Houston Employment Update from GHP

The Houston-The Woodlands-Sugar Land metro area created 46,000 jobs in ’17. That’s a
significant improvement from ’16 when the region created 18,700 jobs and ’15 when the
region created only 200. Several sectors performed better than expected, a few worse.
The energy sector shaved 400 jobs, with losses in exploration and production nearly
offsetting gains in oil field services.

As of late summer, the construction sector was on track to lose more than 10,000 jobs in
’17. The post-Harvey boom helped reverse that trend, with construction finishing at a net
loss of only 800 jobs for the year.

Manufacturing recorded a robust gain of 8,800 jobs. Fabricated metal products (e.g.,
pipes, valves, flanges and structural steel) added 5,400 jobs while machinery
manufacturing shed 4,100. This is a bit of a conundrum since both are tied to the rig count, which finished the year with 929 rigs operating in North America, up from 658 at the end of ’16. Non-durables (i.e., goods which are quickly consumed or become part of a larger product) recorded a loss of 1,500 jobs, also a surprise given the recent expansion of Houston’s chemical sector.

Wholesale trade, still retrenching after the energy downturn, cut 2,000 jobs. Retail, facing weak wage growth and the inroads of e-commerce, posted a gain of 2,800 jobs. That’s well below the average 6,200 jobs the sector creates in non-recession years.

Financial activities (e.g., banking, insurance and real estate) added 3,800 jobs, a 2.4
percent annual growth rate. The average growth rate for non-recession years is 2.3
percent. Nearly three-fourths of the 14,900 jobs created in professional and business services were in employment services, i.e., contract workers. Employment services added 10,700 jobs, a 13.0 percent increase over ’16, which reflects companies’ reluctance to hire full-time, permanent employees.

Concerns over the fate of the Affordable Care Act along with pressure from consumers
and insurers to control costs slowed growth in health care employment. The sector added 6,400 jobs in ’17, slightly below the long-term average of 8,000 jobs per year.
Leisure and hospitality also underperformed, adding only 2,800 jobs for the year. Since
the end of the Great Recession, job growth has averaged 11,800 per year.

The government sector added 8,000 jobs, three-fourths of them in school districts,
community colleges, and public universities.

Houston’s unemployment rate was 4.3 percent in December, unchanged from November and down from 5.3 percent in December ’16. Texas’ unemployment rate was 3.7 percent in December, unchanged from November and down from 4.5 percent in December ’16.

The U.S. rate was 3.9 percent in December, unchanged from November and down from4.5 percent in December ’16. The rates are not seasonally adjusted.

A note of caution to readers: In March, the Texas Workforce Commission will issue its
benchmark revisions of employment data for all of ’17 and part of ’16. The final
employment counts may be significantly different from the current report. Those
revisions will be covered in detail in a future issue of Houston: The Economy at a Glance

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