Economic Conditions Outlook

August 2025

Welcome to the August 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 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	Worker Shortage Update

Economic Survey Results by Industry

Based on the response to the Quarter 3 (July 2025) survey, the evaluation of the level of general business activity and company outlooks have mostly “improved” from the previous quarter. (In the last quarter, the evaluation of the level of general business activity and company outlooks had “improved.”)

The Quarter 3 current indicator responses show 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” are mostly reported for the average employee workweek. Delivery time is evenly split between “increase” and “no change.” Finished goods inventories is evenly split between “decrease” and “no change.” (In the last quarter, responses showed “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” were 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.)

The six-month outlook in Quarter 3 anticipates 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” are mostly expected for unfilled orders, finished goods inventories, and average employee workweek. Delivery time is evenly 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, number of employees, and capital expenditures. “No changes” were expected in unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, wages and benefits, and average employee workweek.)

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 3 (July 2025) survey that their evaluation of the level of general business activity and company outlooks are mostly “the same” from the last quarter. (The evaluation of the level of general business activity was mostly split between “worsened” and “the same” from the previous quarter, while company outlooks were “mixed” in the last quarter.)

The Quarter 3 current indicator responses show mostly “increases” in input prices and capital expenditures. The number of full-time employees, wages and benefits, and selling prices are evenly split between “increase” and “no change.” Revenue, the number of part-time employees, and average employee workweek are mostly reported as unchanged. (In the last quarter, responses showed 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 were split evenly between “increase” and “no change.” Capital expenditures were “mixed.”)

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

Labor Market Information

The Knoxville MSA’s unemployment rate in July was 4.0% (up from 3.8% in June and up from 3.2% in July 2024.) Knox County’s unemployment rate in July was 3.9% (up from 3.7% in June and up from 2.9% in July 2024.) Tennessee’s unemployment rate was 4.4% in July (up from 4.1% in June and up from 3.6% in last July.) The U.S. unemployment rate was 4.6% in July (up from 4.4% in June and up from 4.5% in last July.)

The size of the total labor force slightly increased from June to July at the local, state, and national levels. Knox County’s labor force increased 0.5% from 260,786 in June to 262,184 in July. The Knoxville MSA’s labor force increased 0.5% from 463,639 in June to 466,030 in July. Tennessee’s labor force increased 0.5% from 3,495,698 in June to 3,514,374 in July. The national labor force increased 0.2% from 171,343,000 in June to 171,646,000 in July.

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

Job Market

For the month of July, there were 10,638 unique active job postings in the Knoxville MSA (up 7.6% from June and up 8.4% from last July.) There were 6,457 unique active job postings in Knox County (up 8.0% from June and up 2.9% from this time last year.)

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

The Top 10 occupations (by number of job postings) in the Knoxville MSA in July 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 August report shows a net gain of 54,000 in private-sector employment (down from the 104,000 net jobs gain in July). Industry sectors showing positive job growth in August include Leisure and Hospitality (+50,000), Construction (+16,000), Professional and Business Services (+15,000), Information (+7,000), Natural Resources and Mining (+4,000), and Other Services (+1,000). The industry sectors that showed negative job growth in August were Trade/Transportation/Utilities (-17,000), Education and Health Services (-12,000), Manufacturing (-7,000), and Financial Activities (-2,000).

By establishment size, large businesses (with 500+ employees) gained 18,000 jobs, mid-sized businesses (with 50-249 employees) gained 18,000 jobs, “Very Small” businesses (with 1-19 employees) gained 10,000 jobs, mid-sized businesses (with 250-499 employees) gained 7,000 jobs, and “Other Small” businesses (with 20-49 employees) gained 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 August, there were 12,969,000 people employed by U.S. small businesses with one to nine employees, up 11,600 from July. Jobs were up in ten of the twelve industry sectors tracked by the Index including Leisure and Hospitality (+4,600), Education and Health Services (+3,800), Construction (+800), Manufacturing (+700), Finance and Real Estate (+400), Professional and Business Services (+400), Wholesale Trade (+400), Agriculture/Natural Resources/Mining (+300), and Retail Trade (+200). The Utilities sector was statistically unchanged. Sectors that showed minor job losses were Information and Transportation and Warehousing.

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 7.2 million jobs to fill and only 5.3 million hires in July, leaving 1.9 million jobs unfilled.

In July, the largest increases in U.S. job openings were in construction (+64,000), wholesale trade (+54,000), financial activities (+47,000), manufacturing (+41,000), transportation/warehousing/utilities (+36,000), accommodation and food services (+14,000), other services (+14,000), and information (+13,000).

The largest decreases in job openings were in health care and social assistance (-181,000), retail trade (-110,000), arts/entertainment/recreation (-62,000), and professional and business services (-56,000). The private educational services sector was unchanged from last month.

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.

Tennessee Ranks #13 on WalletHub’s “Hardest-Working States in America 2025” Rankings

WalletHub, the personal finance website, recently ranked the 50 states to determine which states were the “hardest working.” The analysis compared and scored the 50 states using ten key metrics across two key dimensions – “Direct Work Factors” and “Indirect Work Factors.” The Direct Work Factors include average workweek hours, the employment rate of the civilian population aged 16+, the share of households where no adults work, the share of workers leaving vacation time unused, the share of engaged workers (those “involved in, enthusiastic about and committed to their work and workplace” as defined by Gallup), and idle youth (residents aged 18-24 who are not in school, not working, and have no education beyond high school.) The Indirect Work Factors include average commute time, share of workers with multiple jobs, average volunteer hours per resident, and average leisure time spent per day.

Tennessee ranked #13 overall. The top five states were #1 North Dakota, #2 Alaska, #3 South Dakota, #4 Texas, and #5 Hawaii. Other southern state rankings include #6 Virginia, #12 Georgia, #17 Mississippi, #20 Alabama, #26 Arkansas, #28 Florida, #30 North Carolina, #34 South Carolina, #35 Louisiana, and #39 Kentucky. You can read more here.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from July 2024 to July 2025 is 2.7%. This is unchanged from the June 2024 to June 2025 period. Last year, the national inflation rate was 2.9% from July 2023 to July 2024.

The July CPI report marks the thirty-seventh 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 13.8%, auto repair services are up 6.5%, electricity costs are up 5.5%, auto insurance is up 5.3%, used car prices are up 4.8%, eating out prices are up 3.9%, housing prices are up 3.7%, groceries are up 2.2%, airline fares are up 0.7%, and new vehicle prices are up 0.4%.

From a year ago, gasoline prices are down 9.5% and apparel is down 0.2%.

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 July 29-30. The Fed stated that “although swings in net exports have affected the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low 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. 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 July 2024 to July 2025 period. This is unchanged from the June 2024 to June 2025 period. Last year, the rate was 2.7% from July 2023 to July 2024.

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

Housing Market

Home sales in East Tennessee decreased 0.1% from June to July at a seasonally adjusted annual rate (SAAR) of 19,465, an increase of 7.3% over July 2024.

July home sales in Knox County also decreased 0.9% month over month but increased 4.4% over 2024 at a seasonally adjusted annual rate (SAAR) of 7,298.

The median home sales price across the East Tennessee region was $374,900 in July, no change from a year ago. Knox County’s median home sale price rose to $395,000, an increase of 5.8% from a year ago.

Half of the homes sold across the East Tennessee region went under contract in 24 days or less, up from 15 days last year.

Active inventory in the East Tennessee region was up 31.2% 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, dropped slightly to 4.1 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

The total advance monthly retail sales estimate for July 2025 was $744.246 billion (up 4.3% from June and up 2.8% from last July.)

The retail sectors that showed sales growth from last July were Health and Personal Care Stores (+6.7%), Furniture and Home Furnishings Stores (+5.6%), Clothing Stores (+4.2%), Food Services and Drinking Places (+4.1%), Motor Vehicles and Parts Sales (+4.1%), Non-store Retailers (+3.6%), General Merchandise Stores (+3.1%), Food and Beverage Stores (+2.3%), and Miscellaneous Stores (+0.8%).

Retail sectors that showed a decline in sales from last July were Electronics and Appliance Stores (-4.7%), Building Materials (-2.2%), Sporting Goods/Books/Hobby/Music Stores (-2.1%), and Gasoline Stations (-1.8%).

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $135.906 million in state sales taxes in July (down 1.1% from June and up 4.2% from last July) and Knox County collected $85.866 million in July (down 1.0% from June and up 3.6% from last July.) The state of Tennessee collected $1.271 billion in state sales taxes in July (up 0.7% from June and up 2.7% from last July.)

The Knoxville MSA collected $49.699 million in local sales taxes in July (statistically unchanged from June and up 6.7% from last July) and Knox County collected $29.533 million in July (down 0.5% from June and up 5.6% from last July.)

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.

July 22, 2025 – Aqua-Chem, a water purification and process water treatment solutions firm, held a ribbon cutting for its expanded office facility in Knoxville. The company was acquired by Nijhuis Saur Industries (NSI) in 2022 and serves key markets including pharmaceuticals, beverages, energy, and the U.S. military. You can read more here.

August 14, 2025 – Axle Logistics, a third-party logistics firm, has moved employees into the company’s nearly finished 82,000-square-foot second headquarters building on North Central Street in North Knoxville. The building has more than 900 workstations with large display screens and several amenities including pool tables, water features, golf simulators, a gym, basketball court, and more. The expanded space will allow the company to grow from 700 employees to 1,250. You can read more here.

August 18, 2025 – The Tennessee Valley Authority (TVA) announced a new power purchase agreement with Kairos Power and Google. Kairos Power’s Hermes 2 plant in Oak Ridge will provide up to 50 megawatts of power to supply two Google data centers in Tennessee and Alabama. You can read more here.

August 27, 2025 – MAHLE GmbH, a German-based global automotive parts supplier, announced a more than $10 million expansion of its Morristown plant and will add 50 new jobs. The expansion will bring the location’s total headcount to 800 and will allow the company to start production of electric compressors used on fuel-cell electric vehicles, plug-in hybrids, and full electric vehicles. You can read more here.

Knox County Business Licenses

New business licenses issued in July 2025 by Knox County are up 19.1% from June and are up 33.2% from July 2024.

A total of 281 new business licenses were issued in July 2025 compared to 236 in June and 211 in July 2024. The top industry sectors for which business licenses were issued in July 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 356,533 passengers in July (up 2.1% from June’s passenger traffic of 349,303 and up 9.4% from July 2024.) The July passenger count broke another record for TYS airport previously set last month.

The total freight recorded in July at TYS was 5,327,752 pounds (up 17.6% from June and down 13.5% from last July.)

Southwest Airlines, the low-cost carrier, announced in mid-August that the airline would begin service from McGhee Tyson Airport beginning in March 2026. The airline will offer twice-daily service between Knoxville and Nashville International Airport (BNA) as well as daily roundtrip flights to Baltimore-Washington International Airport (BWI), Dallas Love Field (DAL), and Orlando International Airport (MCO). Southwest will be the seventh airline offering service at TYS joining Allegiant, American, Avelo, Delta, Frontier, and United. You can read more here.

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in July was 2,744,168 (up 1.1% from the July 2024 daily passenger average of 2,713,552 and up 5.9% from the pre-COVID July 2019 average of 2,592,486.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , “U.S. domestic traffic increased by just 1.5% YoY in July. The domestic PLF (Passenger Load Factor) of US carriers declined 0.8 percentage points YoY to 87.0%.” You can read more here.

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