Job growth in Austin cooled just a tad in '16
Revised data confirm area easing after going full throttle 2012-15.
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-
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.”
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.