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Economy at a Glance - February 2023

This edition of Glance analyzes the year-end data from the major economic indicators tracked by the Partnership.
Published on 2/1/23

The Year in Review

Economic data for the final months of ’22 continue to stream in. With each report, a clearer picture of the year emerges.

Job growth set a record last year. Unemployment fell to a near-historic low. Inflation surged in the spring but began to abate mid-year. Oil prices rose with Russia’s invasion of Ukraine then fell as supply concerns eased. The domestic rig count approached pre-pandemic levels. Commercial construction continued at a torrid pace. Home sales peaked in the spring before rising interest rates pummeled would-be buyers. Only the Class A segment of the apartment market fared well, and lately even that’s showing signs of weakness. The Port of Houston set a record for container traffic. Air passenger traffic continued to recover. And as the year closed, the Houston Purchasing Managers Index indicated growth was slowing but the local economy was not yet in recession. Details on how each sector fared in ’22 follow.

Employment

The region created 179,000 jobs in ’22, according to the Texas Workforce Commission (TWC). That’s the best year on record for metro Houston. The previous record was set in ’21 when the region created 159,700 jobs. With the December jobs report, payroll employment topped 3,356,000. Total employment now stands at a record high for the region. 

The numbers should be taken with a grain of salt, however. These are preliminary estimates based on surveys of employers that TWC conducts throughout the year. As with any survey, the results are subject to sampling, non-response, and structural errors. TWC is currently adjusting the estimates by comparing its survey data with unemployment insurance tax records that all employers must file. In March, TWC will issue its annual “benchmark” revisions to the data, adjusting job growth for the past two years. The revisions could be significant. 

  • Twice the commission overestimated growth by 30,000 or more jobs. The biggest miss was in ’08 when it shaved 36,000 jobs off earlier estimates.
  • Three times in the past 20 years, TWC reported growth when the region was contracting.
  • Twice, TWC grossly underestimated losses, the biggest gap in ’20 when TWC missed by over 40,000 jobs.
  • Five times in the past 20 years the commission has underestimated job growth by 30,000 or more jobs. The biggest miss was in ’05 when TWC low-balled growth by nearly 50,000 jobs.
  • Only seven times in the past 20 years has TWC adjusted its estimate by 10,000 or fewer jobs.

When TWC issues its benchmark revisions for ’22, the Partnership expects employment gains to be revised downward, perhaps by as much as 50,000 jobs. Even with a substantial revision to the data, the year will be one of the best on record for job creation.

Unemployment

Metro Houston started ’22 with a 5.5 percent unemployment rate. Robust economic growth and strong demand for workers drove that down to 3.9 percent by December. 

Any unemployment rate below 5.0 percent indicates a tight labor market. Below 4.0 percent is an extremely tight market. Only 17 times in the past 30 years has the monthly rate dropped below 4.0 percent. The all-time low was in March ’19 when the rate fell to 3.3 percent.

The corollary to the low rate is that initial claims for unemployment benefits, a proxy for layoffs in the region, continue to track at historically low levels. On average, 4,500 workers per week filed claims in December of ’21. That slipped to 3,700 per week in December of ’22. 

Just over 105,000 Houstonians joined the local labor force in ’22. Some moved here from overseas or from other parts of the U.S. Others entered after graduating from high school or college. Some returned to work after taking time off to care for family members. Financial need compelled others to seek employment. Houston’s civilian workforce, defined as individuals working, or if not employed actively looking for work, stood at 3,566,000 in December. Early in the pandemic, over 200,000 Houstonians dropped out of the workforce. Since May ’20, when the economy reopened, over 330,000 Houstonians have joined.

To continue reading, download this report.

Note: The geographic area referred to in this publication as “Houston,” "Houston Area” and “Metro Houston” is the nine-county Census designated metropolitan statistical area of Houston-The Woodlands-Sugar Land, TX. The nine counties are: Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller.

Key February Takeaways

Here are the facts to know about the Houston region this month
1
February Takeaway #1
Robust economic growth and strong demand for workers drove Metro Houston's unemployment rate from 5.5 percent in January '22 down to 3.9 percent in December '22.
2
February Takeaway #2
The City of Houston issued $7.8 billion in construction permits in '22, the highest level of permitting since '15.
3
February Takeaway #3
'22 ended with Houston's ninth consecutive quarter of 10 million or more square feet of industrial leasing activity.

Want to learn more? Contact our Research Team:

Patrick Jankowski, CERP
Senior Vice President, Research
713-844-3616

Previous Issues of Economy at a Glance

JAN
2023
The U.S. Economy and Houston's GDP Estimates
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DEC
2022
Recovery in the Oil and Gas Industry
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NOV
2022
Metro Houston's Job Growth and the Apartment Market
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OCT
2022
Exploring Population Changes Through the ACS
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SEPT
2022
Recession? Maybe, Maybe Not
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AUG
2022
Houston at Mid-Year
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JUL
2022
The Houston Housing Market, Affordability, and Recent Shifts
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JUN
2022
Economic Recovery, Population Growth & Global Houston recap
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MAY
2022
Economic recovery, rising costs & labor force
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APR
2022
Population growth and employment data
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MAR
2022
Local Impact of a Global Event
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FEB
2022
Post-Analysis of 2021 Houston Economy
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JAN
2022
Omicron, GDP, Employment
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DEC
2021
2022 Employment Forecast
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NOV
2021
Job Gains, Real Estate, Exports
Read Report
OCT
2021
Inflation, Employment & Global Innovation
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SEP
2021
Employment, Oil & Gas, Containerized Exports, and Housing
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AUG
2021
Delta Variant, Rebounding Travel, Economic Growth and Population Gains
Read Report
JUL
2021
Energy Transition, Recovery Bottlenecks, & the Worker Shortage
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JUN
2021
Economic Recovery, Multifamily, Population & More
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May
2021
Housing Boom and Robust Recovery
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APR
2021
Pandemic Recovery, Tech Workforce
Read Report
MAR
2021
Pandemic Employment Data
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FEB
2021
Coronavirus Impact and 2021 Outlook
Read Report
JAN
2021
Racial Demographics and Population Shifts
Read Report
NOV
2020
U.S. Recovery, 2021 Outlook
Read Report
OCT
2020
U.S. Recovery, Houston Update
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SEP
2020
COVID-19 Impact on Economy
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AUG
2020
Energy Change Over Time
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JUL
2020
COVID-19 Update, Houston Unemployment
Read Report
JUN
2020
COVID-19 Update, Affected Sectors, Energy
Read Report
MAY
2020
U.S. & Texas Outlook, GDP
Read Report
APR
2020
COVID-19 Update, PMI, Industry Outlook
Read Report
MAR
2020
Economic Impact, Global Outlook, Recession Probability
Read Report
FEB
2020
U.S.-China Trade Deal, USMCA
Read Report
JAN
2020
Houston GDP, Energy, Jobs
Read Report
DEC
2019
Sector by Sector Forecast for 2020
Read Report
NOV
2019
Houston Region Demographic Update 2
Read Report
OCT
2019
Houston Region Demographic Update 1
Read Report
SEP
2019
Houston's Growth Engines
Read Report
AUG
2019
PMI, Commercial Real Estate & Housing
Read Report

More Insight & Analysis

Monthly Update: Inflation

Review the latest data on inflation in the Houston area. 

Monthly Update: Employment

Review the latest data on jobs in the Houston region. 

Monthly Update: Purchasing Managers Index

Review the latest data on this key economic indicator. 

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