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Economy at a Glance - November 2022

This edition of Glance delves into Metro Houston's job growth and an overview of trends in the apartment market.
Published on 11/8/22

Even With Revisions

Metro Houston has created 108,600 jobs through the first nine months of ’22. That already makes this the fifth-best year on record for job growth.

 

The region added 14,800 jobs in September ’22, in line with expectations for the month. In years with strong growth, the region typically creates 10,000 to 16,000 jobs in September. 

Those numbers are deceiving, however. The government sector, specifically state and local education, added 16,800 jobs in September. Several other sectors—restaurants and bars, and business, scientific and technical services—showed uncharacteristically large increases as well. Those gains helped offset significant losses in other sectors.

Restaurants and bars added 5,300 jobs in September, a month in which the sector typically loses 1,000 to 2,000. Over the last two months, restaurants and bars have hired 8,700 workers. That’s nearly a full year’s worth of job growth. At the pace of the last few months, the sector is on track to add over 33,000 jobs this year, or three times what’s typical for a year. The Partnership suspects TWC is overestimating job growth and will eventually revise these gains downward. 

Professional, scientific, and technical services added 3,900 jobs in September. The sector typically sheds a few hundred jobs in the month. Only three times in the past 30 years has the sector recorded growth in September, and then no more than 500 to 600 jobs. The Partnership suspects TWC is overestimating here as well and will later revise the gains downward. 

Sectors recording notable losses in September were construction (-3,000 jobs), retail (-2,800), wholesale trade (-2,200), transportation and warehousing (-2,200), other services (-2,100), and nondurables manufacturing (-1,200). It’s too soon to tell whether the losses reflect slower growth or whether TWC is compensating for overestimating gains earlier in the year by subtracting jobs later in the year.

Historically, the region adds 20,000 or more jobs in Q4, even in recession years. The gains often top 40,000 in boom years. Businesses typically boost hiring to handle the holiday rush and meet year-end deadlines. Even with a weak finish to the year, Houston should end ’22 with a net gain of 130,000 or more jobs.

However, these gains could be revised downward when TWC issues its benchmark revisions in March ’23. The data TWC releases each month derives from a survey of employers, the sample selected to represent employers from all sizes and industries in the economy. Like all surveys, the results are subject to sampling, response, and processing errors. In some years, TWC has underestimated growth by as many as 45,000 jobs. In other years, TWC has overestimated by as many as 33,000. The Partnership suspects TWC may have overestimated job growth in April, May, and June of this year, reporting the region created 30,000 or more jobs each month, well above the long-range average and the previous records for those months.

If growth is later revised downward by 20,000 or more jobs, ’22 will still prove to be remarkable. In a normal year, one in which high oil prices aren’t over-stimulating growth or low prices haven’t sedated it, the region creates 60,000 to 70,000 jobs.  Even after the March ’23 revisions, the Partnership expects job growth to finish well above “normal.”

Pandemic Update

Thirteen of the 18 major sectors tracked by TWC had fully recouped their pandemic losses as of September ’22. 

As of September ’22, five sectors have yet to fully recover their pandemic job losses.

Leisure travel has recovered, and event bookings have soared, but business travel has yet to return to pre-pandemic levels and that’s delayed the recovery of Houston’s hotel sector.

Other Services includes barber shops, beauty salons, repair shops, and similar small businesses. These were among the hardest hit businesses during the pandemic. They are also among some of the most difficult to survey. The Partnership suspects recovery is much further along than TWC has reported.

The downturn in energy began prior to the pandemic when Wall Street curtailed lending to the sector. The pandemic compounded the sector’s woes. Now it deals with labor and materials shortages, a hostile regulatory climate, and pressure to adjust business models brought on by the need to address climate change. 

Manufacturing’s woes are tied to energy. Almost all the missing jobs involve the manufacture of equipment used for the exploration and production of oil and gas. 

The information sector is dealing with structural changes in how we send and receive information that began two decades ago and were compounded by the pandemic.

Houston’s recovery compares well against that of the nation and major U.S metro areas. As of September, Houston ranked sixth among the nation’s 20 most populous metros in percent of jobs recovered.

To continue reading, download this report.

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.

Key November Takeaways

Here are the facts to know about the Houston region this month
1
November Takeaway #1
Metro Houston has created 108,600 jobs through the first 9 months of '22.
2
November Takeaway #2
Houston ranks 6th among the nation's 20 most populous metros in percent of jobs recovered.
3
November Takeaway #3
Class A apartments’ strong absorption rates offset declines in seen across classes B, C, and D.

Want to learn more? Contact our Research Team:

Patrick Jankowski, CERP
Senior Vice President, Research
713-844-3616

Previous Issues of Economy at a Glance

OCT
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Exploring Population Changes Through the ACS
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SEPT
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Recession? Maybe, Maybe Not
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AUG
2022
Houston at Mid-Year
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JUL
2022
The Houston Housing Market, Affordability, and Recent Shifts
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JUN
2022
Economic Recovery, Population Growth & Global Houston recap
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MAY
2022
Economic recovery, rising costs & labor force
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APR
2022
Population growth and employment data
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MAR
2022
Local Impact of a Global Event
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FEB
2022
Post-Analysis of 2021 Houston Economy
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JAN
2022
Omicron, GDP, Employment
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DEC
2021
2022 Employment Forecast
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NOV
2021
Job Gains, Real Estate, Exports
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OCT
2021
Inflation, Employment & Global Innovation
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SEP
2021
Employment, Oil & Gas, Containerized Exports, and Housing
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AUG
2021
Delta Variant, Rebounding Travel, Economic Growth and Population Gains
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JUL
2021
Energy Transition, Recovery Bottlenecks, & the Worker Shortage
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JUN
2021
Economic Recovery, Multifamily, Population & More
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May
2021
Housing Boom and Robust Recovery
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APR
2021
Pandemic Recovery, Tech Workforce
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MAR
2021
Pandemic Employment Data
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FEB
2021
Coronavirus Impact and 2021 Outlook
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JAN
2021
Racial Demographics and Population Shifts
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NOV
2020
U.S. Recovery, 2021 Outlook
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OCT
2020
U.S. Recovery, Houston Update
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SEP
2020
COVID-19 Impact on Economy
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AUG
2020
Energy Change Over Time
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JUL
2020
COVID-19 Update, Houston Unemployment
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JUN
2020
COVID-19 Update, Affected Sectors, Energy
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MAY
2020
U.S. & Texas Outlook, GDP
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APR
2020
COVID-19 Update, PMI, Industry Outlook
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MAR
2020
Economic Impact, Global Outlook, Recession Probability
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FEB
2020
U.S.-China Trade Deal, USMCA
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JAN
2020
Houston GDP, Energy, Jobs
Read Report
DEC
2019
Sector by Sector Forecast for 2020
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NOV
2019
Houston Region Demographic Update 2
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OCT
2019
Houston Region Demographic Update 1
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SEP
2019
Houston's Growth Engines
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AUG
2019
PMI, Commercial Real Estate & Housing
Read Report

More Insight & Analysis

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Get more in-depth analysis from the Partnership team with a Membership.