dollar, state-of-the-art centrifuge uranium facility. The 750,000-square-foot uranium enrichment center will be a multi-structure commercial production site and will be one of the largest in North America. Though the total investment was not officially announced for the early-stage project, it is expected to be the largest in Tennessee history, even more than the $5.6 billion Ford Blue Oval City campus near Memphis. The new facility will create 305 new jobs in Roane County. Orano USA is the second company to locate in Tennessee utilizing the state’s Nuclear Energy Fund, which assists nuclear energy-related businesses choosing to relocate or expand in the state. You can read more here.

Tennessee Ranks #3 on Area Development Magazine’s Top States For Doing Business in 2024

Area Development Magazine recently released its latest rankings for Top States for Doing Business in 2024. The rankings are based on detailed survey results from expert consultants across a range of 14 key categories – Overall Cost of Doing Business, Access to Qualified Labor, Availability of Sites, Business Incentive Programs, Climate Risk and Resilience, Cooperative and Responsive State/Local Government, Corporate Tax Structure, Favorable Property Tax Environment, Favorable Regulatory Environment, Energy Availability and Costs, Logistics and Infrastructure, Workforce Training Programs, Site Readiness Programs, and Water Availability. Tennessee ranked #3 overall, just behind Georgia and South Carolina. The rest of the Top Ten states were #4 North Carolina, #5 Indiana, #6 Ohio, #7 Texas, #8 Alabama, #9 Virginia, and #10 Michigan.

By category, Tennessee ranked #1 for Energy Availability and Costs as well as Site Readiness Programs. The Volunteer State ranked #2 for the categories of Overall Cost of Doing Business, Availability of Sites (tied with Texas), Cooperative and Responsive State/Local Government, Corporate Tax Structure (tied with North Carolina), and Favorable Property Tax Environment (tied with North Carolina). You can view the rest of the rankings and read more here.

Knox County Business Licenses

New business licenses issued in August 2024 by Knox County are up 17.5% from July and are down 0.4% from August 2023.

A total of 248 new business licenses were issued in August 2024 compared to 211 in July and 249 in August 2023. The top industry sectors for which business licenses were issued in August 2024 were services, retail, non-classified establishments, construction, and Finance/Insurance/ Real Estate.

Below is a chart showing the 13-month trend of business licenses issued by Knox County.

(Sources: Knox County Clerk)

McGhee Tyson Airport (TYS) Passenger and Freight Trends

The Metropolitan Knoxville Airport Authority recorded 296,778 passengers in August (down 9.0% from July’s passenger traffic of 325,957 and up 20.3% from August 2023.)

The total freight recorded in August at TYS was 6,539,990 pounds (up 6.1% from July and down 6.2% from last August.)

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in August was 2,564,305 (up 5.4% from the August 2023 daily passenger average of 2,432,164 and up 8.7% from the pre-COVID August 2019 average of 2,359,247.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , U.S. domestic traffic in August continued its upward trend at 5.5% annual growth and recorded a monthly record for revenue passenger-kilometer (RPKs) volume. You can read more here.

(Sources: Metropolitan Knoxville Airport Authority; U.S. Transportation Security Administration; International Air Transport Association)

Notice: This survey is copyrighted by its owner, and permission to use such copyrighted materials must be obtained from the owner and cannot be obtained from the Knoxville Chamber. Reproduction or distribution of this survey, in whole or in part, is expressly prohibited without the written permission of the content owner.

Connect with resources to support the operation and expansion of your business in Knox County.

Request Information