By SHERYL JEAN, Dallas Morning News
Texas added more jobs in 2014 than any other year in history despite declining oil prices for half of the year — but the picture may not be as rosy in the months to come as the effects of oil-related layoffs hit home.
The state gained 457,900 jobs in 2014, which translates to a healthy annual job growth rate of 4 percent, according to data released Friday by the Texas Workforce Commission. The state’s job growth rate in 2013 was 2.9 percent.
Texas probably led the nation in job creation in 2014, but the state-by-state data needed to make comparisons won’t be released by the federal government until Tuesday.
“We think the jobs report is very positive,” said Pia Orrenius, a senior economist for the Federal Reserve Bank of Dallas. “We also think there’s slowing ahead.”
An updated Dallas Fed economic model estimates the state could shave about a third off its employment growth rate this year, resulting in about 140,000 fewer added jobs. The bank predicts 2015 employment growth of 2 percent to 2.5 percent for Texas.
Texas ended 2014 on a high note, adding 45,700 jobs in December — the most since May.
The state’s seasonally adjusted unemployment rate fell to 4.6 percent in December, the lowest level since May 2008. The rate was down from 4.9 percent in November and 6 percent in December 2013.
The oil and gas industry led the state with an employment growth rate of 11.5 percent, or 33,900 jobs, in 2014. The industry added 4,900 jobs in December after losing 2,400 in November.
“Companies were hiring in December, which is surprising given the high decline in oil prices,” said Boyd Nash-Stacey, an economist for BBVA Compass bank in Houston. “We were expecting some decline in December. It’s unlikely that Texas will see job growth in oil and gas this year. We expect layoffs to pick up over the next three months.”
Most economists expect Texas, the nation’s largest oil-producing state, to see slower job growth this year as the plunge in oil prices takes a toll.
Oil prices have fallen 60 percent since June. West Texas Intermediate crude oil, the U.S. benchmark, declined to $45.39 a barrel Friday.
Three Houston-based oil field service companies already have announced thousands of job cuts because of low oil prices.
This week, Halliburton said it cut 1,000 jobs at the end of 2014 and expects more, and Baker Hughes announced it will lay off 7,000 workers. Last week, Schlumberger Ltd. announced 9,000 job cuts.
As the slump in oil prices continues, drilling is expected to decline further, which could lead to more layoffs. The U.S. oil drilling rig count fell to 1,317, its lowest level in nearly two years, Baker Hughes reported on Friday. In Texas, the rig count fell to 763.
Economists expect Texas’ economic growth to slow this year, partly because of low oil prices. The concern is that oil industry woes will spread to other industries as laid-off workers don’t spend as much on food, furniture and housing.
Every major Texas industry added jobs last year, with professional and business services and trade, transportation and utilities adding 85,800 each.
In addition to energy, three other industries saw annual job growth top 5 percent: construction, 7.7 percent; professional and business services, 5.8 percent; and financial services, 5.1 percent.
BBVA’s Nash-Stacey doesn’t expect Texas to sustain its level of construction job growth this year, but he sees a deceleration, not a severe contraction.
Ken Simonson, chief economist for the Associated General Contractors of America, said this week the employment outlook for Texas is a “mixed bag” given low oil prices.
“This is more of a threat to Texas than to most states … but by no means a disaster,” Simonson said. Still, a survey by the industry trade group found that 84 percent of Texas’ construction executives plan to hire this year.
Earlier this month, Fitch Ratings Inc. said low oil prices could affect “economic and revenue trends” for certain Texas cities, counties and school districts. Some economists have forecast that Texas could enter a recession, but others say the state has diversified too much for that to happen.
Still, the oil-heavy Houston economy and employment growth will slow more than the Dallas and Austin areas, Orrenius said. Already, Houston’s employment growth slowed by nearly two-thirds from September to December, she said.
“Dallas is growing faster,” Orrenius said. The Dallas-Fort Worth area’s jobless rate, not seasonally adjusted, fell to 4 percent in December.