Two weeks ago, the U.S. Bureau of Labor Statistics released the Regional and State Employment and Unemployment Summary for June 2015. The following is a recap that highlights the report for the states with the largest populations and economies and national averages.
After the one-month decline in March that ended 53 consecutive months of positive net nonfarm job creation in Texas, there were 16,700 jobs created in June and 33,000 in the prior two months. Despite lower oil prices and an appreciated U.S. dollar, the mining and logging industry, which is dominated by oil and gas jobs, increased by 2,700 jobs last month. Texas is a well-diversified economy with gains in other industries, such as 18,900 jobs in the services providing industry. As noted in a recent article in The International Trade Journal, this diversification contributing to Texas being resilient to oil price shocks and other external U.S. shocks is partially derived from NAFTA.
Figure 1 shows that annual nonfarm job creation in Texas has been robust relative to these other entities during much of the last decade-plus. However, several states are finally creating jobs at a pace similar to Texas. The twelve-month increase in net nonfarm job creation in Texas is 269,900, for an average monthly gain of 22,492.
Texas’ unemployment rate ticked down 0.1 percent to 4.2 percent making last month the 102nd consecutive month it has been at or below the national average. Figure 2 presents evidence that this rate is at least 1.1 percentage points lower than any of the other unemployment rates below.
This lower unemployment rate is even more impressive when you consider how many Americans have stopped looking for work after an unsuccessful job search. While the nation’s reported 5.3 percent unemployment rate in June is near what some consider “full employment,” it doesn’t tell the whole story as noted in Figure 3 by the drop in the nation’s labor force participation rate. Though remaining higher than these other entities, Texas’ rate has started to turn south as job growth slows from lower oil prices. This is an area to keep an eye on moving forward.
Figure 4 presents data showing that Texas’ share of the population employed has rebounded since the Great Recession and is substantially higher than the national average and other states. Given the false signal a lower unemployment rate might send from fewer searching for a job, the employment-population ratio provides valuable information. This ratio might change from employment preferences, such as those who decide to not work so they can care for children at home or go back to school that would lower the ratio, but Texas far exceeds these other rates. As with the participation rate, this is another indicator to watch as it has recently declined.
Figures 5 and 6 below illustrate that Texas has been the nation’s primary job creator since the Great Recession began in December 2007. Total employment in Texas also didn’t decline during that recession when oil prices dropped substantially more than they have since last July—another indication that the current oil price drop may not cause severe consequences from an economy that’s well diversified and supported by pro-growth policies, as noted in the NAFTA article above.
There is much to remain positive about in the Lone Star State with positive job creation last month despite potentially negative indications from a couple labor market indicators. The Texas Legislature should continue to take steps to limit spending, reduce regulation, expand trade globally, and cut taxes so that the success of the Texas model will continue to benefit all Texans.