Houston Economic Indicators

Houston’s labor market growth was broad based in May 2024, but slowdowns in top sectors weighed on growth. Employment growth in the metro area is in-line with the nation, and unemployment has been holding steady. Average hourly earnings in Houston ticked up slightly year over year.

Labor Market

Key employment growth sectors slow

Over the past three months, employment in Houston grew an annualized 1.8 percent or 15,407 jobs (Chart 1). Mining and construction jobs spiked with 17.4 percent growth in mining (2,708 jobs) and 8.6 percent growth in construction (4,784). Other sectors such as leisure and hospitality, manufacturing and financial activities grew at a strong pace from February to May.

Over the same time period, employment in trade, transportation and utilities and professional and business services remained mostly flat. Employment was flat in trade, transportation and utilities (-160 jobs) and fell 0.6 percent in professional and business services (-795 jobs). Due to the relative size of these sectors in the Houston labor market, their lack of growth weighed on Houston’s overall job growth.

Year over year, Houston’s labor market was balanced across sectors. Employment grew 1.8 percent between May 2023 and May 2024. Education and health services, leisure and hospitality and information and other services each grew more than 3.0 percent. However, over that period, employment was again flat in trade, transportation and utilities and professional and business services. Professional and business services added 2,981 jobs over the entire year. Employment in oil and gas and mining was also flat, shedding 0.7 percent of its workforce (-477 jobs).

Overall employment growth stabilizes

Houston employment growth stabilized above its trend rate in recent months . The three-month annualized growth rate in May was 1.8 percent. (Chart 2). After revisions, April’s annual growth was 1.8 percent, and March was 1.9 percent. This is below annual state employment growth of 2.6 percent in May. Throughout much of 2022 and 2023, Houston’s labor market grew at a faster pace than the Texas labor market. Over the past three months, U.S. employment grew an annualized 1.9 percent in May 2024.

Unemployment remains flat

The Houston unemployment rate has been stable between 4.1 and 4.3 percent for two years, and the rate was 4.2 percent in May. The Texas rate has held steady between 3.9 and 4.1 percent since January 2023, and the rate was 4.0 percent in May. Houston and Texas tend to have higher unemployment than the U.S. overall due to their more robust labor force. Year to date, the labor force in Houston grew an annualized 2.3 percent while the state labor force grew 2.1 percent.

In contrast, unemployment in the U.S. has been slowly growing. In January 2023, U.S. unemployment was 3.4 percent, and in May 2024 it hit 4.0 percent. Nationally the labor force grew an annualized 0.4 percent year to date, slower than both Texas and Houston.

Real earnings hold steady

Inflation-adjusted hourly earnings in Houston were $34.82 in May 2024. This is little changed from November 2023, when average real hourly earnings were $34.73 . Year over year in May 2024, real earnings rose 1.1 percent. Non-inflation adjusted wages in Houston grew 4.2 percent over the past year .

Houstonians’ real hourly earnings are in-line with the national average of $34.91. Real earnings in both Houston and the nation tend to be higher than the state overall. Texas real hourly earnings in May 2024 were $32.54.