In June employment in the San Antonio metropolitan economy grew 2.22% compared to June of last year. The growth in the region trailed the growth in Dallas, the fastest growing region in June, Fort Worth, Austin, and Texas. All of the metro areas with the exception of Houston and the state continue to see growth rates that exceed the national rate of growth in employment.
The trend in growth rates is shown in the following chart and provides some insights into what is happening in these economies. The year-over-year growth rates cover the period since June 2009 (the trough of the Great Recession) to June 2017. It is very clear that while Houston’s employment growth has not quite yet recovered to the level of the other major metro areas in the state, the economy is well into a recovery driven, at least in part, by the increase in oil prices. Fort Worth has also seen nice increases in growth rates, also probably in response to rising oil prices. These increase have also pushed up the growth rate in the state. However, growth rates in San Antonio, Austin, El Paso, and Dallas appear to be on a downward trend. Since January of this year, employment growth in the San Antonio economy dipped below its historical average growth rate of 2.42%. All of these economies are probably seeing slower growth because they have reached, or are very close to, their full-employment levels. I suspect we also see similar trends in Houston, Fort Worth, and across the state over the next year or two. This means that growth is going to be driven by increases in population (more specifically, the labor force) and gains in productivity. While projections are for increasing population of approximately 2% across the state into the foreseeable future (more on this in a future post), overall demographic trends will likely constrain labor force growth. This leaves productivity gains as possibly the main driver of economic growth over the next few years.