The first half of 22 was the strongest opening on record for Houston’s economy. Employment growth picked up. The unemployment rate fell. Houston’s civilian workforce grew considerably. The export sets a record. Container traffic increased sharply. Crude Oil surpassed $100 a barrel. The number of rigs was approaching pre-pandemic levels. And agents leased a record amount of industrial/warehouse space.
Only a few sectors had problems. Rising interest rates and rising prices are affecting home sales. Double-digit inflation weighed on consumer spending. The housing market began to weaken. Hardly any progress was made in reducing the flood of office space.
However, the positive aspects far outweighed the negative. Houston is entering the second half of 22 with considerable momentum. The region is projected to grow through the end of this year and well into next. What follows is the partnership’s mid-year view of the economy.
employment outside of agriculture
Metro Houston added 22 84,600 jobs in the first half of the year. This is the best start ever for the region, beating any year in the 1980’s when rig count exceeded 4,500 domestically, or in the early 10’s when the Eagle Ford shale boom hauled Houston out of the Great Recession .
Overall, Houston has regained all of the jobs lost to the pandemic. Non-farm payrolls were over 3.2 million in June 22. That’s 75,500 more than the previous employment record set in November 2019.
However, the recovery has been patchy. Eleven sectors have fully recovered their pandemic losses: administrative support (37,300); arts, entertainment and recreation (23,700); educational services (12,900); finance and insurance (6,200); government (8,600); healthcare (47,900); professional, scientific and technical services (16,300); restaurants and bars (111,900); Retail (57,400); transportation and storage (20,300); and Wholesale (12,300).
At their current pace of growth, a handful of sectors should recoup their remaining losses within the next few months or so (jobs needed in parentheses): property and equipment rentals (200); information (700); hotels (2,300); other services (3,400); and construction (5,700).
Only two sectors are still struggling: manufacturing (9,100 jobs) and energy (9,400 jobs). The majority of manufacturing jobs that have yet to be recovered are in the manufacture of oilfield equipment. They will not return without a significant increase in drilling activity. By mid-August, the number of rigs in the US had yet to return to pre-pandemic levels.
Although energy companies reported record profits in Q2/22, they are reluctant to increase their payroll significantly. Instead, they’re buying back stock, paying dividends, funding alternative energy efforts, and modestly increasing exploration programs.
Civil Worker
Metro Houston added over 60,000 to its workforce in the first half of this year and nearly 100,000 in the last 12 months. Houstonians who dropped out during the pandemic have re-entered the job market. The economy has also benefited from the influx of new residents into the region. In June 22, the workforce reached 3,521,124, an all-time high for the region.
Labor force estimates are from the Current Population Survey (CPS), which is based on a survey of households. Salary data is from the Current Employment Series (CES), which is based on a survey of employers. The two surveys tend to agree on the direction of job growth, but often disagree on the magnitude. Data from the most recent CPS suggests Houston has added just 56,680 jobs so far this year, well below CES estimates and the second-best start to the year on record. The best start, according to CPS, was 10 when the region created over 96,000 jobs.
Initial Claims
Initial jobless claims, an indicator of layoffs in the region, trended down until late spring and then picked up slightly from April. However, they remain well below the pandemic peaks and are only slightly above pre-pandemic levels.
Most of the recent layoff announcements have been national and not in response to a local slowdown. Layoffs are focused on the technology sector and digital currency trading platforms, not a slowdown in the national economy. Almost none of the layoffs are affecting Houston.
Continuing Claims
In the second week of June, 22,122 additional jobless claims were filed in the Gulf Coast region. That’s up from 20,221 in May, but an improvement from the 43,092 filed in June last year. The decline suggests those who lost their jobs had little trouble finding new ones. Continuing claims peaked in June ’20 at 276,116.
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Note: The geographic area referred to in this publication as “Houston,” “Houston Area,” and “Metro Houston” is the nine-county census-designated Houston-The Woodlands-Sugar Land, TX Metropolitan Statistical Area. The nine counties are: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller.
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