TEXAS PICKS UP PACE
OIL & GAS: Industry helps fuel success as state adds 40,000 positions in June
Texas employers added more than 40,000 jobs in June, speeding a slow recovery from the oil downturn as drillers continue to hire rapidly to bring new production online.
That robust number brings Texas to an annualized growth rate of 2.7 percent, up from 2.4 percent last month, in line with an acceleration in job growth nationally. The unemployment rate fell to 4.6 percent from 4.8 percent in May.
Oil and gas as well as manufacturing again led the state’s growth, after a strong month in May, accounting for nearly a quarter of all positions added. Oil and gas jobs are now up 10.3 percent from a year ago.
The recent acceleration in job growth led the Federal Reserve Bank of Dallas to boost its forecast for employment growth to 2.8 percent.
Growth was not quite as impressive in Houston. Employment grew at annual rate of 1.9 percent — slug-
gish compared to the state’s fastest-growing cities, like Dallas, which posted 3.4 percent growth. Still, that is an improvement from last month, when the annual growth rate stood at 1.7 percent; June marked five consecutive months in which employers added to payrolls.
Temporary staffing
In Houston, energy and manufacturing employment continued to struggle in June, as did construction, which has shed 2.4 percent of jobs over the year. Unlike Texas as a whole, the service industries, such as health care, are growing faster here than goods-producing industries.
The unemployment rate in Houston stands at 5.3 percent, slightly below last year’s rate for June.
Experts voiced some concern that employment services, which cover temporary staffing companies, still make up such a large chunk of Houston’s job growth, accounting for one in four new jobs over the past year. That could indicate that companies are still hesitant to bring people on full time.
“By now, growth in employment services should have plateaued and job growth in other sectors kicked in,” says Patrick Jankowski, head of research at the Greater Houston Partnership, the largest local business group. “Either employers remain uncomfortable with the current pace of growth or we’re seeing a fundamental shift in hiring patterns.”
Analysts said they are seeing another shift in hiring patterns as oil and gas companies outsource more functions, such as legal services. That means an oil company’s former in-house lawyer (or architect, or accountant) might show up in a different category rather than oil and gas.
Indeed, professional and business services — which includes many of those white-collar jobs — led employment growth in June, adding 19,000 jobs over the year.
Shrinking retail sector
Jankowski is also concerned by the shrinking retail sector, which accounts for more than 300,000 jobs in Houston. Retail employment is down 1 percent from a year go, with much of decline occurring among sellers of building materials, such as Home Depot, which have been affected by the slowdown in the construction industry.
Both the Texas and Houston economies face risks, such as weakening oil prices that already have started to deflate the bump in drilling. Over the past week, the North American rig count declined by one, after adding 488 since this time last year.
Oil lost $1.15 a barrel in New York trading Friday, settling at $45.77.