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Texas lost 13,700 jobs in August (9/18/15)

By Sheryl Jean

When it comes to employment growth, Texas’ oil woes are not over.

The state lost 13,700 jobs in August, after four months of job gains, according to government data released Friday.

It’s the second month this year that Texas has lost jobs. The state lost 25,200 jobs in March, the first loss in Texas in nearly five years.

Texas tied with New York for losing the most jobs last month, according to the U.S. Bureau of Labor Statistics. In addition, Texas’ job growth for July was revised downward to 25,800 jobs gained from 31,400.

Oddly, though, Texas’ seasonally adjusted unemployment rate fell from 4.2 percent in July to 4.1 percent in August — the lowest level in 14 years. That’s far below the U.S. rate of 5.1 percent last month.

However, Texas’ unemployment decline could be related to the state’s shrinking civilian labor force, down by nearly 100,000 people since February. Unemployed people who have stopped looking for a job are no longer part of the Texas labor force.

Pia Orrenius, senior economist for the Federal Reserve Bank of Dallas, predicted last month that Texas’ recent job growth wouldn’t “have legs” — meaning it probably couldn’t be sustained, given market conditions.

She was right on the money.

Orrenius and other economists blame the job losses mainly on two things that happened in August: Oil prices tumbled again after a short-lived rebound, and the U.S. dollar strengthened against foreign currencies, affecting many manufacturers.

Job losses in Texas’ oil and manufacturing industries accelerated in August. Oil lost 5,300 jobs, and manufacturing lost 5,600 jobs.

“As oil prices began to tumble again, we expected that would be bad news for the Texas labor market, and that’s what we’re seeing play out now,” Orrenius said. “There’s a resignation among our energy contacts of lower oil prices for a longer time.”

Oil helped drag U.S. job growth below 200,000 two weeks ago, noted Boyd Nash-Stacey, an economist for BBVA Compass bank.

Texas, the nation’s largest oil-producing state, is sensitive to oil prices. The price of West Texas Intermediate crude oil dipped below $40 a barrel this summer and rebounded to around $49 in late August. It traded at $44.68 on Friday.

Bud Weinstein, an energy economist at Southern Methodist University, expects to see more oil-related layoffs.

“Some companies have filed for bankruptcy … and a lot of consolidation is going on,” he said. “A lot of guys got into the energy business. Now we’ll see a winnowing out of the less experienced or less efficient energy producers.”

So far, the Dallas area has persevered through the state’s ups and downs. The Dallas-Plano-Irving area gained 7,300 jobs in August, though both the manufacturing and leisure and hospitality sectors lost more than 2,000 jobs.

The Dallas-Fort Worth area’s unemployment rate fell to 3.9 percent in August from 4.1 percent in July. The Amarillo area posted the state’s lowest jobless rate, 3.1 percent, and the McAllen area saw the highest, 7.9 percent. Local rates have not been adjusted for seasonal variations.

Overall, seven of Texas’ 11 major industry groups posted job losses last month, led by trade, transportation and utilities, and government, which each lost 6,200 jobs. Financial services, education and health services, and information services also lost jobs.

The spread of job losses through more service-providing industries is worrying. Orrenius noted that some industries, like railroads, have just started to suffer from the oil slowdown as a backlog of business runs off.

In addition, a Dallas Fed report shows that Texas’ service sector activity, which has driven much of the state’s recent employment growth, grew at a much slower pace in August.

“We could be seeing some spreading of the [oil] slowdown to the service sector,” she said. “It’s too early to say.”

Other service industries continued to add jobs in August. Leisure and hospitality gained 5,900 jobs, followed by professional and business services’ 4,000 jobs and construction’s 3,200 jobs.

Nationally, employment increased in 32 states and decreased in 18 states plus Washington, D.C., in August, according to government data. California saw the biggest monthly job gains (36,200).

Like Texas, the oil-producing states of Alaska and North Dakota saw job losses in August.

“It’s clear now that the oil and gas sector can respond very quickly to prices [up or down],” Nash-Stacey said. Texas’ “overall job creation will depend on where oil prices go over the remainder of the year.”

http://www.dallasnews.com/business/headlines/20150918-texas-lost-13700-jobs-in-august.ece