If you’re looking for evidence of an economic downturn, you’ll be hard-pressed to find it in Austin’s sizzling job market.
The region ended 2022 with a December unemployment rate of 2.7%, according to unseasonally adjusted data from the Texas Workforce Commission, up from 2.9% a year ago and after a flat 2.8% in November. October and September.
The slight decline comes despite increased national and local headwinds, including rising interest rates, cooling housing markets and increased layoffs in the high-tech sector, which raise fears that the broader economy could head into recession.
However, it is clear from the latest unemployment data that the trends have not yet affected the overall demand for labor.
Here are some key takeaways from the job numbers:
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Austin is not alone
Statewide and nationally, unemployment also remains low—but not as low as in the Austin area.
The unemployment rate in Texas was 3.6% in December compared to 3.7% in November and 4.2% a year ago. Nationally, the unemployment rate ended in 2022 at 3.3%, compared to 3.4% in November and 3.7% in December 2021. These figures are not seasonally adjusted.
John Hockenios, president of Austin-based economic analysis firm TXP Inc., said the low unemployment rate is indicative of a huge number of jobs that still need to be filled even as the economy cools. Premature retirement, mortality and declining labor force participation rates in the COVID-19 era due to issues such as limited access to childcare have contributed to this trend, Hokkenjos said.
“In terms of the core workforce, the need for people is not decreasing,” he said. “Most businesses have open positions,” especially in consumer-facing industries such as retail and hospitality.
However, he and other economists say they expect the situation to change in the coming months and unemployment to rise as the US Federal Reserve continues to raise interest rates in an attempt to curb inflation.
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This is because an extremely tight labor market is fueling intense competition for workers and higher wages – known as wage inflation – making it a key target for the Fed as it attempts to curb headline inflation.
Dallas Federal Reserve Bank President Lori Logan, who took office in August, mentioned it this week during her first major political speech at the University of Texas McCombs School of Business. Logan is a voting member of the Federal Open Market Committee, which sets interest rate policy.
“The outlook for inflation largely depends on how much and how quickly the labor market weakens,” Logan said. The current high rate of service cost inflation “is a sign of an overheated economy, especially a tight labor market, that will need to be balanced” for headline inflation to return to sustainable levels.
But even if unemployment rises in the Austin metro area, including Travis, Williamson, Hayes, Bastrop and Caldwell counties, a number of economists said they don’t expect it to happen by more than a percentage point due to the region’s favorable business climate. This would mean a significant potential increase from the current level, but this figure would still be low by most measures.
The high-tech sector is holding steady
As things stand, there is little sign so far that the steady stream of national layoff announcements from some high-profile high-tech companies are having a major impact on Austin’s big tech sector, at least in terms of job numbers.
The number of workers in the employment category, which includes much of the region’s high-tech industry, increased by about 1,400 in December from November and increased by more than 10,000 from last year to 163,000.
This is despite announcements of job cuts at some high-profile tech companies with significant Austin operations, such as Amazon, Intel and Meta Platforms parent Facebook, which Google joined on Friday.
Hokkenios said the trend is partly time-related because layoff announcements don’t immediately show up in unemployment figures.
But he also said that many high-tech employers in the Austin metro area appear to still be ramping up and adding workers, a by-product of the huge influx of companies that have flocked to the region in recent years and its status in the tech sector as a growing industry. center.
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Tough times for the construction industry
The direction of the local construction sector is more murky as higher interest rates dampen the region’s once booming housing market.
Home sales in the Austin metro area – after breaking several records in recent years and climbing the local market to the hottest in the country in a number of national rankings – have fallen by double digits for most of 2022 compared to the same months. 2021, according to the Austin Board of Realtors.
Local jobs in the construction sector totaled 71,800 in December, down 800 from November and 3,500 from last year.
However, the number of jobs for specialized trade contractors, many of whom work on construction sites, increased slightly compared to November and December 2021 at 44,800.