Feeling the heat
Triple-digit heat indexes are expected over the weekend, a reminder that even though school is starting, summertime in Houston isn’t over yet.
Houston employers have added jobs at the fastest pace in four years as the region’s energy sector regains its strength following the brutal oil bust and slow industry recovery.
The region gained more than 100,000 jobs in the year between July 2017 and July 2018, increasing overall employment by 3.4 percent, the Texas Workforce Commission reported Friday. That rate of job growth was the fastest since 2014, the peak of the last oil boom, outpacing the state’s job growth of 3.1 percent and the nation’s, 1.6 percent.
The region’s unemployment rate was 4.4 percent, down from 5.1 percent a year ago, the Workforce Commission reported.
The Houston area has largely lagged state job growth after the oil boom went bust in late 2014 because of the concentration of energy companies in the region. But a combination of rising oil prices and drilling activity, the rebuilding after Hurricane Harvey and the strong national economy have fueled the region’s comeback, said Parker Harvey, principal economist at Workforce Solutions-Gulf Coast Workforce Board, which provides employment services in the region.
A year after the record storm pummeled Houston, the boost from rebuilding efforts appears to be accelerating, Harvey said. Construction employment in July surged 12 percent from a year ago, adding more than 25,000 jobs.
“Bottom line, it’s oil plus Harvey plus the national economy that’s driving the incredible growth we’re seeing,” he said. “I wouldn’t be surprised if some of the growth gets revised lower, but even taking that into account, I think the underlying strength is real.”
The Houston metropolitan area accounts for about 25 percent of the state’s jobs, and the region’s rebound has contributed to employment growth in Texas that the Federal Reserve Bank of Dallas described as “blistering” in a recent report.
The state in July added jobs for the 25th consecutive month as employers boosted payrolls by about 24,000 jobs after increasing them by nearly 25,000 jobs in
June, according to the Workforce Commission. The state added nearly 380,000 over the past year.
The state unemployment rate held steady at 4 percent in July, slightly above the national average of 3.9 percent.
While the Texas economy has been red hot lately, Dallas Fed economists expect it to cool in the coming months. Keith Phillips, senior economist at the Dallas Fed, said the anticipated slowdown in the second half of 2018 should cut the rate of annual job growth to 2.7 percent from an earlier forecast of 3 percent.
Uncertainty over the North American Free Trade Agreement, which has been under negotiation for more than a year, and a brewing trade war that has seen the United States and other countries impose titfor-tat tariffs, are creating headwinds for Texas manufacturers, Phillips said. Texas manufacturers added more than 20,000 jobs over the year.
“Manufacturing employment in the state has been growing like gangbusters, really,” Phillips said, “so it’s not surprising that we see some slowing in this really rapid rate of growth, especially with the tariff situation.”
The dwindling pool of unemployed workers could also crimp job growth, he said, as companies find it increasingly difficult to fill open slots. The good news is that after years of stagnant wages, employers are having to offer higher pay to attract and retain workers.
“I think this year has been good for people looking for a job and it’s good for people negotiating wages and I think it will continue to be,” Phillips said.
Statewide, construction led job gains in July, adding 10,500 added positions, the largest monthly gain for the sector since October 2017, according to the Workforce Commission. Trade, transportation and utilities, which includes retailers, added 7,500 added workers, education and health services, 6,400, and leisure and hospitality, which includes hotels and restaurants, 5,700.