Monday, November 23, 2009

Texas gains jobs even as unemployment rate still rises to 8.3%

The Texas economy threw off mixed signals in October, with expanding payrolls but a rising unemployment rate.

Employers boosted payrolls by a preliminary count of 41,700 jobs last month – a significant piece of good economic news after a year of nearly uninterrupted monthly job losses.

But the unemployment rate edged up to 8.3 percent from 8.2 percent in September, the Texas Workforce Commission said Friday.

The state has lost more than 300,000 jobs over the last year, and Waco economist Ray Perryman described the October report as a "pleasant surprise." He warned, though, that it's too early to say the positive number marks the beginning of sustained job growth.

"It is certainly too early to call this number a trend," he said. "I do not think we are yet at a point where we can count on job growth every month, but we should begin to see an overall pattern of gradual increase with more up months than down."

How could the jobless rate rise when the economy added jobs?

Payroll employment and the unemployment rate tend to track each other over time, with the jobless rate typically going down when job creation increases.

But the two indicators are based on separate surveys, and it's not uncommon for them to move in seemingly contradictory directions in a particular month.

Moreover, if employers continue to add jobs, more people could come back into the labor force to look for work. That could cause the unemployment rate to rise even while the economy is recovering.

In October, job gainers included education and health services, where employers added 14,900 positions, and professional and business services, up 10,800 jobs. Employers added 4,500 jobs in financial activities.

Employers cut only 200 manufacturing jobs in October, after slicing much more deeply earlier in the year. But the construction industry shed another 9,400 jobs last month.

Texas was not the only state to add jobs in October – in fact, two of the nation's most economically troubled states also posted employment gains. Michigan picked up 38,600 jobs, while California added 25,700, according to the U.S. Bureau of Labor Statistics.

New York lost 15,300 jobs, Florida shed 8,500 and Georgia dropped 7,500.

Whether or not Texas is close to sustained job growth, a top local economist said North Texas job losses this year could end up topping 100,000 – significantly more than current estimates.

"Our numbers are showing that we've lost almost 115,000 jobs this year," D'Ann Petersen, an economist with the Federal Reserve Bank of Dallas, said at a real estate outlook panel Friday organized by The Dallas Morning News.

"We are actually performing worse than the other Texas metro areas," she said.

According to Texas Workforce Commission data, the Dallas-Fort Worth area lost nearly 60,000 jobs between October 2008 and last month.

But Petersen said those statistics understate employment losses in North Texas.

"The reason it hurts so bad here is it happened so quickly and we weren't ready for it," Petersen told several hundred commercial real estate industry members at the meeting. "We had been one of the fastest-growing markets in the country."

Once a year, government statisticians use comprehensive unemployment insurance records to revise their estimates of recent job growth. The revisions can be large.

Since the Dallas Fed uses such records to update its employment data more frequently, its job tally sometimes differs significantly from the Texas Workforce Commission's.

Petersen is the second local analyst in two days to forecast a local job loss of 100,000 or more this year.

Greg Willett, vice president of research for apartment analyst MPF Research, said Thursday that local employment declines are much larger than what has been reported.

"We think when the revisions for the data come out in 2010, they will reveal the D-FW area is struggling more so than the numbers have actually suggested," he said.

But he added that the worst will be over this year for the local economy, with job gains likely in 2010.

"The forecast for the employment numbers suggests we are pretty close to the bottom at this point," he said.

By BRENDAN CASE and STEVE BROWN / The Dallas Morning News