Houston’s Economy Remains in Growth Mode

HOUSTON—Notable job gains occurred in professional and technical services, healthcare, social assistance, and financial activities and the number of unemployed persons was largely unchanged at 6.1 million, the US Bureau of Labor Statistics reported on Friday. Total nonfarm payroll employment rose by 164,000 in July and the unemployment rate was unchanged at 3.7%.

“Solid job growth in the professional and technical services jobs as well as the financial sector bodes well for the office market, which has shadowed the slow and steady growth of the economy,” Matt Dolly, Transwestern director of research, tells GlobeSt.com. “In addition, the continued strong job growth in the healthcare industry presents an opportunity for office building owners to convert all or part of their assets to support the growing medical office sector.”

In July, the number of persons unemployed less than five weeks increased by 240,000 to 2.2 million, while the number of long-term unemployed (those jobless for 27 weeks or more) declined by 248,000 to 1.2 million. The long-term unemployed accounted for 19.2% of the unemployed. In July, the labor force participation rate was 63%, and the employment-population ratio was 60.7%. Both measures were little changed during the month and year.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) declined by 363,000 in July to 4 million. These individuals who would have preferred full-time employment were working part time because their hours had been reduced or they were unable to find full-time jobs. During the past 12 months, the number of involuntary part-time workers has declined by 604,000.

For industrial jobs, technology has played a factor in decreases.

“Mixed results were reported in the jobs report for industrial real estate market, the darling of the commercial real estate sector,” Dolly tells GlobeSt.com. “While construction jobs continued to increase in more than 40 states over the past 12 months, the manufacturing sector fell off its estimates in July, falling to a three-year low with an average of only 8,000 jobs per month this year, compared to 23,000 per month in 2018. It should be noted that many manufacturing tasks have been replaced by technology and robotics, so lower numbers in that sector are not surprising.”

Dolly shared that retail jobs continued to decline in July as store closings continue at a pace that could double last year’s closures.

“However, it is possible that workers could be losing lower-paying retail jobs and gaining employment in the warehouse sector, which is largely responsible for the decline in the retail sector,” he tells GlobeSt.com. “This could eventually result in higher wages for the worker, contributing to an overall rise in wages.”

For Houston, decreased rig count and uncertainty in the energy industry is causing some concern, however, the local economy remains in growth mode, GlobeSt.com learns.

“Despite global headwinds and continued turmoil in the energy sector, Houston’s economy remains in growth mode with approximately 83,000 jobs created year-over-year and 48,000 added during the second quarter alone,” Stuart Showers, vice president of research, tells GlobeSt.com. “Houston has historically been able to run counter to national recessionary environments, and all signs point to this trend continuing.”

The US rig count slipped to an average of nearly 970 rigs in June, a drop of 108 rigs from the three-year high of 1,077 in December, according to the Houston Economic Indicators report from the Federal Reserve Bank of Dallas. Fluctuations in monthly drilling activity tend to follow changes in monthly oil prices with a lag of about three months. However, efforts to rein in capital spending, ongoing improvements in efficiency and productivity, and expectations for a significant expansion of pipeline capacity in the second half of 2019 are likely contributing to the recent erosion of the rig count, GlobeSt.com learns.