Greater Houston Partnership – Employment UPDATE

http://www.houston.org/pdf/research/narratives/Employment/Employment_Update.pdf

The Houston metro area added 14,500 jobs in September, according to data released today by the Texas Workforce Commission (TWC). While the reported job growth is a bit above historic patterns, it’s not unreasonably higher. Over the past 25 years, September job gains have ranged from 5,000 to 18,000, with an average of 10,000. The average of the last five years is 13,100.

The bulk of the growth (18,800 jobs) occurred in local education, a subsector of local government. Over the past 10 years, local education has added an average of 16,500 jobs in the month. Given Houston’s recent population growth and the current stage of the business cycle—public education always lags every other sector by a year or two—September’s robust job growth is not surprising.

Houston benefited from the 1,600 jobs added in health care in September. That sector continues to generate employment opportunities. As long as people continue to move here, have babies here, and grow old here, that sector will continue to add jobs.

Construction also added 1,600 jobs in September, but growth in the sector will likely taper off in the coming months as the office, multi-family and chemical plant construction booms wind down.

The loss of only 300 jobs in manufacturing, a sector that cut 2,000 – 3,000 jobs a month in ’15 and early ’16, suggests the worst may be over for manufacturing.

Job losses in wholesale, retail trade, finance, insurance, real estate, and other services partially offset gains in the other sectors. Retail always loses jobs in September before adding them back in October, November and December. The weakness in wholesale is symptomatic of the weakness in the energy sector and energy-related manufacturing. The drop in finance employment is part of on-going restructuring as the industry tries to remain profitable in a lowinterest environment.

The losses in accommodations and food services are no surprise. Like retail, the sector always loses jobs in September before adding them back over the remainder of the year. A common misconception is that TWC’s employment data reflect full-time/40-hour-a-week jobs. In reality, the data only reflect individuals on payroll, whether they work 20, 40 or 60 hours in a week. The employment loss in accommodations and food services may reflect the departure of part-time help, primarily high school and college students, who leave the payroll when they return to school in the fall.

Employment growth in accommodations and food services has been strong over the past 12 months, greatly exceeding the long-term trend for the sector. TWC may have overestimated this growth and the data may be revised downward when the agency issues its benchmark revisions in March 2017. Likewise, TWC reports that mining and logging added 200 jobs in September. This is a bit of a conundrum since the two subsectors that comprise 98.5 percent of employment in the mining and logging—exploration and production and oil field services—lost a combined 1,000 jobs in the month.

September’s energy employment numbers will likely be sorted out with the March benchmark revisions as well. Houston’s unemployment rate dropped from 5.8 in August to 5.7 percent in September. The Texas rate dropped from 5.0 to 4.9 percent. The U.S. rate decreased from 5.0 to 4.8 percent. The rates are not seasonally adjusted.

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