By: Dr. M. Ray Perryman
Published in syndication June 26, 2019
Texas hit a new all-time low rate of unemployment, dropping to 3.5% in May. This series dates back to 1976, meaning that unemployment in the state is currently lower than during the oil boom of the 1980s or any of the other growth periods over the past four decades. The national unemployment rate was 3.6% in May, which was little changed from a year prior. The unemployment rate is not the best measure of the economy (my poor students had to endure an hour on that topic back in the day), but it generates a lot of attention and patterns over time can be informative.
Texas added 19,600 seasonally adjusted nonfarm positions in May, pushing the total gain for the year to 286,300. That's the largest gain of any state, followed by California (+282,700), and Florida (+214,500).
There are states with lower rates of unemployment, but that's not necessarily a healthy situation. Vermont, for example, also experienced a series low in May, yet the number of people working in the state was actually down for the month. What's going on there is more about individuals leaving the workforce because they relocated or gave up searching than healthy economic growth.
Looking at growth by industry, the largest increase in employment between May 2018 and May 2019 occurred within the professional and business services group, which was up 49,100. Education and health services rose by 42,100, and leisure and hospitality gained 41,600. These sectors are large and involve labor-intensive activities, and it's not unusual for them to generate large numbers of new jobs.
Growth was also strong in other segments of the economy, and diverse expansion brings a more sustainable pattern. Construction increased by 35,200 over the year, and trade, transportation, and utilities added another 33,300 net new jobs. Manufacturing jobs impressively increased by 26,300. In addition, every one of the state's metropolitan statistical areas saw a decrease in unemployment over the year.
One dominant engine for growth is the energy sector and the oil surge currently underway (more on that later). The state is also attracting more new corporate locations and expansions than any other by a wide margin, a phenomenon which has persisted for years. Another strength is the large and growing workforce. Proactive efforts to encourage the development of key sectors such as technology decades ago continue to pay dividends. Tireless efforts by professionals in communities across the state are crucial to ongoing success.
Business fluctuations are, unfortunately, inevitable, and Texas faces some immediate challenges from potential trade wars and restrictive immigration policies. However, the solid growth across industries and communities is paving the way for future expansion and enhances our ability to weather any storms.