Houston job gains slip amid slowdown
Employers add fewer jobs in July as the energy industry’s struggles begin to take toll on state
Houston-area employers kept hiring in July, but employment gains slowed a bit as the energy sector’s recent struggles began to ripple throughout the state and affect local payrolls.
Houston employers added 2,900 jobs to the region in July, a notable slowdown from a month prior, in which employers added 11,400 jobs, the Texas Workforce Commission reported. The local unemployment rate was 4 percent in July, down from 4.5 percent during the same month of 2018.
“While job growth in Houston remains positive, it slowed in July, likely due to the weakening in the energy sector,” said Keith Phillips, a senior economist and an assistant vice president of the Federal Reserve Bank of Dallas.
In the state, Texas employers added 35,200 jobs in July as the state’s unemployment rate held at an all-time low of 3.4 percent. The national unemployment rate was 3.7 percent in July.
The Houston region has been a bright spot in an otherwise concerning outlook for energy employment, inwhich other areas of the state have already begun to shed jobs. That changed this month.
Mining and logging, which is dominated here by the oil and gas industry, lost 1,300 jobs in July, a decline of 1.5 percent. Job losses in the sector are unusual at this time a year — historically, the sector has added 300 jobs on average during July.
Activity inthe oil and gas industry has slowed in recent months as oil prices remain subdued and concerns about aweakening global economy and deteriorating energy demand keep downward pressure on prices. Thesectorhas lost favor with investors lately, making it difficult to raise capital
for many companies and slowing their growth.
West Texas Intermediate crude oil settled in New York at $54.87 a barrel, down 40 cents.
The question for the Texas economy at large is whether the slowdown in energy will spill over into other sectors.
Pia Orrenius, an economist at the Federal Reserve Bank of Dallas, said economic growth in the state is stronger than the bank projected in 2019, but a fewkey factors, namely energy, pose a risk to that growth over the next six to nine months.
“The data is stronger than we expected, but at the same time, leading indicators are negative, and the energy sector lost jobs again,” Orrenius said. “How fast can we grow without robust growth in manufacturing and a slowing energy sector?”
Texas shed 3,100 mining and logging jobs, primarily in oil and gas, in July, the biggest month-to-month loss in the sector since June 2016.
With these losses, the Texas economywill have to rely more on the services and construction sectors for employment growth unless indicators formanufacturing and energy employment reverses course and turn up, Orrenius said.
A forecast contraction in manufacturing has been a concern for Houston’s economy in recent months but has yet to lead to local job losses. The Houston region added 11,000 manufacturing jobs in July from the month in 2018, up 4.8 percent.