A variety of factors drive economic performance, from policy decisions to industrial composition to natural resources. Some of these can be influenced over time such as by fostering a climate which is business friendly or targeting particular industries for development efforts.
It is also possible to enhance growth by encouraging education and training which meets the needs of growing firms, and cycles within industries can affect overall patterns.
We recently looked at employment data by state and industry which is maintained by the Bureau of Labor Statistics to get a feel for how states and industries are doing and how Texas stacks up.
First, let’s take a brief look at how employment changed for the nation as a whole for context. During 2017, U.S. nonfarm employment expanded from 145.7 million to 147.9 million.
Although the lowest since 2010, this gain of 2.2 million net new jobs represents a fairly healthy rate of growth for the year of 1.51 percent. All of the major industry groups added jobs over the period, led by services industry groups including education and health services (470,000), professional and business services (429,300), and leisure and hospitality (348,800). Construction also saw a notable uptick, rising by 308,800, while manufacturing increased by 170,100, which is very encouraging.
The states with the largest numbers of net new jobs were California (342,500 net new jobs), Texas (306,900), and Florida (213,500).
Together, these three states account for about four of every 10 new jobs in the United States last year. It falls off sharply from there, with the next-largest gain in New York (98,300).
As in the rest of the nation, services industries drove growth in California and Florida. In California, construction industries added about 56,000 net new jobs, but manufacturing in the state contracted by about 2,000 jobs.
Florida also experienced strong gains in construction (up 43,900), while manufacturing rose by 16,200.
Two states actually lost jobs last year. Alaska employment dropped by 2,200 jobs, with several industry groups losing ground. In Delaware, where about 600 jobs were lost, trade, transportation, and utilities; leisure and hospitality; and professional and business services were the roots of the decline.
Turning to the rate of growth, several smaller states turned in impressive increases including Nevada (up 3.31 percent), Oregon (2.66 percent), and Utah (2.61 percent). Each of these areas experienced gains in services industry groups as well as construction and manufacturing.
Texas was next in terms of rate of growth, with a 2.53 percent increase, by far the highest among the larger states in the country.
Of the 306,900 jobs added in Texas, about 52,600 of them were added in professional and business services, 42,400 in leisure and hospitality, and 30,700 in education and health services. Notable gains were also seen in construction (up 27,900), due in part to Hurricane Harvey recovery efforts.
The Lone Star State added an impressive 36,300 manufacturing jobs. In fact, Texas accounted for a significant portion (21.34 percent) of net new manufacturing jobs in the United States. Given that no other state came close to this level and a number of states actually lost manufacturing jobs, the Texas increase is particularly noteworthy.
Texas also contributed about one in five new jobs in the (1) trade, transportation, and utilities and (2) financial activities industry groups.
Last year saw some states, such as Nevada continue to dig out from lingering problems associated with the Great Recession. Others, such as California saw strong growth in some industries but a decline in manufacturing. Overall declines in employment contrary to national patterns were seen in some places, and others experienced minimal improvement.
The performance of the Texas economy stacks up quite well compared to other states. While California added more jobs, part of the reason is relative size (California is about a third larger than Texas in terms of employment), and the rate of growth was slower.
Moreover, the Texas expansion covers not only the services industries (which are growing across the nation), but also other industry groups such as manufacturing.
Of course, the fact that oil prices are high enough to spur activity in related sectors is helping. In fact, the mining sector, which is dominated by oil and gas activity in Texas, saw a gain in employment of 29,100, a 13.5 percent increase for the year.
Looking ahead, Texas is well positioned for long-term growth. It is imperative to continue to provide and enhance the kind of environment where business can thrive (including improvements in infrastructure and education and maintaining competitive incentives, among other key factors).
The better we deal with existing challenges and embrace emerging opportunities, the brighter the future looks.