Job growth set a record last year. Unemployment fell to a near-historic low. Inflation surged in the spring but began to abate mid-year. Oil prices rose with Russia’s invasion of Ukraine then fell as supply concerns eased. The domestic rig count approached pre-pandemic levels. Commercial construction continued at a torrid pace. Home sales peaked in the spring before rising interest rates pummeled would-be buyers. Only the Class A segment of the apartment market fared well, and lately even that’s showing signs of weakness. The Port of Houston set a record for container traffic. Air passenger traffic continued to recover. And as the year closed, the Houston Purchasing Managers Index indicated growth was slowing but the local economy was not yet in recession. Details on how each sector fared in ’22 follow.
The region created 179,000 jobs in ’22, according to the Texas Workforce Commission (TWC). That’s the best year on record for metro Houston. The previous record was set in ’21 when the region created 159,700 jobs. With the December jobs report, payroll employment topped 3,356,000. Total employment now stands at a record high for the region.
The numbers should be taken with a grain of salt, however. These are preliminary estimates based on surveys of employers that TWC conducts throughout the year. As with any survey, the results are subject to sampling, non-response, and structural errors. TWC is currently adjusting the estimates by comparing its survey data with unemployment insurance tax records that all employers must file. In March, TWC will issue its annual “benchmark” revisions to the data, adjusting job growth for the past two years. The revisions could be significant.
When TWC issues its benchmark revisions for ’22, the Partnership expects employment gains to be revised downward, perhaps by as much as 50,000 jobs. Even with a substantial revision to the data, the year will be one of the best on record for job creation.
Metro Houston started ’22 with a 5.5 percent unemployment rate. Robust economic growth and strong demand for workers drove that down to 3.9 percent by December.
Any unemployment rate below 5.0 percent indicates a tight labor market. Below 4.0 percent is an extremely tight market. Only 17 times in the past 30 years has the monthly rate dropped below 4.0 percent. The all-time low was in March ’19 when the rate fell to 3.3 percent.
The corollary to the low rate is that initial claims for unemployment benefits, a proxy for layoffs in the region, continue to track at historically low levels. On average, 4,500 workers per week filed claims in December of ’21. That slipped to 3,700 per week in December of ’22.
Just over 105,000 Houstonians joined the local labor force in ’22. Some moved here from overseas or from other parts of the U.S. Others entered after graduating from high school or college. Some returned to work after taking time off to care for family members. Financial need compelled others to seek employment. Houston’s civilian workforce, defined as individuals working, or if not employed actively looking for work, stood at 3,566,000 in December. Early in the pandemic, over 200,000 Houstonians dropped out of the workforce. Since May ’20, when the economy reopened, over 330,000 Houstonians have joined.
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Note: The geographic area referred to in this publication as “Houston,” "Houston Area” and “Metro Houston” is the nine-county Census designated metropolitan statistical area of Houston-The Woodlands-Sugar Land, TX. The nine counties are: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller.