Economic Conditions Outlook

October 2025

 

 

Welcome to the October 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:

Airport Freight and Passenger TrendsNational Employment Report
Consumer Price Index/Inflation RatesNational Retail Sales
Housing MarketRecent Expansion Announcements
Job MarketState and Local Sales Tax
Knox County Business LicensesWorker Shortage Update

Economic Survey Results by Industry

Based on the response to the Quarter 4 (October 2025) survey, the evaluation of the level of general business activity has “worsened” and company outlooks have remained “the same” 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 4 current indicator responses show “increases” in prices paid for raw materials, prices received for finished goods, wages and benefits, number of employees, and capital expenditures. Production, volume of new orders, volume of shipments, and finished goods inventories show “decreases.” “No changes” are reported for capacity utilization, growth rate of orders, unfilled orders, delivery time, and average employee workweek. (In the last quarter, responses showed mostly increases in production, capacity utilization, volume of new orders, growth rate of orders, unfilled orders, volume of shipments, prices paid for raw materials, prices received for finished goods, wages and benefits, the number of employees, and capital expenditures. “No changes” were mostly reported for the average employee workweek. Delivery time was evenly split between “increase” and “no change.” Finished goods inventories was evenly split between “decrease” and “no change.”)

The six-month outlook in Quarter 4 anticipates “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, finished goods inventories, prices paid for raw materials, prices received for finished goods, wages and benefits, number of employees, average employee workweek, and capital expenditures. “No changes” are expected for unfilled orders and delivery time. (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, prices paid for raw materials, prices received for finished goods, wages and benefits, the number of employees, and capital expenditures. “No changes” were mostly expected for unfilled orders, finished goods inventories, and average employee workweek. Delivery time was evenly split between “increase” and “no change.”)

Note: There were no retail responses for the Quarter 4 (October 2025) survey. The analysis below is from Quarter 3 (July 2025).

Knoxville area retailers indicated in the Quarter 3 (July 2025) survey that their evaluation of the level of general business activity and company outlooks are evenly split between “Improved” and “worsened.” (In the last quarter, retailers responded that their evaluation of the level of general business activity had “worsened” from the previous quarter and company outlooks had stayed “the same.”)

The Quarter 3 current indicator responses show “increases” in wages and benefits and input prices. “No changes” are reported in internet sales and inventories. All other indicators are evenly split between “increase” and “no change.” (In the last quarter, retail responses showed “increases” in net sales revenue, input prices, selling prices, capital expenditures, and inventories. The numbers of both full-time and part-time employees had “decreased.” “No changes” were reported for internet sales, average employee workweek, and wages and benefits.)

The six-month retail outlook in Quarter 3 projects “no changes” in internet sales, the numbers of full-time and part-time employees, and average employee workweek. Net sales revenue is evenly split between “increase” and “decrease.” Selling prices, capital expenditures, and inventories are evenly split between “increase” and “no change.” “Increases” are expected in wages and benefits and input prices. (The six-month outlook in the last quarter anticipated “increases” in net sales revenue, input prices, selling prices, and capital expenditures. “No changes” were expected in internet sales, the numbers of full-time and part-time employees, average employee workweek, and wages and benefits. Inventories were expected to “decrease.”)

Knoxville area service sector businesses report in the Quarter 4 (October 2025) survey that their evaluation of the level of general business activity and company outlooks are “the same” from the last quarter. (This sentiment is unchanged from the last quarter.)

The Quarter 4 current indicator responses show “no changes” in revenue, the number of part-time employees, average employee workweek, wages and benefits, input prices, and selling prices. The number of full-time employees and capital expenditures are evenly split between “increase” and “no change.” (In the last quarter, responses showed mostly “increases” in input prices and capital expenditures. The number of full-time employees, wages and benefits, and selling prices were evenly split between “increase” and “no change.” Revenue, the number of part-time employees, and average employee workweek were mostly reported as unchanged.)

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

In addition to the regular quarterly survey questions, respondents were asked if the tariffs were directly or indirectly impacting their businesses and if so, in what ways. The majority (67%) of respondents said the tariffs were impacting their business. The cost and availability of raw materials, shipping costs, and the uncertainty of near- and long-term prices were all cited as negative business impacts.

Labor Market Information

Data note – due to the federal government shutdown, September 2025 data is not available.

The Knoxville MSA’s unemployment rate in August was 3.2% (down from 4.0% in July and unchanged from August 2024.) Knox County’s unemployment rate in August was 3.1% (down from 3.9% in June and up from 3.0% in August 2024.) Tennessee’s unemployment rate was 3.6% in August (down from 4.4% in July and up from 3.5% last August.) The U.S. unemployment rate was 4.5% in August (down from 4.6% in July and up from 4.4% last August.)

The size of the total labor force slightly decreased from July to August at the local, state, and national levels. Knox County’s labor force decreased 0.1% from 262,184 in July to 261,868 in August. The Knoxville MSA’s labor force decreased 0.1% from 466,030 in July to 465,345 in August. Tennessee’s labor force decreased 0.2% from 3,514,374 in July to 3,506,861 in August. The national labor force decreased 0.4% from 171,646,000 in July to 171,035,000 in August.

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

 

Job Market

For the month of September, there were 9,957 unique active job postings in the Knoxville MSA (up 10.1% from August and up 0.8% from last September.) There were 6,261 unique active job postings in Knox County (up 8.4% from August and up 0.6% from this time last year.)

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

The Top 10 occupations (by number of job postings) in the Knoxville MSA in September 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 October report shows a net gain of 42,000 jobs in private-sector employment (up from the 32,000 net jobs loss in September). Industry sectors showing positive job growth in October include Trade/Transportation/Utilities (+47,000), Education and Health Services (+25,000), Financial Activities (+11,000), Natural Resources and Mining (+7,000), and Construction (+5,000). The industry sectors that showed job losses in October were Information (-17,000), Professional and Business Services (-15,000), Other Services (-14,000), Leisure and Hospitality (-5,000), and Manufacturing (-3,000).

By establishment size, large businesses (with 500+ employees) gained 74,000 jobs, “Other Small” businesses (with 20-49 employees) gained 5,000 jobs, and mid-sized businesses (with 250-499 employees) gained 3,000 jobs. Mid-sized businesses (with 50-249 employees) lost 25,000 jobs and “Very Small” businesses (with 1-19 employees) lost 15,000 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 October, there were 12,896,000 people employed by U.S. small businesses with one to nine employees, down 24,600 from September. Jobs were down in eleven of the twelve industry sectors tracked by the Index including Leisure and Hospitality (-10,300), Retail Trade (-4,000), Education and Health Services (-3,600), Professional and Business Services (-2,800), Finance and Real Estate (-1,300), Manufacturing (-900), Transportation and Warehousing (-600), Information (-500), Agriculture/Natural Resources/Mining (-400), Construction (-400), and Utilities (-300). The only industry sector that showed growth was Wholesale Trade (+500).

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

Data note – due to the federal government shutdown, September 2025 data is not available.

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 7.2 million jobs to fill and only 5.1 million hires in August, leaving 2.1 million jobs unfilled.

In August, the largest increases in U.S. job openings were in accommodation and food services (+106,000), health care and social assistance (+81,000), retail trade (+55,000), transportation/warehousing/utilities (+53,000), private educational services (+14,000), and other services (+13,000).

The largest decreases in job openings were in construction (-115,000), professional and business services (-39,000), manufacturing (-29,000), financial activities (-14,000), arts/entertainment/recreation (-9,000), information (-8,000), and wholesale trade (-3,000).

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, Knoxville Ranks in Top Half of WalletHub’s 2026 Best Colleges and Universities

WalletHub, the personal finance website, recently released its 2026 rankings of the Best Colleges and Universities in the U.S. The rankings were determined by comparing 791 colleges and universities across seven categories including student selectivity, cost and financing, faculty resources, campus safety, campus experience, educational outcomes, and career outcomes.

The University of Tennessee, Knoxville (UTK) ranked #217 overall.

The Top Ten in the Nation were:

#1 Princeton University
#2 Harvard University
#3 Yale University
#4 Dartmouth College
#5 Massachusetts Institute of Technology
#6 California Institute of Technology
#7 Carnegie Mellon University
#8 Williams College
#9 Rice University
#10 Northwestern University

UTK’s aspirational peer rankings were #63 Illinois (Urbana-Champaign), #77 Georgia, #89 NC State, #101 Purdue, #250 Penn State, and #309 Michigan State.

UTK’s comparable peer rankings were #131 Clemson, #134 Virginia Tech, #202 Auburn, #277 Missouri (Columbia), #278 South Carolina (Columbia), #359 Iowa State, #360 Oklahoma (Norman), and #384 Nebraska (Lincoln). The University of Colorado (Boulder) and the University of Kentucky did not rank in the top 500. You can read more here.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from September 2024 to September 2025 is 3.0%. This is up from 2.9% in the August 2024 to August 2025 period. Last year, the national inflation rate was 2.4% from September 2023 to September 2024.

The September CPI report marks the thirty-ninth 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 11.7%, auto repair services are up 7.7%, electricity costs are up 5.1%, used car prices are up 5.1%, eating out prices are up 3.7%, housing prices are up 3.6%, rent is up 3.4%, airline fares are up 3.2%, auto insurance is up 3.1%, groceries are up 2.7%, and new vehicle prices are up 0.8%.

From a year ago, gasoline prices are down 0.5% and apparel is down 0.1%.

The Federal Reserve decided to lower the target range of the federal funds rate by a quarter percentage point to 3 ¾ to 4 percent at its Federal Open Market Committee (FOMC) policy-setting meeting on October 29. The Fed stated that “economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated. Uncertainty about the economic outlook remains elevated.” The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run. 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 3.0% for the September 2024 to September 2025 period. This is unchanged from the August 2024 to August 2025 period. Last year, the rate was 2.1% from September 2023 to September 2024.

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

 

Housing Market

Home sales in East Tennessee decreased 5.3% from August to September at a seasonally adjusted annual rate (SAAR) of 18,816, an increase of 10.2% over September 2024.

September home sales in Knox County also decreased 15.3% month over month and 0.3% over 2024 at a seasonally adjusted annual rate (SAAR) of 6,656.

The median home sales price across the East Tennessee region was $380,000 in September, up 3% from a year ago. Knox County’s median home sale price dropped to $404,000, the same as 2024.

Half of the homes sold across the East Tennessee region went under contract in 31 days or less, up from 20 days last year.

Active inventory in the East Tennessee region was up 26% 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, increased to 4.5 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)

National Retail Sales

Data note – due to the federal government shutdown, September 2025 data is not available.

The total advance monthly retail sales estimate for August 2025 was $745.481 billion (up 0.2% from July and up 1.2% from last August.)

The retail sectors that showed sales growth from last August were Food Services and Drinking Places (+5.2%), Clothing Stores (+3.5%), Non-store Retailers (+2.8%), Health and Personal Care Stores (+2.7%), Food and Beverage Stores (+1.9%), Furniture and Home Furnishings Stores (+0.8%), General Merchandise Stores (+0.7%), and Motor Vehicles and Parts Sales (+0.6%).

Retail sectors that showed a decline in sales from last August were Building Materials (-6.5%), Miscellaneous Stores (-5.6%), Electronics and Appliance Stores (-2.0%), and Gasoline Stations (-1.3%). The Sporting Goods/Books/Hobby/Music Stores category was unchanged.

 

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $138.019 million in state sales taxes in September (up 0.3% from August and up 1.4% from last September) and Knox County collected $87.755 million in September (up 2.2% from August and down 0.1% from last September.) The state of Tennessee collected $1.264 billion in state sales taxes in September (down 1.7% from August and up 4.1% from last September.)

The Knoxville MSA collected $50.110 million in local sales taxes in September (down 2.0% from August and up 4.1% from last September) and Knox County collected $29.975 million in September (down 0.9% from August and up 2.0% from last September.)

 

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 13, 2025 – Radiant Industries, a California-based nuclear startup firm, announced plans to build a Kaleidos microreactor factory in Oak Ridge. The company plans to be the first to bring portable nuclear microreactors that replace diesel generators to the private market in the U.S. and the Oak Ridge facility will produce up to 50 microreactors per year. The $280 million investment will create 175 new jobs. Radiant is the sixth company to locate in Tennessee utilizing the state’s Nuclear Energy Fund. You can read more here.

Knox County Business Licenses

New business licenses issued in September 2025 by Knox County are down 0.4% from August and are up 1.1% from September 2024.

A total of 274 new business licenses were issued in September 2025 compared to 275 in August and 271 in September 2024. The top industry sectors for which business licenses were issued in September 2025 were services, retail, 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 313,297 passengers in September (down 1.3% from August’s passenger traffic of 317,399 and up 5.8% from September 2024.)

The total freight recorded in September at TYS was 4,840,927 pounds (down 5.0% from August and down 11.6% from last September.)

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in September was 2,398,254 (up 0.5% from the September 2024 daily passenger average of 2,386,637 and up 6.8% from the pre-COVID September 2019 average of 2,246,344.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , “In the U.S., domestic travel continued to decline, with RPK (Revenue-Passenger-Kilometer) contracting by 1.7% YoY after a slight decrease in August. Capacity was broadly flat, and the load factor eased to 80.2%—the weakest among major domestic markets in September.” You can read more here.


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

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