Wednesday, January 17, 2018

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Perryman: Starting the year with a bang

By M. Ray Perryman
March 18, 2017 at 4 a.m.

I have never been one to put much stock in a single monthly statistic. Economic data can fluctuate for all sorts of reasons and it is usually best to see a pattern develop.

In the more than 30 years I have been writing this weekly epistle, I could probably count on one hand the number of times I have focused on a single number and have a few fingers left over. This week, however, I am making an exception.

The January employment numbers are out and Texas started the year with a hiring bang, according to U.S. Bureau of Labor Statistics data. The state added 51,300 net new jobs, as measured by seasonally adjusted nonagricultural wage and salary employment, pushing the total gain for the prior 12 months to 225,300. The Texas unemployment rate now stands at 4.8 percent.

Clearly, a job increase of this magnitude is good news. There have only been a few months in the past decade when job gains exceeded 50,000 so this is noteworthy indeed. It comes after a fairly lackluster end to 2016 — there was one month during the recent "oil boom" when Texas topped 80,000. During the worst of the oil downturn in 2015, the state gained fewer than 156,000 jobs all year, so a month with an increase of nearly a third of that amount is very positive. It indicates that the adverse effects of the oil downturn are largely behind us, particularly given that the increases were across most segments of the economy.

The largest gains were in professional and business services (up 14,000) and trade, transportation, and utilities (up 8,100). That's a common pattern, as these large industry segments are expanding as components of the workforce in most industrialized countries. Over the past year, service-providing sectors as a group saw an increase of some 244,900 jobs. Sectors adding the largest numbers of jobs during the past year include education and health services with 47,100, professional and business services with 45,500, trade, transportation, and utilities with 45,200 and leisure and hospitality with 44,300.

The only one of the major service-providing sectors to lose jobs over the year was information, which was down 3,900. The information sector includes establishments that create, disseminate or provide the means to distribute information such as newspaper, book and periodical publishers; software publishers; broadcasting and telecommunications producers and distributors; motion picture and sound recording industries; information services; and data processing services. The industry itself is growing, but in a way in which technology is displacing workers.

Texas also saw thousands of jobs added in goods-producing sectors in January. Manufacturing employment increased by 7,300, while construction was up by 5,300. The total gain of 14,500 wiped out a large chunk of the losses for the prior year, but goods-producing sectors still remain down by 19,600 since January 2016. The primary reason for the decrease is mining (mostly oil and gas in Texas), which was up 1,900 in January, but remains down 23,600 for the year. Given recent hiring patterns, there should be better days ahead.

In addition to involving a variety of industries, increases were spread across most of the state's metropolitan areas. With its larger exposure to the energy sector, Houston is still experiencing relatively sluggish growth, but the other largest population centers are adding jobs at a notable pace.

Over the past year, greater Dallas, Austin, San Antonio, Fort Worth, and El Paso have all seen significant growth. Smaller metropolitan areas such as College Station-Bryan, Killeen-Temple, and Lubbock also had employment expansion outpacing the state. Many other communities have gained jobs.

The Texas gain was nearly 22 percent of the national total for January. Looking at other states, Florida added slightly more jobs in January with 54,300, Texas was second, and New York was a distant third with 28,700 net new jobs. California was up 9,700.

As noted, a job gain of January's magnitude should not be expected month after month and we will doubtless see ups and downs in the months to come. However, the annual rate of 1.9 percent from January 2016 through January 2017 is a solid, healthy rate. It's a signal that the state economy is gaining momentum. There are daunting long-term challenges but the bottom line is that things are looking very good for the state economy.

— M. Ray Perryman, president and CEO of The Perryman Group in Waco, is a regular contributor to the Saturday Forum.



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