Holiday spending fueled by more jobs helped the Lubbock economy end 2018 hotter than a Roman candle on New Year’s Eve, according to Lubbock Economic Index.
“There is good news to report,” said Randy Laycock, Lubbock National Bank’s senior vice president of marketing, at a press conference.
Besides spending and jobs, the average home value continued to soar.
The Lubbock Economic Index reached 154.4 in December, up from 153.2 in November and up 2 percent from December 2017.
“The cycle of growth for the Lubbock Economic Index has been in place for 87 months, which has improved during that time by over 31 percent,” Laycock said. “That’s an annual growth of 4.3 percent, so excellent. It’s a great growth cycle we’ve enjoyed. From what we’ve seen so far, I think it’s going to continue for 2019 as well.”
Almost all other sectors of the Lubbock economy were posting healthy, if not record, results.
“Spending is pretty much the biggest driver of our economy,” Laycock said.
Spending as measured by retail sales rose 12.7 percent in December, compared to the same month a year ago. The holiday spending pushed the total for the fourth quarter 6.7 percent higher than a year earlier. Both totals set records. Although spending was sluggish in the first half of the year, the wave of spending in the second half of 2018 pushed spending for the year up 3.3 percent.
Auto sales were flat at year-end, reflecting the bankruptcy filing of Reagor-Dykes Auto Group, one of the area’s largest dealerships, Laycock said. However, auto spending, adjusted for inflation, was up 3.4 percent in the fourth quarter, compared to the same period in 2017. Auto sales for the year were up 6.5 percent.
Growth of the local economy has been accompanied by greater price stability as the Lubbock Consumer Price Index continued to slow. It showed a year-over-year price increase of 2 percent in December, down from 2.2 percent the month before. Falling energy prices influenced the declining rate. Lubbock’s inflation rate is comparable to the national rate of 1.9 percent in December.
The only component of the Lubbock CPI to increase significantly was the price of housing; it rose 4.2 percent in December.
“There are apartments being built all the time – just like restaurants,” said Chip Gilmour, LNB senior vice president.
The population growth in Lubbock is putting upward pressure on housing prices – both single-family and apartments – as construction grows to keep pace.
Average monthly sales price surpassed $200,000 for the first time in September and remained above that mark for the rest of the year. The average sales price was up 20 percent in December compared with a year earlier. Prices in the fourth quarter were 13 percent higher than that period in 2017 and the 2018 average price was 6 percent higher than 2017.
Combining a record number of sales and record prices, boosted sales volume in December by 20 percent. In the fourth quarter the dollar volume of sales was 13 percent higher than the same period in 2017 and for the year it was 6 percent higher than 2017.
Permits for new single-family housing fell 8 percent, compared to the record 1,352 permits for 2017. Overall, new housing construction was comparatively strong because 2018 marked only the fifth time the annual number of permits exceeded 1,200.
Sales activity for existing homes came roaring into December, setting a number of records. There were 316 sales closed, a record for December and 12 percent higher than the same month a year ago. The record number of fourth-quarter sales were 4 percent higher. Total sales for the year exceeded 4,300 for the first time and was 7 percent above the 2017 figure.
Commercial construction spent most of 2018 in the doldrums as it cooled off following a red-hot year of building in 2017. However, the value of commercial building permit activity bounced back in the fourth quarter with the value of permits filed rising 70 percent over the year-ago levels. In December, the value of commercial permits filed hit $121.6 million. It was the fourth largest monthly total on record.
The robust fourth quarter was not enough, however, to offset the previous 9 months. Commercial construction permits for all of 2018 fell 31 percent compared to 2017.
The Lubbock economy added 4,500 jobs between December 2017 and 2018. About 1,100 of those jobs were in the Leisure and Hospitality industry and the Trade, Transportation and Utilities sector produced 2,200 jobs. Employment grew 3 percent over the year but eased slightly in the fourth quarter to 2.7 percent growth.
Lubbock’s unemployment rate, which has generally fallen since 2010, continued to drift downward in 2018 but did tick up 0.1 percent in December and was unchanged in the fourth quarter.
Hotel and motel spending moved along its upward path, gaining 8.6 percent for the year. The number of passengers flying out of Lubbock’s airport grew 5.3 percent in 2018.