Texas employers added 74,200 jobs as another three industries surpassed pre-COVID employment levels.
But the state’s unemployment rate of 4.2%, despite ticking down a notch from April, continues to be notably higher than the national rate of 3.6%. Texas’ labor force grew for the seventh straight month to 13.4 million, according to the Friday jobs report from the Texas Workforce Commission.
“Texas continues to set records for employment growth with more than 250,000 jobs added from the beginning of this year through May,” said TWC chairman Bryan Daniel in a statement.
Texas was one of seven states to see an increase in nonfarm payroll employment, according to a report from the U.S. Bureau of Labor Statistics.
Since May 2021, Texas has added 762,400 jobs, an increase of 6.1%. The May jobs growth was the largest month-over-month increase of 2022, according to Beacon Economics.
The report is good news for the Texas economy, said Pia Orrenius, senior economist at the Dallas Fed.
“This was a big number,” she said. “We were a little surprised. It’s better than we had hoped for and forecasted for the month.”
Part of the reason Texas is growing faster than the rest of the country is that it benefits from the high oil and gas prices as a large producer in the industry, she said.
The Dallas-Fort Worth metro area added 32,700 jobs in May, accounting for nearly 44% of the state’s growth, Beacon Economics said. Dallas-Fort Worth’s unemployment hit 3.2% in May, lower than the state and nation, according to data not seasonally adjusted from the BLS.
Texas has more than recovered from the pandemic in terms of jobs. There are about 390,000 more people employed in Texas now than prior to the pandemic, according to Beacon Economics. This represents a “significant outperformance” compared to the nation, which still has 0.5% fewer jobs compared to the pre-pandemic peak, according to the research firm.
The state has gotten a boost over the nation because its labor force participation force has grown more quickly, said Adam Perdue, an economist for the Texas Real Estate Research Center at Texas A&M University.
“Everybody in Texas has gone back to work or is looking for work,” he said.
Prior to the pandemic, the U.S. and Texas had a labor force participation rate of 63.4%. Now, Texas’ labor force participation rate is even higher at 63.7% while the U.S. sits below its pre-pandemic rate at 62.3%.
“We are relatively younger here in Texas so people weren’t as concerned about any lingering COVID matters and we didn’t have as many people retire,” Perdue said. “People were ready to get back out there.”
In May, another three industries surpassed pre-COVID employment levels in Texas, including construction; manufacturing; and leisure and hospitality, according to TWC.
The 2% monthly gain in leisure and hospitality employment in May is particularly significant because that sector was most damaged by the pandemic.
“The increases this month represent a significant milestone for the state’s economy as the most affected sector during the onset of the pandemic has now recovered all of the jobs that were lost,” said Beacon Economics research manager Taner Osman in a statement. “With the summer travel season, employment growth in this industry will remain strong.”
That comeback is in addition to five industries that had previously recovered in the state: trade, transportation and utilities; information; financial; professional and business services; and education and health.
Only three industries in Texas are still struggling to come back to pre-COVID levels: mining and logging; other services; and government.
Government employment remained flat in May as the industry has a hard time hiring back workers who can find higher wages elsewhere, Orrenius said.
“Government can’t increase wages as fast as the private sector,” she said.
The mining and logging industry’s employment has grown 16.6% in the past year. But employment remains behind pre-pandemic levels because the industry had to lay off so many workers at the start of the pandemic, Orrenius said.
“It was in a huge labor deficit when oil prices started to go back up so it’s been very challenging to hire back while everyone is trying to hire,” she said.
As a result of the strong May report, the Dallas Fed is revising its forecast for December 2021 to December 2022 employment growth to 4%, up from 3.7%, Orrenius said. Already in 2022, Texas has seen a growth of 5.6%.
“So much of the growth has already happened in the first half of the year so we are still expecting growth to be significantly slower in the second half,” she said.