Texas’ recovery slows again in January as hiring falls to lowest level since July

Texas added 30,800 nonfarm jobs in January, and the statewide unemployment rate ticked down to 6.8%, but the pace of the recovery continued to slow into the new year.

While employment expanded in Texas, the January gain was less than half the monthly increase in November, and it was the lowest monthly improvement since July, when coronavirus cases were spiking in the state.

After the pandemic arrived and many businesses locked down, Texas lost 1.4 million jobs in April. The state has been adding jobs every month since May, but the recovery has been uneven.

When COVID-19 cases and hospitalizations increased, consumers often pulled back and hiring slowed. In January, Texas’ nonfarm employment was still 560,000 jobs short of its January 2020 level.

Leisure and hospitality, the sector that includes restaurants, bars and hotels, accounted for nearly 200,000 of the lost jobs — far more than any other single category.

Unemployment also remains high in Texas, nearly double the rate of a year ago and a half-point higher than the 6.3% unemployment rate for the U.S. Texas’ jobless rate has been running higher than the U.S. rate since September.

“We’re not surprised by the slowdown,” said Luis Torres, research economist at the Texas Real Estate Research Center at Texas A&M University. “After the Thanksgiving and Christmas season, when people were getting together, there was a resurgence in the virus. And the fiscal stimulus was starting to dissipate.

“Put those factors together and that’s why the economy was slowing down,” Torres said.

Texas’ manufacturing industry lost 2,700 jobs and the government sector lost 1,800 in January, the Texas Workforce Commission reported. All other large sectors added workers, albeit at a much slower rate.

Professional and business services added nearly 13,000 jobs in January, but that was well shy of the 28,700 added in December. Trade, transportation and utilities added 1,200 jobs in January, down sharply from the 10,000 hires the month before.

The labor markets in Dallas and Austin have been adding jobs faster than most metros, and one firm projects they’ll fully recover by next year. But the number of unemployed was still roughly double the level of a year earlier.

“This data shows the pandemic hasn’t ended — and that we need more fiscal stimulus,” Torres said, referring to the $1.9 trillion federal relief bill signed by President Joe Biden on Thursday.

The Dallas-Fort Worth metro had 263,200 unemployed in January, up from 131,500 before the pandemic.

The unemployment rate for Dallas-Plano-Irving, 6.4% on a nonseasonally adjusted basis, was nearly twice as high as a year earlier, although it was still lower than the state and many metros.

Amarillo and Austin had the lowest unemployment rates in Texas, at 4.9% and 5.4% respectively, according to the Texas Workforce Commission.

Torres warned that Texas’ February job numbers would be disappointing and the state could lose jobs for the month. That’s largely because a brutal winter storm shut down electricity in much of the state, idling plants and stranding residents without power.

In the first two weeks of February, several indicators improved, he said, but the early momentum ended with the winter storm.

“March is looking much better,” Torres said. “The indicators are looking good right now.”

Two key factors make Torres optimistic about a fast recovery: the rapid deployment of COVID-19 vaccines and the additional federal spending in Biden’s relief package.

“I think everybody’s expecting to see really strong employment growth in March, April and going forward,” he said.

Consumer sentiment has been climbing. It reached a one-year high in early March, according to the University of Michigan sentiment index.

The survey director said the results suggested strong consumer spending in the year ahead. And he said half of all consumers reported hearing favorable economic developments — with positive gains in jobs leading the way.

“Once we put the health crisis behind us, we’ll be on a path to recovery,” Torres said. “Add in the fiscal stimulus, and the whole economy will grow at a faster pace.”

In the Dallas-Plano-Irving metro area, many sectors added jobs last year, but the pandemic was brutal for restaurants. They lost nearly 50,000 jobs in 2020, and one economist said the problem will be fixed only after the coronavirus is gone.
Thousands of vehicles lined up for food at Fair Park in Dallas on Nov. 14. Over half a million people in Dallas-Fort Worth didn't have enough to eat in the previous week, according to estimates from a recent pulse survey by the U.S. Census Bureau.
The 'Welcome to Texas' sign greets drivers as they enter the Lone Star State near Denison. Last year, Texas added far more residents than any state, and much of the gain was likely due to newcomers from elsewhere in the U.S. The population growth, along with a larger workforce, raise the prospects of a faster economic recovery for the state and Dallas-Fort Worth.