Texas economic expansion slows, job growth slows, exports rise in January – Corridor News

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JThe Texas economy showed signs of slowing expansion in January as payroll employment growth slowed and jobless claims remained high.

Respondents to Texas business outlook surveys indicated a positive outlook. Texas exports rose in January and retail sales rose late in the year, although they remained below December 2019 levels.

A growing share of Texans said it’s hard to pay for usual household expenses, according to the Census Bureau’s latest Household Pulse Survey.

LABOR MARKET

Job growth is slowing

Employment in Texas rose an unannualized 0.3% in January after climbing a downwardly revised 0.5% in December (Chart 1).

January marks the ninth consecutive month of payroll increases in the state since jobs plummeted in March and April due to the COVID-19 pandemic.

National job growth accelerated in the first two months of the year. Payroll fell at the end of the year before climbing 0.1% and 0.3% in January and February, respectively.

Job growth in Texas was strongest in the oil and gas sector, which rose an unannualized 2.3% in the first month of the year.

Employment in government and manufacturing fell 0.1% each, and education and health services were flat. All other sectors grew in January.

Unemployment insurance claims remain high

Unemployment claims in Texas have slowly recovered from their initial increase last spring, but remain more than seven times higher than their pre-pandemic level (Chart 2).

National unemployment claims are more than 10 times higher than their pre-pandemic level.

The high number of claims has persisted in part due to the availability of pandemic assistance that includes unemployment insurance outside of regular government programs, emergency unemployment compensation and extended benefits.

These programs have been extended through the first week of September with the latest COVID-19 relief bill.

Chart 2

The unemployment rate in Texas fell slightly in January, from 6.9% to 6.8%. The national rate fell to 6.3% in January before dropping to 6.2% in February.

TEXAS BUSINESS OUTLOOK SURVEYS

After reporting a gloomy outlook at the start of the pandemic, respondents to Texas business outlook surveys had a net neutral to positive outlook in the second half of last year (Chart 3).

The outlook for the manufacturing sector has been above average since July 2020, while the outlook for the services sector briefly rose above the post-recession average last fall before falling more recently to subdued but positive readings. The outlook darkened for both sectors in January before picking up again in February.

The outlook for the manufacturing sector, although lower than the figures at the end of last year, is still more optimistic than it was for most of 2019. The outlook for the services sector, whose performance is more closely linked to mobility and engagement of the population, should improve as the number of vaccinations continues to increase.

Chart 3

EXPORTS

Texas exports have slowly recovered from last spring’s decline, picking up again in January 2021 (Chart 4). The statewide export trajectory was largely driven by manufacturing exports, which accounted for 72.8% of total exports in 2020.

Despite this steady recovery, total and manufacturing exports in January 2021 remained 13.5% and 12.9% respectively below their pre-pandemic levels in February.

Mining exports have been much more volatile and were 21.0% below their pre-pandemic levels in January 2021.

While agricultural exports saw a slight decline in the first four months of 2020, they more than doubled between that point and October.

They retreated somewhat thereafter, but climbed again in January to 66.4% above their February 2020 level.

Chart 4

RETAIL SALES

Even though online sales increased in the spring of 2020, total retail sales in Texas fell from January to April as many retail businesses closed due to the pandemic response (Chart 5).

In the second half of the year, total sales recovered and were 3.5% below year-ago levels in December 2020.

Sales in December, while lower than record sales at the end of 2019, were higher than year-end sales of any previous year since the series began in 1990.

Chart 5

HOUSEHOLD EXPENSES

Texans who responded to the Household Pulse Survey have reported more difficulty than the national average paying for usual household expenses since the survey began asking this question last fall (Chart 6).

The statewide measure peaked around the end of December. In mid-February, winter storm Uri hit Texas, causing a protracted crisis that began with widespread power outages.

The share of Texans reporting difficulty paying for usual household expenses fell that week, but rose in the survey that followed two weeks later.

Chart 6

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