The national job market is blazing hot for most Americans. The overall unemployment rate is at 3.8%, the lowest in 18 years, according to the U.S. Bureau of Labor Statistics (BLS), and jobless claims continue to hover at 48-year lows. For the fourth month in a row, there are more job openings than job seekers.
According to the latest statistics released by the Dallas Fed, Texas job growth outpaced the rest of the nation at 3.6 percent (annualized) for the first half of 2018. Texas catapulted to the No. 1 spot, up from 9th place in 2017. The state’s two largest sectors—trade, transportation and utilities and professional and business services—generated the highest job growth relative to the rest of the country. For Texas employers, reaping the rewards of the strong economy is tempered with the ongoing challenge of finding skilled talent in a tight job market. Firms must be more creative in their recruiting and are increasingly competing for employees through nonwage benefits, such as signing bonuses, flexible work hours or increased paid leave.
Despite the roaring Texas economy, there are a few points of uncertainty that analysts and business executives are watching closely:
Growth in Houston, which makes up 25% of state employment, may moderate as the year winds down and Hurricane Harvey-induced activity dissipates. From an economic perspective, the impact the job market, construction, and spending of the catastrophic storm are largely behind us. This may be good news for construction and skilled trades employers who have been short of labor since Harvey-related work absorbed the entire available workforce.
Tariff and Trade Issues
Mexico and Canada are the state’s primary trade partners, accounting for 44% of this year’s exports from Texas. China is the state’s next largest trade partner, receiving another 7% of exports. Tit-for-tat tariffs between these trading partners are of major concern to manufacturers of products including chemicals, fabricated metal products, and machinery. Businesses surveyed by the Dallas Fed expressed frustration over tariffs and the ongoing renegotiation of the North American Free Trade Agreement (NAFTA). The U.S. and Mexico recently announced an informal trade agreement, but the net impact of the proposal is still uncertain.
The economy of Texas lives and dies by the state of oil and this year is no different. Oil prices finally returned to the $60-$65 per barrel price range in early 2018, and fewer companies in the industry are filing for bankruptcy. When surveyed by the Dallas Fed, 51% of energy companies expected their employment ranks to grow. While a shortage of skilled labor has hindered growth among oil & gas and energy companies, another obstacle is the pipeline development plan. Steel tariffs may impact any growth in the pipeline infrastructure, while retaliatory actions could target the energy industry.
The professionals at The Daniel Group are ready to help with all of your staffing needs in this robust job market. We qualify the best and brightest candidates that will fit into your organization’s culture, and we stand behind our work with a One-Year Replacement Guarantee.