Job growth may signal Texas recovery
Energy leaders, economists say this could mark end of oil slump
The U.S. economy delivered another month of solid job growth in October, continuing a long and steady expansion that is finally boosting the wages of American workers and even helping the sluggish Texas economy pick up the pace.
In its last report before the presidential election, the Labor Department said Friday that the economy generated 161,000 new jobs in October, the 74th consecutive
month of job growth since the labor market began expanding near the end of 2010. Unemployment slipped to 4.9 percent while increased competition for workers helped push wages up nearly 3 percent over the
past year — the fastest rate of growth in seven years.
“The bottom line is, there’s not too much labor market slack left,” said Anthony Murphy, a senior economist at the Federal Reserve Bank of Dallas. “You can’t keep boosting employment by huge numbers as the labor market tightens up.”
The news was even better in Texas, where jobs in the third quarter grew at annual rate of 2.6 percent, triple the pace of growth in the previous two quarters as the energy sector stabilized after a two-year downturn, the Dallas Fed reported Friday. Nationally, oil and gas employment has essentially held steady over
the past four months, according to the Labor Department.
In earnings reports over the past two weeks, energy executives have called a bottom to the oil bust, saying that the industry appears to have hit bottom in around mid-year and begun a slow, tentative recovery. Many companies have narrowed losses and some, such as the oil field services giants Schlumberger and Halliburton, reported profits and an end to mass layoffs that have marked the industry over the past 18 months or so.
“The data that we’re looking at indicates that we might be seeing the beginning of the end of the Texas slump,” said Dallas Fed economist Amy Jordan in a statement today. The Fed also revised its growth forecast for 2016 through the end of the year up to 1.5 percent, which would exceed the rate for 2015.
It’s a quick turnaround from earlier in the year, when economists were forecasting that the energy recession would drag down the state well into 2017. As recently as last month, the Wall Street Journal highlighted how Texas was weighing on the U.S. economy, after several years of boosting it through tremendous growth in oil and gas.
Much of the Dallas Fed’s optimism comes from broader trends that are positive for manufacturing, the service sector, retail and energy. Oil prices have risen from their low in February of $26 a barrel to more than $50 recently, although they fell below $45 a barrel this week. The dollar, which strengthened over the past few months as economies in Europe and Asia sputtered, has weakened recently, providing a boost to manufacturers as the goods they sell overseas become cheaper.
Rising wages and incomes, meanwhile, are supporting consumer spending.
The real estate market has also contributed to Texas’ growth, with single family home prices in September increasing 6.1 percent from September 2015. Fewer firsttime homebuyers, however, were able to purchase houses, possibly because of tighter credit conditions.
There was even some good news for Houston, which has been the laggard in Texas because of its high concentration of energy companies. Employment growth in the third quarter rose to 1.9 percent on an annualized basis, after shrinking by 1 percent in the second quarter. Dallas, however, put Houston in the shade, with 5 percent job growth in the third quarter — expanding by more than any of the nation’s 20 largest metropolitan areas in September.
According to one broad measure of economic activity, the Dallas Fed’s business cycle index, the Houston economy has grown for several months now, following a period of contraction. Historically, such a turnaround signals the beginning of a sustained expansion.