Job growth in Austin cooled just a tad in '16

Re­vised data con­firm area eas­ing af­ter go­ing full throt­tle 2012-15.

Austin American-Statesman - - FRONT PAGE - By Dan Zehr dzehr@states­man.com

The lat­est re­vi­sions to last year’s work­force data con­firmed that Austin-area em­ploy­ers added jobs at a much faster rate than ini­tially re­ported — but also that its growth eased from the siz­zling pace of the prior four years and has re­mained on that more mod­est tra­jec­tory through the start of 2017.

The num­ber of jobs in the Austin metro area rose 3.3 per­cent in 2016, ac­cord­ing to re­vised data re­leased Fri­day by the Texas Work­force Com­mis­sion. That was a tick higher than the ini­tial re­vi­sion re­leased two weeks ago, and far higher than the pre­lim­i­nary 1.9 per­cent growth rate re­ported back in Jan­uary.

The new data show Cen­tral Texas em­ploy­ers con­tin­ued to add jobs fast enough to eas­ily ab­sorb the re­gion’s pop­u­la­tion growth, and pay­rolls con­tin­ued to ex­pand far faster than in most U.S. metro ar­eas.

In fact, when av­er­ag­ing out the monthly ebbs and flows of pay­roll growth over all of 2016, Austin em­ploy­ers ex­panded pay­rolls by 3.8 per­cent, ac­cord­ing to com­mis­sion data. How­ever, even that higher fig­ure was slower than com­pa­ra­ble rates in the prior four years, when job growth ex­ceeded 4 per­cent.

The slow­down doesn’t sug­gest a fun­da­men­tal prob­lem for the re­gional job mar­ket, lo­cal la­bor ex­perts said. As Austin’s la­bor mar­ket tight­ened — lo­cal un­em­ploy­ment rates re­main far be­low state and na­tional lev­els — it was bound to ease off its ex­cep­tion­ally fast in­creases of 2012-2015.

“The econ­omy is slow­ing just a tad,” said An­ge­los An­gelou, founder of Austin-based An­gelou Eco­nomics. “I think it will slow fur­ther in 2017, but we will still have sub­stan­tial em­ploy-

ment gains.”

So far this year, Austin con­tin­ued on the still rapid but more sus­tain­able pace it set­tled into dur­ing the sec­ond half of last year, ac­cord­ing to com­mis­sion data. Austin metro area em­ploy­ers added about 2,700 jobs in Fe­bru­ary, up 0.3 per­cent from Jan­uary and up 2.7 per­cent from the same month last year.

How­ever, a jump in the num­ber of un­em­ployed Austin work­ers pushed the Cen­tral Texas job­less rate to 3.7 per­cent, up from 3.5 per­cent in Jan­uary and 3.1 per­cent in Fe­bru­ary 2016. That marked just the third time since 2000 that the metro’s un­em­ploy­ment rate in­creased in Fe­bru­ary.

How­ever, much of the ex­pan­sion of the lo­cal un­em­ploy­ment rolls stemmed from work­ers en­ter­ing or re­turn­ing to the of­fi­cial la­bor force — per­haps a sug­ges­tion that work­ers had more op­ti­mism about their job prospects. About 4,200 more Cen­tral Tex­ans were em­ployed in Fe­bru­ary than in Jan­uary, the re­port showed.

The com­mis­sion doesn’t im­me­di­ately ad­just its metro-level un­em­ploy­ment data to fac­tor in sea­sonal la­bor mar­ket pat­terns. Ac­cord­ing to cal­cu­la­tions by the Fed­eral Re­serve Bank of Dal­las, the sea­son­ally ad­justed job­less rate in Austin jumped to 3.8 per­cent in Fe­bru­ary — up from 3.4 per­cent the prior month and to its high­est point since Jan­uary 2015.

“Even with rapid job growth, be­cause so many more peo­ple are en­ter­ing the job mar­ket, the un­em­ploy­ment rate also went up,” said Drew Scheberle, a se­nior vice pres­i­dent at the Greater Austin Cham­ber of Com­merce. “We have to fo­cus on at­tract­ing and re­tain­ing a lot of good jobs just to keep pace.”

For Texas as a whole, the sea­son­ally ad­justed un­em­ploy­ment rate rose to 4.9 per­cent in Fe­bru­ary from 4.8 per­cent the prior month, ac­cord­ing to the work­force com­mis­sion. Na­tion­ally, the rate ticked down to 4.7 per­cent from 4.8 per­cent.

On Fri­day, the Dal­las Fed said it ex­pects statewide pay­rolls to rise 2.3 per­cent this year

In Austin, eco­nomic growth has eased over the past 18 months or so, ac­cord­ing to the Dal­las Fed’s Austin Busi­ness-Cy­cle In­dex. How­ever, the re­gional econ­omy con­tin­ued to ex­pand faster in Jan­uary than its long-term av­er­age growth rate.

Based on Fri­day’s job data, that still brisk but mod­er­at­ing trend should con­tinue in Fe­bru­ary.

Lo­cally, fac­to­ries showed a no­tice­able uptick in hir­ing, adding 900 jobs dur­ing the month, help­ing off­set losses at Cen­tral Texas re­tail­ers, which cut about 2,000 po­si­tions last month. The pub­lic sec­tor and the leisure and hos­pi­tal­ity in­dus­tries col­lec­tively added about 2,800 lo­cal jobs dur­ing the month.

An ar­ray of pro­fes­sional em­ploy­ers, in­clud­ing fi­nan­cial firms and a key swath of Austin’s high-tech com­pa­nies, made small trims to their pay­rolls, ac­cord­ing to the monthly data. How­ever, the in­tense com­pe­ti­tion for skilled tech­ni­cal and pro­fes­sional work­ers re­mained.

“It con­tin­ues to be a can­di­date’s mar­ket,” said Melinda Ali­son, the Cen­tral Texas re­gional vice pres­i­dent for Robert Half, an in­ter­na­tional staffing firm. “For can­di­dates who are un­em­ployed and peo­ple who are em­ployed and look­ing for the next op­por­tu­nity, there con­tin­ues to be more jobs and op­por­tu­ni­ties than peo­ple.”

Some small and mid­size busi­nesses are hav­ing a harder time com­pet­ing for talent, Ali­son said. Larger com­pa­nies can af­ford higher wages or, more of­ten, greater flex­i­bil­ity in their of­fers to work­ers — not just in terms of com­pen­sa­tion, but with en­hanced va­ca­tion, work­from-home and other life- style op­tions.

Still, that didn’t ap­pear to hin­der a hir­ing spree by what Ali­son called “emerg­ing growth com­pa­nies.” The Austin high-tech scene is mov­ing into a cy­cle in which a lot of grow­ing star­tups are adding func­tions they pre­vi­ously out­sourced or didn’t need, such as hu­man re­sources and fi­nance po­si­tions, she said.

“Last year we saw a trend in a lot of these star­tups start­ing to gen­er­ate rev­enue and start­ing to layer in po­si­tions that, now that they’re start­ing to gen­er­ate more rev­enue, it was time to layer in,” Ali­son said. “We’ve con­tin­ued to see that in the first quar­ter of this year.”

Yet the rapid eco­nomic and pop­u­la­tion growth in Cen­tral Texas has spawned po­ten­tial drags on the re­gional econ­omy as well.

An­gelou ticked off the head­winds: soar­ing prop­erty taxes; down­town of­fice rents that are ap­proach­ing Los An­ge­les’ lev­els; a more ex­pen­sive la­bor mar­ket; and a cost of liv­ing that pushes more res­i­dents farther away from the nu­cleus of jobs in Travis County.

“I don’t want to paint a doom-and-gloom sce­nario,” An­gelou said. “We are suc­cess­ful. We have been suc­cess­ful. But let’s not be­come vic­tims of our own suc­cess.”

TAMIR KALIFA/ AMER­I­CAN-STATES­MAN

Work­ers build the set for the 2017 MTVu Wood­ies in the Amer­i­can-States­man park­ing lot March 11. A more ex­pen­sive la­bor mar­ket and a soar­ing cost of liv­ing are among the drags on the re­gion’s econ­omy.

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