Scott Ball / Rivard Report
Job growth remains weak in San Antonio even as the unemployment rate fell to an eight-month low in July and wages picked up sharply, according to the latest economic indicators report.
The monthly economic indicators report released Aug. 23 by the Federal Reserve Bank of Dallas looks at a variety of factors, including employment, wages, and home affordability, and provides the business-cycle index – an economic statistic that helps gauge the current state of the Texas economy. The index is constructed using payroll employment, gross state product and the unemployment rate.
Though the business-cycle index for San Antonio has accelerated, the report states growth of the San Antonio economy was “mild” during July.
San Antonio’s unemployment rate fell to 3.2 percent in July from 3.8 percent in December 2017 . Though job growth remained tepid and wages increased, overall the San Antonio business-cycle index expanded at a 2.5 percent annualized rate in July, up from June’s 1.7 percent but still below its long-term average of 3 percent.
The Texas business-cycle index increased an annualized 5.2 percent in July, continuing a slowing trend after rising for more than two years.
As for job growth in San Antonio, the report called it “weak” at just under 1 percent in July, even as the unemployment rate declined. This is possibly due to labor market tightness restraining job growth, according to the report.
“The soft growth in July – and for the year in general in San Antonio – seems to stem largely from a decline in leisure and hospitality employment,” said Christopher Slijk, assistant economist at the Dallas Fed. “Hotel and tourism activity looks to be up this year so this [downturn] is unusual, but we have also heard respondents to our business outlook surveys report increasing difficulties in finding the type of entry-level workers that tend to be more prevalent in the hospitality industry.”
The health care industry saw the biggest gains in job growth as San Antonio jobs grew at a .4 percent annualized rate over the three months through July, slightly below the year-to-date rate of .5 percent.
Though health care employment surged, the leisure and hospitality and information industries saw employment drop to negative numbers (-15 percent and -4.6 percent). Mining and “other services” grew at a healthy pace, the report stated, while the remaining private services sectors were flat or shed jobs over the three-month period.
Construction jobs picked up in May and July, with a net addition of nearly 900 specialty trade contractor jobs alone.
Wages also rose in July, with the three-month average climbing to its highest level since 2008. Over the first half of the year, wages grew an annualized 5.4 percent locally, compared with 2.6 percent in Texas and 2.7 percent nationally.
But those wage increases, the report concedes, could be influenced by weakness in low-paying leisure and hospitality jobs, and could be pushing up the average wage.
The second quarter brought bad news on home affordability for median-income San Antonians. The share of homes sold that the median-income household could afford fell from 62 percent to 55.8 percent, a greater decline than the 4.5 percentage-point drop in the national average to 57.1 percent.
As one of twelve regional Reserve Banks in the Federal Reserve System, the Dallas Fed serves the Eleventh Federal Reserve District, which consists of counties in Texas, northern Louisiana and southern New Mexico.