Austin jobless rate hovers near 20-year low

Austin’s latest unemployment rate is once again near a 20-year low, a continuation of a long-running trend that is giving local businesses fits when trying to find new workers amid the stretched labor market but that also has made the city a beacon for anyone looking for a job.

The unemployment rate in the Austin metro area slipped to 2.4% in December, down from 2.5% in November and from 2.7% in December a year ago, according to the Texas Workforce Commission.

The local jobless rate averaged just under 2.7% throughout 2019, and in most months last year it hovered near its lowest point since the dot-com boom two decades ago. The latest figure is the Austin area’s lowest jobless rate for the month of December since 2000.

The civilian workforce in the metro area, which includes Travis, Williamson, Hays, Bastrop and Caldwell counties, has climbed by nearly 65% since then to more than 1.23 million people, from about 750,000 in 2000.

“Austin is booming because it has the right mix of industries for today’s economy,” including high tech, manufacturing, education and hospitality, said Bernard Weinstein, a Southern Methodist University economist. “It’s kind of the ideal economy” for the current era.

Still, the difficulty that many Austin-area companies are having in finding enough workers amid what has become an extremely tight local labor market has been sapping some of the momentum.

While total nonfarm job growth came in at a relatively strong 3.5% last year — for an increase of nearly 38,000 workers — plenty of evidence suggests local employers would have added to their payrolls even more if they could have. A measure of local economic output devised by the Federal Reserve Bank of Dallas, called the Austin business-cycle index, recently rose at its slowest annualized pace in nearly a decade — with the Dallas Fed citing the tight labor market as the primary culprit.

Weinstein concurred with a number of other economists who have called the issue a likely headwind for growth this year, as improving economic conditions and low unemployment elsewhere across the state and nation reduce the spigot of people moving to Austin for job opportunities.

But, baring a U.S. recession or a similarly unforeseen major disruption, Weinstein said he expects the Austin-area economy to outperform many other regions regardless and to attract more than its share of transplants seeking greener pastures. The Dallas Fed has generally agreed with that assessment, noting that its Austin business-cycle index has continued to reflect relatively strong gains even as the hot local economy appears to be coming off its boil.

“Growth in 2020 may not be as fast as growth in 2019, but Austin is still a magnet city, a magnet metro,” Weinstein said. “Austin should stay on a pretty good growth path for the foreseeable future.”

Statewide, the seasonally adjusted unemployment rate for December ticked up by a tiny amount to 3.5%, from 3.4% in November, according to the workforce commission. The statewide rate had been at 3.4% — its lowest rate on record since tracking began in 1976 — for sixth consecutive months before the slight rise in December.

The Texas Workforce Commission doesn’t immediately adjust its metro area level data for seasonal factors. But the Dallas Fed released seasonally adjusted numbers for the Austin metro area Friday, putting the local unemployment rate last month at 2.6%, down a small amount from 2.7% in November and from 2.9% in December last year.

Hiring in the metro area last year was led by 10,600 new jobs in professional and business services, the industry category that includes most of the technology sector. Jobs in that category have climbed 5.6% since December 2018, bringing the region’s total to 198,600, according to the workforce commission.

The leisure and hospitality sector came in second in 2019, adding 7,800 jobs, or 6.1%, for a total of 136,500. The employment sector that includes construction and oil and gas services added 5,200 new jobs last year, an 8.2% uptick that puts the total in the category at 68,600.

Overall, Austin’s unemployment rate for December was once again the lowest among Texas’ major metro areas, according to the Dallas Fed, with the San Antonio-New Braunfels region in second place at a seasonally adjusted 3%. The McAllen region in South Texas came in highest among the state’s major metro areas at 6.5%.