08/29/2024 | Press release | Distributed by Public on 08/29/2024 15:46
August 29, 2024
Houston economy dashboard (July 2024) | |||||
Job growth (annualized) April-July '24 |
Unemployment rate |
Avg. hourly earnings |
Avg. hourly earnings growth y/y |
||
-0.3% | 4.3% | $35.41 | 3.2% |
Houston's labor market slowed in July, but the unemployment rate held steady. Weekly hours worked fell following Hurricane Beryl, but hourly wages held steady. Tubular goods imports ticked up, while the rig count fell. Retail fuel prices fell despite an uptick in crude oil prices in mid-August. Real oil and gas exports through the Port of Houston declined in June from a record high in May.
Labor market
Job growth stumbles
Over the three months ending in July, employment in Houston contracted an annualized 0.3 percent, or -2,227 jobs (Chart 1). Houston's job losses in July were likely exacerbated by Hurricane Beryl. From June to July, employment in Houston fell an annualized 2.5 percent (-7,140 jobs). However, anemic job growth is being observed in other major Texas metros as well. Further months of data should reveal whether this is a trend or an unlucky combination of extreme weather and a summer slump.
Job losses from April through July were mostly concentrated in service sectors. Leisure and hospitality saw the greatest losses, 4.0 percent (-3,681 jobs), followed by education and health services declining 2.4 percent (-2,832) and professional and business services falling 1.7 percent (-2,338). Weakness in professional and business services was concentrated in administrative and support services. Employment in manufacturing also fell 1.3 percent (-771) from April through July.
Strong growth in mining and construction over that same period helped offset these losses. Construction employment grew 9.9 percent (5,523), and oil and gas grew 8.6 percent (1,419). Gains in construction came from building construction and heavy and civil engineering construction; specialty trade contractors grew at a more moderate pace. Oil and gas growth was concentrated in the support activities for mining subsector, which includes first-line supervisors, derrick operators and drill operators.
Year over year in July, Houston's labor market was balanced and growing on trend. Employment increased 1.7 percent from July 2023 through July 2024. Government and information and other services grew the strongest with job gains over 3 percent. However, over that period, trade, transportation and utilities and professional and business services were flat. Oil and gas employment was mostly flat with a 0.8 percent decline.
Energy-related employment ticks up
The number of energy-related jobs in Houston grew to 234,062 in July from 230,456 in April (Chart 2). Energy-related employment has been steadily increasing from a low of 198,779 in February 2021 when the pandemic decimated global oil demand. Despite a robust recovery of energy markets, energy employment is still not at prepandemic levels, partly due to increasing oilfield efficiency and consolidation in the energy sector.
Energy-related employment includes oil and gas extraction; support activities for mining; fabricated metal manufacturing; agriculture, construction and mining machinery manufacturing; pipeline transportation services; and architecture, engineering and related services.
Beryl causes weekly earnings to plunge
Real average weekly earnings in Houston fell 4.65 percent in July 2024 compared with July 2023 (Chart 3). This is likely due, at least in part, to Hurricane Beryl disrupting shift work and leading to a decline in the number of hours worked. Real average hourly earnings in July 2024 grew 1.5 percent year over year. Growth in real hourly earnings has slowed substantially since mid-2023 and is now back near prepandemic levels.
However, the Employment Cost Index (ECI) in Houston grew 5.1 percent year over year in second quarter 2024-still elevated growth compared with prepandemic averages. The U.S. ECI grew by 4.2 percent in the second quarter. The national readings have been slowly ticking down since 2022 but also remain higher compared with before the pandemic.
Energy market
Pipe imports increase
The three-month moving average of seasonally adjusted oil country tubular goods (OCTG) imports into the Houston-Galveston port district increased to 106.5 thousand metric tons in June from a low of 78.9 thousand tons in January. Import data reflect shipping weight of trade (SWT) or the gross weight of imports. Meanwhile, the U.S. oil and gas rig count ticked down to 586 in July from a high of 780 in December 2022. Chart 4 shows these measures as indexed values for clarity. Texas energy production of oil and natural gas measured in barrels of oil equivalent (BOE) increased to 342.9 million BOE in May 2024 (Chart 4).
OCTG is a class of pipes or tubes used in the production of oil and gas. These goods include drill pipe, line pipe, tubing and casing. In an increasingly efficient oil field, tubular goods imports can be a more helpful leading indicator of production activities than the rig count. Technological improvements such as multi-well pads and greater horizontal drilling distances allow greater resource extraction but leave the rig count and frac fleet count relatively unchanged while still requiring more pipe.
Retail fuel prices decline
Nominal retail fuel prices for both regular gasoline and diesel fuel ticked down in Houston in mid-August (Chart 5). Regular gas fell to $2.96 per gallon the week of Aug.19 from $2.97 per gallon the prior week. Diesel fell to $3.36 per gallon from $3.71 per gallon over the same time. Crude oil prices were up the week of Aug. 12, reaching $1.96 per gallon. Crude oil was $1.88 per gallon the week of Aug. 5.
Port activity
Real exports of oil and gas through the Houston-Galveston port district ticked down to $10.8 billion in June from an all-time high of $11.4 billion in May (Chart 6). Exports of other goods from Houston have held steady compared with the explosive growth of oil and gas. Chemicals and plastics also saw a decline from $3.2 billion to $3.1 billion over the same time. Petroleum and coal products grew to $3.6 billion in June from $3.3 billion in May.
NOTE: Data may not match previously published numbers due to revisions.
About Houston Economic Indicators
Questions or suggestions can be addressed to Robert Leigh at [email protected]. Houston Economic Indicators is posted on the second Monday after monthly Houston-area employment data are released.