October 25, 2022
Houston payrolls continued to post significant gains through September, and high-frequency data from Houston on trends in credit and debit card transactions and restaurant demand showed no signs of slowing through early October. However, early economic indicators continue to signal a slowdown. Taken together, the latest data suggests that while Houston is heading into the winter with plenty of momentum, the local economy is likely to slow to a more sustainable pace of growth over the next few months.
Employment growth was broad-based and robust in 2022 (Diagram 1). All of Houston’s industries, except for those related to oil and gas and the tiny information sector (not shown on chart), have exceeded pre-pandemic employment levels.
Payroll jobs are up 5.8 percent this year through September. At this rate, the subway would create 183,600 jobs to 3.4 million by the end of the year. That would mean a full recovery in job numbers, which Houston would have achieved had it maintained the pace of growth seen in 2000 through 2019. All sectors have grown since the beginning of the year.
The month-on-month change in local payrolls accelerated to 6.6 percent, led by leisure and hospitality, professional and business services. However, monthly employment data is very volatile at the local industry level and is subject to significant revisions. Of the four manufacturing subsectors that lost jobs in September, only the large trade, transportation and utilities sector fell for two straight months.
Houston’s unemployment rate fell to 4.4 percent in September amid continued labor force growth. For comparison, the unemployment rate was 4.0 percent in Texas and 3.5 percent statewide.
Nominal credit and debit card spending has increased in Houston since April 2022, while national spending has leveled off (Diagram 2). Compared to January 2020, card spending in Houston increased 13.5 percent and U.S. card spending increased 13.6 percent in the four weeks ended October 2, 2022. Texas spending fell 10.0 percent in the summer, higher than in January 2020.
demand in the restaurant
Diners seated at Houston restaurants rebounded from summer lows in September and October (Diagram 3). Demand for restaurants in the four weeks ended Oct. 13 was 15.5 percent higher than the same period in 2019. Demand in Texas was 19.5 percent higher than in 2019, while demand in the US was flat stayed.
Purchasing, leading indices
While Houston’s payrolls show little sign of slowing, concurrent and leading indices continue to weaken. The Houston Purchasing Managers Index fell to 54.2 in August (Diagram 4). While still pointing to growth, the index has been trending down since October 2021 and is now at its lowest level since January 2021. The index’s key manufacturing component fell to 48.6, suggesting more producers are beginning to see a fall in production Manufacturing as reported up since May 2020. The leading index of Houston economic indicators turned negative, falling 3 percent in the three months to August. This implies much slower job growth over the next three to 12 months, but not necessarily a contraction.
NOTE: Data may not match previously published figures due to revisions.
About Houston economic indicators
Questions can be directed to Jesse Thompson at [email protected] Houston economic indicators will be released on the second Monday after the release of monthly Houston-area employment data.