Economic Conditions Outlook

November 2024

Welcome to the November 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 4 (October 2024) survey, the evaluation of the level of general business activity has “worsened” since the last quarter and company outlooks are split evenly between “worsened” and “the same.” (In the last quarter, the evaluation of the level of general business activity was split evenly between “improved” and “the same” while company outlooks were reported as “improved.”)

The Quarter 4 current indicator responses show “decreases” in production, capacity utilization, volume of new orders, and average employee workweek. Wages and benefits have “increased.” Unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, and number of employees are evenly split between “decreased” and “no change.” The growth rate of orders, volume of shipments, and capital expenditures are evenly split between “increased” and “decreased.” Finished goods inventories are split between “increased” and “no change.” (In the last quarter, responses showed “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 had “increased.” The volume of shipments, finished goods inventories, prices paid for raw materials, wages and benefits, number of employees, and capital expenditures were all split evenly between “increase” and “no change.”)

The six-month outlook in Quarter 4 anticipates “no changes” in delivery time and prices paid for raw materials. Production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, and average employee workweek are split evenly between “increase” and “decrease.” Unfilled orders, finished goods inventories, prices received for finished goods, number of employees, and capital expenditures are split evenly between “decrease” and “no change.” Wages and benefits are split between “increase” and “no change.”

(The six-month outlook in the last quarter expected “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” were expected for delivery time, prices received for finished goods, and average employee workweek. Unfilled orders, prices paid for raw materials, and capital expenditures were split evenly between “increase” and “no change.”)

Knoxville area retailers indicated in the Quarter 4 (October 2024) survey that their evaluation of the level of general business activity and company outlooks are “the same” from the last quarter. (In the last quarter, retailers responded that their evaluation of the level of general business activity and company outlooks had mostly “worsened.”)

The Quarter 4 current indicator responses show “increases” in net sales revenue, wages and benefits, input prices, and selling prices. “No changes” are reported in internet sales, the number of full-time and part-time employees, average employee workweek, capital expenditures, and inventories. (In the last quarter, retail responses showed “no changes” in the number of part-time employees and average employee workweek. Input prices had mostly “increased.” The number of full-time employees, wages and benefits, capital expenditures, and inventories were mostly split between “increase” and “no change.” Net sales revenue, internet sales, and selling prices were mostly split between “decrease” and “no change.”)

The six-month retail outlook in Quarter 4 projects “increases” in net sales revenue, wages and benefits, input prices, and selling prices. “No changes” are expected in internet sales, the number of full-time and part-time employees, average employee workweek, capital expenditures, and inventories. (The six-month outlook in the last quarter anticipated 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 were expected to “increase.” Net sales revenue and selling prices were mostly split between “increase” and “decrease.” Internet sales and capital expenditures were mostly split between “decrease” and “no change.”)

Knoxville area service sector businesses report in the Quarter 4 (October 2024) survey that their evaluation of the level of general business activity has mostly “worsened” since the last quarter and company outlooks are “mixed.” (The evaluation of the level of general business activity and company outlooks were mostly “the same” in the last quarter.)

The Quarter 4 current indicator responses show mostly “no changes” in the number of full-time and part-time employees, average employee workweek, and wages and benefits. Input prices have mostly “increased.” Capital expenditures are mostly split between “increased” and “no change.” All other indicators are “mixed.” (In the last quarter, responses showed 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 had mostly “increased.” Revenue was mostly split between “decrease” and “no change.”)

The six-month outlook in Quarter 4 projects mostly “increases” in revenue, input prices, and capital expenditures. Mostly “no changes” are expected in the number of part-time employees and average employee workweek. The number of full-time employees, wages and benefits, and selling prices are mostly split between “increase” and “no change.” (The six-month outlook in the last quarter anticipated mostly “increases” in revenue, the number of full-time employees, input prices, and capital expenditures. Mostly “no changes” were expected in the number of part-time employees, average employee workweek, and wages and benefits. Selling prices were split between “increase” and “no change.”)

Service sector comments indicate that many service employees are working multiple jobs and asking for more pay due to inflation.

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 October was 3.2% (down from 3.3% in September and down from 3.3% in October 2023.) Knox County’s unemployment rate in October was 2.9% (down from 3.1% in September and down from 3.0% in October 2023.) Tennessee’s unemployment rate was 3.5% in October (down from 3.6% in September and down from 3.6% in last October.) The U.S. unemployment rate was 3.9% in October (unchanged from September and up from 3.6% in last October.)

The size of the total labor force slightly decreased from September to October at the local level. The Knoxville MSA’s labor force decreased 0.1% from 449,955 in September to 449,641 in October. Knox County’s labor force decreased 0.1% from 256,822 in September to 256,549 in October. Meanwhile, Tennessee’s labor force increased from 3,407,556 in September to 3,408,844 in October and the national labor force was 168,569,000 in October, unchanged from September.

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 October, there were 9,919 unique active job postings in the Knoxville MSA (up 0.4% from September and up 7.7% from last October.) There were 6,253 unique active job postings in Knox County (up 0.5% from September and up 3.6% from this time last year.)

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

The Top 10 occupations (by number of job postings) in the Knoxville MSA in October 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 November report shows a net gain of 146,000 in private-sector employment (down from the 233,000 net jobs gain in October.) Industry sectors showing positive job growth in November include Education and Health Services (+50,000), Construction (+30,000), Trade/Transportation/Utilities (+28,000), Other Services (+20,000), Professional and Business Services (+18,000), Leisure and Hospitality (+15,000), Financial Activities (+5,000), Information (+4,000), and Natural Resources and Mining (+2,000). The only industry sector showing negative job growth in November is Manufacturing (-26,000).

By establishment size, large businesses (with 500+ employees) gained 120,000 jobs, mid-sized businesses (with 50-249 employees) gained 23,000 jobs, mid-sized businesses (with 250-499 employees) gained 19,000 jobs, and “Very Small” businesses (with 1-19 employees) gained 12,000 jobs. The job gains were offset by “Other Small” businesses (with 20-49 employees), which lost 29,000 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 7.7 million jobs to fill and only 5.3 million hires in October, meaning there are 1.5 job openings for every unemployed person.

In October, the largest increases in U.S. job openings were in professional and business services (+209,000), accommodation and food services (+162,000), information (+87,000), financial activities (+17,000), health care and social assistance (+15,000), transportation/warehousing/utilities (+8,000), and retail trade (+2,000).

The largest decreases in job openings were in wholesale trade (-37,000), other services (-37,000), arts/entertainment/recreation (-33,000), manufacturing (-13,000), construction (-9,000), and private educational services (-6,000).

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.

The U.S. Leads The World In Artificial Intelligence (AI) Innovation In Stanford University’s Latest Global AI Power Rankings

The Stanford Institute for Human-Centered AI’s Global Vibrancy Tool ranks 36 countries in AI by aggregating 42 key indicators such as research and development, private investment, AI infrastructure, and patents. The U.S. ranks #1 with the most robust AI ecosystem as it produced the highest quality AI research, built the most notable machine learning models, spent the most in private investment, had the most merger/acquisition activity, had the highest number of AI job postings, and highest number of newly funded AI startups. China ranks #2 and leads the world in AI patents. The rest of the top ten include #3 United Kingdom, #4 India, #5 United Arab Emirates, #6 France, #7 South Korea, #8 Germany, #9 Japan, and #10 Singapore. You can read more here.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from October 2023 to October 2024 is 2.6%. This is up from 2.4% in the September 2023 to September 2024 period. Last year, the national inflation rate was 3.2% from October 2022 to October 2023.

The October CPI report marks the twenty-eighth 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 14.0%, auto repair services are up 5.8%, housing prices are up 4.9%, electricity costs are up 4.5%, airline fares are up 4.1%, eating out prices are up 3.8%, natural gas prices are up 2.0%, groceries are up 1.1%, and apparel is up 0.3%.

From a year ago, gasoline prices are down 12.2%, used car prices are down 3.4%, and new vehicle prices are down 1.3%.

The Federal Reserve cut the target range for the federal funds rate by ¼ percentage point to 4 ½ to 4 ¾ percent at its Federal Open Market Committee (FOMC) policy-setting meeting November 7. The Fed stated that recent indicators suggest that economic activity has continued to expand at a solid pace, labor market conditions have generally eased since earlier in the year, the unemployment rate has moved up but remains low, and inflation has made progress toward the Committee’s 2 percent objective though remains somewhat elevated. 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 2.5% for the October 2023 to October 2024 period. This is up from 2.1% in the September 2023 to September 2024 period. Last year, the rate was 3.5% from October 2022 to October 2023.

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

Housing Market

Home sales in East Tennessee increased 3.4% from September to October to a seasonally adjusted annual rate (SAAR) of 17,621. By comparison, home sales in Knox County increased 5.1% from the previous month to a seasonally adjusted annual rate (SAAR) of 6,999. Compared to the previous year, home sales were down 0.3% in the East Tennessee region.

The median home sales price across the East Tennessee region was $374,900 in October, up 7.11% from a year ago. Knox County’s median home sale price was $400,000, an increase of 9.51% from a year ago.

Half of the homes sold across the East Tennessee region went under contract in 21 days or less, no change from the previous month.

Active inventory in the East Tennessee region increased in October, with the total number of active listings up 38.2% 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 3.95 months.

According to Apartment List’s recent report on cost-burdened renter households across the United States based on Census ACS data 51.8% of all renter households in the country are cost burdened and 11.2% are severely cost burdened. According to the report a renter is considered moderately cost burdened if they spend over 30% of their gross monthly income on housing costs and is considered severely cost burdened if they spend over 50% of their gross monthly income on housing costs. The report showed 52.6% of renter households in the Knoxville MSA are cost burdened with 25% being severely cost burdened. Although the percent of severely cost burdened renters in the Knoxville MSA has decreased from the high in 2009, since 2021 there has been a steady increase of cost burdened renters overall. The MSA has hit an 18-year record high of 53% of renters being cost burdened, meaning only 47% of renters are spending less than 30% of their monthly gross income on housing costs. The Knoxville MSA is seeing relatively similar rates to the other metropolitan areas although it is outpacing Chattanooga.

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 October 2024 was $730.037 billion (up 7.1% from September and up 4.1% from last October.)

The retail sectors that showed sales growth from last October were Non-store Retailers (+7.8%), Furniture and Home Furnishings Stores (+7.7%), Building Materials (+6.7%), Health and Personal Care Stores (+5.5%), Motor Vehicles and Parts Sales (+5.4%), Food Services and Drinking Places (+5.3%), General Merchandise Stores (+3.9%), Miscellaneous Stores (+3.7%), Food and Beverage Stores (+2.9%), and Clothing Stores (+0.9%).

Retail sectors that showed a decline in sales from last October were Gasoline Stations (-7.5%), Electronics and Appliance Stores (-1.0%), and Sporting Goods/Books/Hobby/Music Stores (-0.7%).

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

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $126.720 million in state sales taxes in October (down 6.9% from September and up 6.2% from last October) and Knox County collected $80.498 million in October (down 8.4% from September and up 5.5% from last October.) The state of Tennessee collected $1.168 billion in state sales taxes in October (down 5.0% from September and up 4.4% from last October.)

The Knoxville MSA collected $46.735 million in local sales taxes in October (down 3.0% from September and up 16.3% from last October) and Knox County collected $28.467 million (down 3.2% from September and up 14.0% from last October.)

(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.

October 29, 2024 – Amazon officially opened its long-delayed 219,000-square-foot “last mile” delivery station at the former Knoxville Center Mall site. The station will employ 250 workers directly and 700 drivers will be employed by 12 delivery service partners. The delivery fleet will include more than 100 electric vehicles. Starting pay will be $18.50 per hour, with benefits starting on the first day of employment for full-time employees. You can read more here.

November 1, 2024 – Beehive Industries, an additive manufacturer that makes jet engines and parts using 3D printing, secured a $12.46 million contract to collaborate with the University of Dayton Research Institute (UDRI) and the Air Force Rapid Sustainment Office at Wright-Patterson Air Force Base to develop and produce low-cost Small Expendable Turbine (SET) engines. The contract tasks Beehive Industries with manufacturing 30 engines in 24 months, with much of the work being done in the Knoxville facility. You can read more here.

Knox County Business Licenses

New business licenses issued in October 2024 by Knox County are down 11.1% from September and are up 6.6% from October 2023.

A total of 241 new business licenses were issued in October 2024 compared to 271 in September and 226 in October 2023. The top industry sectors for which business licenses were issued in October 2024 were services, non-classified establishments, retail, and construction.

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 346,467 passengers in October (up 17.0% from September’s passenger traffic of 296,087 and up 20.6% from October 2023.) The October 2024 passenger traffic estimate sets a new record as the busiest month in TYS history.

The total freight recorded in October at TYS was 5,715,465 pounds (up 4.4% from September and down 9.0% from last October.)

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in October was 2,461,976 (up 1.6% from the October 2023 daily passenger average of 2,424,069 and up 5.9% from the pre-COVID October 2019 average of 2,324,797.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , “Global passenger traffic maintained a stable growth pace in October. Industry-wide Revenue Passenger Kilometers (RPK), grew 7.1% year-on-year in October.” You can read more here.

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