Houston Economic Indicators – Dallasfed.org

February 4, 2022

Payroll growth in Houston accelerated in the second half of 2021 despite headwinds from the delta and omicron waves of COVID-19. Several indicators showed renewed local producer and consumer price inflation, but Houston-centric prices lagged other measures in 2021. The pace of recovery.

Use

Seventy-six percent of all pandemic-related job losses have been recovered, and at a growth rate of 4.4 percent over the past year, Houston is poised for a full recovery d August 2022. Houston’s payrolls ended 2021 on a strong note, increasing by 83,000 jobs in the second half versus 49,000 in the first (Chart 1).

The acceleration in the growth rate of the wage bill was generalized. Professional and business services (led by administrative and support services) and education and health (led by social assistance) recorded the largest gains. Employment sectors that have languished for most of the recovery have also picked up the pace. Employment gains in mining and manufacturing (led by fabricated metals) generally signal growth in oil and gas activity. Construction payrolls (led by trade contractors like carpenters and plumbers) have also increased.

Chart 1

By contrast, the recovery in leisure and hospitality nearly stalled in the second half of 2021. A high-contact industry beset by both delta and omicron surges, the sector created less than 2,000 jobs from June to December.

Restaurant demand

Houston – and Texas as a whole – saw the number of diners seated in area restaurants fully recover in early 2021. However, reservations plummeted in early January 2022, which is similar to what was observed in August and September 2021 (Chart 2). The setbacks were likely due to setbacks in demand amid waves of COVID-19 as well as sharp increases in worker absenteeism, particularly in January 2022. A tough hiring market and seasonal variations Normal times (back to school and end of holidays) may also have contributed to these lower figures.

Chart 2

COVID-19 Hospitalizations

COVID-19 hospitalizations in the Houston area began to decline in early January (Chart 3). Cases, hospitalizations and deaths are all expected to decline over the next two months, according to projections from the University of Texas and the Institute for Health Metrics and Evaluation, although the arrival of the omicron BA.2 variant in the United States casts uncertainty on the improvement.

Chart 3

Prices

Respondents report rising input prices

Based on the Dallas Fed’s Texas Business Outlook Surveys (TBOS) and the Houston Purchasing Managers Index (PMI), the share of companies reporting that input prices rose rather than fell increased significantly in 2021 (Chart 4). Texas manufacturing input prices rose early in the year, amplified by February’s winter storm. By mid-2021, companies in the service sector were also generally noting increases in input prices. This was followed by the Houston PMI, which was slower to rise, likely due to relatively anemic manufacturing demand in the energy sector.

In January 2022, responses to the TBOS manufacturing survey indicated that while input prices continued to rise, the increases were not as widespread across all firms. These results are consistent with US PMI trends and imply that the pace of price increases has slowed among manufacturers. Respondents to the services sector survey indicated no moderation in input prices.

Chart 4

Inflation in Houston has lagged US levels since the start of the pandemic

Houston consumer prices fell more than the country in 2020 and took longer to return to pre-pandemic levels (Chart 5). This is due at least in part to the devastating oil crisis that has compounded Houston’s pandemic woes. Overall, prices in Houston have increased at an average annual rate of 3.6% since February 2020, while consumer prices in the United States have increased at an average annual rate of 4.4%.

Chart 5

Slower growth in housing costs slowed inflation in Houston in 2021

Consumer price inflation in the United States was 7.1% from December 2020 to December 2021, compared to 6.6% in Houston (Chart 6). Several components stand out as contributors to headline inflation, including the prices of fuel, new and used vehicles, and food and beverages. In Houston, housing costs (rent and owners’ equivalent rent) have increased at a slower rate than in the United States, a factor in lower metro inflation in 2021. Housing costs account for more than a third of total consumer prices in the United States. Index, although the component weight is slightly lower in Houston than in the country.

Chart 6

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 is released the second Monday after the release of monthly employment data for the Houston area.

About Yvonne Lozier

Check Also

UKG Honored by Google Cloud for Fostering Diversity and Inclusion, Alleviating Employee Burnout | Business

LOWELL, Mass. & WESTON, Fla.–(BUSINESS WIRE)–May 4, 2022– UKG, a leading provider of human resource, …