Economic Conditions Outlook

May 2025

Welcome to the May 2025 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:

WalletHub's Best Places to Start a Career	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	Intuit Quickbooks SBI
Annual Population Growth Rates	Worker Shortage Update

Economic Survey Results by Industry

Based on the response to the Quarter 2 (April 2025) survey, the evaluation of the level of general business activity and company outlooks have “improved” from the previous quarter. (In the last quarter, the evaluation of the level of general business activity and company outlooks had mostly “improved.”)

The Quarter 2 current indicator responses show “increases” in production, the volume of new orders, the volume of shipments, finished goods inventories, wages and benefits, the number of employees, and capital expenditures. “No changes” are reported in capacity utilization, growth rate of orders, unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, and average employee workweek. (In the last quarter, responses showed mostly “increases” in the growth rate of orders, prices paid for raw materials, and wages and benefits. “No changes” were mostly reported in unfilled orders, delivery time, finished goods inventories, prices received for finished goods, and average employee workweek. Production, volume of new orders, volume of shipments, and capital expenditures were mostly split between “increased” and “decreased.” The number of employees was mostly split between “increased” and “no change.” Capacity utilization was mostly split between “decreased” and “no change.”)

The six-month outlook in Quarter 2 anticipates “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, finished goods inventories, number of employees, and capital expenditures. “No changes” are expected in unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, wages and benefits, and average employee workweek. (The six-month outlook in the last quarter expected mostly “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, delivery time, prices paid for raw materials, prices received for finished goods, wages and benefits, number of employees, and capital expenditures. “No changes” were expected for unfilled orders, finished goods inventories, and the average employee workweek.)

Knoxville area retailers indicated in the Quarter 2 (April 2025) survey that the evaluation of the level of general business activity has “worsened” from the last quarter and company outlooks have stayed “the same.” (In the last quarter, retailers responded that their evaluation of the level of general business activity was mostly “the same” from the last quarter, while their company outlooks had mostly “improved.”)

The Quarter 2 current indicator responses show “increases” in net sales revenue, input prices, selling prices, capital expenditures, and inventories. The numbers of both full-time and part-time employees have “decreased.” “No changes” are reported for internet sales, average employee workweek, and wages and benefits. (In the last quarter, retail responses showed mostly “increases” in net sales revenue, wages and benefits, input prices, and selling prices. “No changes” were mostly reported in internet sales, the number of full-time and part-time employees, and the average employee workweek. Capital expenditures and inventories were evenly split between “increase” and “no change.”)

The six-month retail outlook in Quarter 2 projects “increases” in net sales revenue, input prices, selling prices, and capital expenditures. “No changes” are expected in internet sales, the numbers of full-time and part-time employees, average employee workweek, and wages and benefits. Inventories are expected to “decrease.” (The six-month outlook in the last quarter anticipated mostly “increases” in net sales revenue, wages and benefits, input prices, selling prices, and capital expenditures. “No changes” were mostly forecasted for internet sales, the number of part-time employees, and the average employee workweek. The number of full-time employees and inventories were evenly split between “increase” and “no change.”)

Knoxville area service sector businesses report in the Quarter 2 (April 2025) survey that their evaluation of the level of general business activity is mostly split between “worsened” and “the same” from the last quarter, while company outlooks are “mixed.” (The evaluation of the level of general business activity had mostly “improved” from the last quarter, while company outlooks continued to be “mixed” in the last quarter.)

The Quarter 2 current indicator responses show mostly “no changes” in revenue, the number of full-time and part-time employees, average employee workweek, wages and benefits, and selling prices. Input prices are split evenly between “increase” and “no change.” Capital expenditures are “mixed.” (In the last quarter, responses showed mostly “increases” in revenue, wages and benefits, input prices, and capital expenditures. “No changes” were mostly reported for the number of part-time employees, the average employee workweek, and selling prices. The number of full-time employees was “mixed.”)

The six-month outlook in Quarter 2 projects mostly “no changes” in selling prices, the number of part-time employees, and average employee workweek. “Increases” are mostly expected in wages and benefits, input prices, and capital expenditures. Revenue is evenly split between “increase” and “decrease.” The number of full-time employees is “mixed.” (The six-month outlook in the last quarter anticipated mostly “increases” in revenue, the number of full-time employees, wages and benefits, input prices, selling prices, and capital expenditures. Mostly “no changes” were expected in the number of part-time employees and the average employee workweek.)

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 April was 2.6% (down from 2.9% in March and up from 2.5% in April 2024.) Knox County’s unemployment rate in April was 2.4% (down from 2.7% in March and up from 2.3% in April 2024.) Tennessee’s unemployment rate was 2.9% in April (down from 3.3% in March and up from 2.7% in last April.) The U.S. unemployment rate was 3.9% in April (down from 4.2% in March and up from 3.5% in last April.)

The size of the total labor force slightly increased from March to April at the local and state levels. Knox County’s labor force increased 0.9% from 258,642 in March to 261,060 in April. The Knoxville MSA’s labor force increased 0.9% from 460,114 in March to 464,061 in April. Tennessee’s labor force increased 0.8% from 3,464,857 in March to 3,493,841 in April. Meanwhile, the national labor force decreased from 170,653,000 in March to 170,622,000 in April.

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 April, there were 10,350 unique active job postings in the Knoxville MSA (up 10.4% from March and up 7.4% from last April.) There were 6,532 unique active job postings in Knox County (up 10.1% from March and up 4.5% from this time last year.)

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

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

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

(Source: Lightcast – formerly Emsi Burning Glass)

Knoxville Ranked #19 on WalletHub’s Best Places to Start a Career

WalletHub, the personal finance website, recently released its 2025 rankings of the Best Places to Start a Career. The list compares 182 major cities across two categories – “Professional Opportunities” and “Quality of Life” – using 25 key metrics ranging from the availability of entry-level jobs to average monthly starting salary to housing affordability. Knoxville ranked #19 overall, #12 in the “Professional Opportunities” category and #88 in the “Quality of Life” category. Knoxville was the highest ranked city in Tennessee and the second highest among its peer cities. The overall rankings for the peers were – #17 Raleigh, #24 Chattanooga, #33 Huntsville, #35 Durham, #39 Nashville, #122 Lexington, and #149 Memphis. (Asheville and Greenville did not make the rankings.) You can read more here.

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 May report shows a net gain of 37,000 in private-sector employment (down from the 62,000 net jobs gain in April.) Industry sectors showing positive job growth in May include Leisure and Hospitality (+38,000), Financial Activities (+20,000), Information (+8,000), Construction (+6,000), and Other Services (+4,000).

Industry sectors showing negative job growth in May include Professional and Business Services (-17,000), Education and Health Services (-13,000), Natural Resources and Mining (-5,000), Trade/Transportation/Utilities (-4,000), and Manufacturing (-3,000).

By establishment size, mid-sized businesses (with 50-249 employees) gained 51,000 jobs. “Other Small” businesses (with 20-49 employees) lost 7,000 jobs, “Very Small” businesses (with 1-19 employees) lost 6,000 jobs, large businesses (with 500+ employees) lost 3,000 jobs, and mid-sized businesses (with 250-499 employees) lost 2,000 jobs.

(Source: ADP)

Intuit QuickBooks Small Business Index

Each month, Intuit QuickBooks, the accounting software provider for small and medium-sized businesses, releases the Small Business Index Report, which analyzes employment and revenue trends for small businesses in the U.S. with one to nine employees across twelve industry sectors.

In May, there were 12,765,400 people employed by U.S. small businesses with one to nine employees, down 0.02% from April. Jobs were up in seven of the twelve industry sectors tracked by the Index including Leisure and Hospitality (+1,300), Retail Trade (+1,300), Professional and Business Services (+600), Education and Health Services (+400), Transportation and Warehousing (+400), Agriculture/Natural Resources/Mining (+300), and Finance and Real Estate (+200). Industry sectors showing a decline in jobs include Manufacturing (-3,100), Wholesale Trade (-1,100), Construction (-1,000), Information (-800), and Utilities (-400).

Below is the 13-month total employment trend for U.S. small businesses with one to nine employees –

You can access the full report here.

(Source: Intuit QuickBooks)

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 7.4 million jobs to fill and only 5.6 million hires in April, leaving 1.8 million jobs unfilled.

In April, the largest increases in U.S. job openings were in professional and business services (+171,000), health care and social assistance (+102,000), retail trade (+46,000), arts/entertainment/recreation (+43,000), information (+27,000), transportation/warehousing/utilities (+19,000), and private educational services (+13,000).

The largest decreases in job openings were in accommodation and food services (-135,000), other services (-60,000), manufacturing (-16,000), wholesale trade (-11,000), construction (-3,000), and financial activities (-2,000).

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.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from April 2024 to April 2025 is 2.3%. This is down from 2.4% in the March 2024 to March 2025 period. Last year, the national inflation rate was 3.4% from April 2023 to April 2024.

The April CPI report marks the thirty-fourth 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, natural gas prices are up 15.7%, auto insurance is up 6.4%, auto repair services are up 5.6%, housing prices are up 4.0%, eating out prices are up 3.9%, electricity costs are up 3.6%, groceries are up 2.0%, used car prices are up 1.5%, and new vehicle prices are up 0.3%.

From a year ago, gasoline prices are down 11.8%, airline fares are down 7.9%, and apparel is down 0.7%.

The Federal Reserve decided to keep the federal funds rate at 4 ¼ to 4 ½ percent at its Federal Open Market Committee (FOMC) policy-setting meeting May 7. The Fed stated that “although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.” The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run. The risks of higher unemployment and higher inflation have increased. 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 2.0% for the April 2024 to April 2025 period. This is up from 1.9% in the March 2024 to March 2025 period. Last year, the rate was 3.2% from April 2023 to April 2024.

(Source: U.S. Bureau of Labor Statistics; Consumer Price Index; Not Seasonally Adjusted)

Housing Market

Home sales in East Tennessee decreased 0.5% from March to April at a seasonally adjusted annual rate (SAAR) of 19,591. This is an unseasonal slump from the normal spring busy season; sales were down 8% from April 2024. The local market almost exactly mirrored the national market this month, which also saw a 0.5% decline from March.

Home sales in Knox County also decreased 7.5% from the previous year at a seasonally adjusted annual rate (SAAR) of 7,287.

The median home sales price across the East Tennessee region was $375,000 in April, up 6% from a year ago. Knox County’s median home sale price was $400,000, an increase of 6% from a year ago.

Half of the homes sold across the East Tennessee region went under contract in 24 days or less, up from 18 days last year and down from 32 days last month.

Active inventory in the East Tennessee region was up 25.6% from the previous year.

Months of inventory for East Tennessee, or the number of months it would take to exhaust active listings at the current sales rate, stayed steady at 4 months.

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)

Knoxville Ranks Lower Than Most of its Peer Cities For Annual Population Growth Rates

The U.S. Census Bureau officially released the 2024 population estimates for all the cities in the nation with 20,000+ population in May. The city of Knoxville’s current population estimate is 198,722, having added 1,259 more people at an annual growth rate of 0.6%. Compared to the ten peer cities, Knoxville’s annual growth rate ranks #8. The table below shows all the peer cities ranked by 2023-2024 annual growth rates.

You can access all 2024 population estimates data here.

(Source: U.S. Census Bureau; Population Estimates Program)

National Retail Sales

The total advance monthly retail sales estimate for April 2025 was $722.558 billion (down 2.0% from March and up 3.0% from last April.)

The retail sectors that showed sales growth from last April were Health and Personal Care Stores (+8.8%), Furniture and Home Furnishings Stores (+8.4%), Motor Vehicles and Parts Sales (+7.6%), Food Services and Drinking Places (+5.4%), Food and Beverage Stores (+4.5%), General Merchandise Stores (+3.6%), Clothing Stores (+2.1%), Non-store Retailers (+0.6%), and Building Materials (+0.4%).

Retail sectors that showed a decline in sales from last April were Gasoline Stations (-8.5%), Miscellaneous Stores (-7.7%), Sporting Goods/Books/Hobby/Music Stores (-2.1%), and Electronics and Appliance Stores (-0.1%).

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

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $136.890 million in state sales taxes in April (up 18.7% from March and up 4.5% from last April) and Knox County collected $88.648 million in April (up 17.0% from March and up 4.0% from last April.) The state of Tennessee collected $1.270 billion in state sales taxes in April (up 19.0% from March and up 3.6% from last April.)

The Knoxville MSA collected $49.719 million in local sales taxes in April (up 17.8% from March and up 6.1% from last April) and Knox County collected $30.381 million (up 17.1% from March and up 5.7% from last April.)

(Source: Tennessee Department of Revenue)

Knoxville Drops 50 Spots on StartupBlink’s “Global Startup Ecosystem Index 2025”

StartupBlink, a global startup research platform that maps the winners of the tech economy, recently released its annual “Global Startup Ecosystem Index 2025.” This index has been updated annually since 2017 and ranks the startup ecosystems of 1,473 cities worldwide by analyzing several dozen sets of parameters that comprise three categories – Quantity (measuring activity level of the ecosystem), Quality (assessing the impact and success of the activity in the ecosystem), and Business Environment (evaluating how supportive the overall conditions are for startup growth).

Knoxville’s current worldwide ranking is #384, a 50-point drop from the 2024 ranking. All of Knoxville’s peer cities also experienced a drop in their current rankings compared to last year. The peer cities ranked as follows – #45 Raleigh-Durham (down from #41 last year), #80 Nashville (down from #68), #211 Greenville, SC (down from #208), #248 Lexington, KY (down from #150), #250 Memphis (down from #248), #273 Chattanooga (down from #247), #354 Huntsville (down from #321), and #485 Asheville (down from # 483). You can download the full report here.

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.

May 8, 2025 – Amentum, a global leader in advanced engineering and innovative technology solutions, announced the opening of its new Nuclear Center of Excellence in Oak Ridge. The center will serve as a strategic hub for nuclear expertise, engineering, and operational excellence by assisting in the development of innovative technologies fit for the complexity and high standards of nuclear engineering, including artificial intelligence and automation, as well as safety and cybersecurity solutions. You can read more here.

May 9, 2025 – Greenheck Group, a Wisconsin-based global manufacturer of air conditioning, ventilation and air circulation equipment, broke ground on its 330-acre Midway Business Park campus in East Knox County. The first phase of the $300 million investment project will include building two 200,000-square-foot factories and creating 440 new jobs with average annual wages of $75,300. In addition to the manufacturing facilities, the company is providing up to $2 million in donations for equipment and resources to establish a student-run, site-based engineering and manufacturing enterprise at Carter High School as part of a partnership with Knox County Schools. The enterprise will operate within the existing career-focused 865 Academies high school technology education class structure, which already allows students to participate in industry and work-based learning. You can read more here.

Knox County Business Licenses

New business licenses issued in April 2025 by Knox County are up 14.0% from March and are down 3.5% from April 2024.

A total of 277 new business licenses were issued in April 2025 compared to 243 in March and 287 in April 2024. The top industry sectors for which business licenses were issued in April 2025 were services, 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 286,013 passengers in April (down 2.2% from March’s passenger traffic of 292,512 and up 20.0% from April 2024.)

The total freight recorded in April at TYS was 4,942,666 pounds (down 35.8% from March and down 17.7% from last April.)

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in April was 2,472,886 (up 0.2% from the April 2024 daily passenger average of 2,467,984 and up 5.8% from the pre-COVID April 2019 average of 2,337,050.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , “Passenger traffic increased across all regions in April, including North America. After two consecutive months of contraction, North American airlines returned to positive territory with a 1.6% YoY increase. Still, seat capacity grew at a faster pace, rising 3.2% during the same period. Most of the traffic gain for North American carriers came from international routes, where traffic rose 5.4% YoY. Although this was the slowest international growth among all regions, it was enough to offset yet another contraction in the U.S. domestic market.” You can read more here.

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