The Texas unemployment rate has dropped to 4.1 percent, the lowest rate since 2001. That’s the good news for Texas in the August jobs report. The bad news: The state lost jobs, especially high-paying oil jobs. Still, economists say there are some bright spots.
Southern Methodist University economics professor Tom Fomby was surprised at the low unemployment rate because the price of oil is low. Right now, it’s about half of what it was a year ago and Texas it’s a big oil producer. Back in the 1980s when oil prices plummeted, it sent the state into a recession. That’s not happening this time around.
“It really does point out that the Texas economy is very well diversified and what you do is if you take a hit in one area, the other areas of the economy picks up the slack.”
Still, Pia Orrenius, the senior economist at the Federal Reserve Bank of Dallas, says despite the low unemployment rate, Texas actually lost jobs last month. And many of those jobs were high-paying oil jobs, and, “it’s very difficult for these workers to relocate to different sectors and earn the same high wage.”
But, she says, that’s the transition that’s underway, and she says it’ll keep up until oil prices rebound. She thinks Texas will pick up more jobs over the rest of the year, just slower than in the last couple years. A lot of those will be low-wage service jobs.
But it’s not all negative. One bright spot in the August numbers is the 3,900 construction jobs that were added in Texas – jobs that are pretty evenly spread around the state.
“If you look outside in Austin where I was today, there are cranes everywhere,” says Waco-based economist Ray Perryman. He says the same holds true in Dallas, Fort Worth, San Antonio and, to a lesser degree, in Houston. There’s a lot of building in some Texas’ smaller cities, as well, he points out. And he sees that trend lasting for the foreseeable future.
“Absorbtion rates are going up, rental rates are going up, occupancy rates are going up,” Perryman says. “So it’s not a case of overbuilding the market, it’s simply that the market is demanding a lot of real estate right now.”
The other upside he says: Even if low oil prices are taking the bounce out of Texas’ jobs picture, at least you’re paying less to fill up the tank, right?