The U.S. added 4.8 million jobs in June and unemployment nationally fell to 11.1%, but economists worry Texas’ swift reopening could spur a pullback in coming months as coronavirus cases surge.
Controlling the spread could lead to more business restrictions, causing “another meaningful drag on the Texas economy,” according to Dallas-based Comerica Inc.‘s newest index of the state’s economy.
Job gains are going to show a lot of “churn” in the months ahead as Texas and the U.S. attempt to right their economies, said Comerica’s senior vice president and chief economist Robert Dye.
”Some industries are going to show losses and some are going to show gains,” Dye said. “And it’s going to be a really challenging time to step back and make sense of the headline numbers because there’s going to be so much going on underneath the surface.”
Besides the state becoming a COVID-19 hot spot, there are other factors bubbling below the surface that will come into play by fall.
Workers kept on company payrolls by Paycheck Protection Program loans will lose their eight-week protection soon, Dye said. Extra jobless pay provided by the CARES Act expires at the end of July, and airlines that accepted government bailout money aren’t able to lay off workers until the end of September. All of those could substantially alter future monthly jobs reports.
Texas saw its first drop in the jobless rate in May as restrictions on businesses were eased, though the decrease was slight. The Texas Workforce Commission won’t release June data until July 17.
Waco economist Ray Perryman will be watching for potential stops and starts in the Texas economy.
“If Texas is forced to shut down the economy, we would see immediate losses of some jobs, which have only recently been regained and delay the overall recovery,” he said. “It would be devastating to individuals, families, businesses, and the economy as a whole, but may be essential to deal with the underlying health issues.”
The state’s airline industry is working hard to convince travelers it’s safe to get back on planes, even as retailers like Apple are closing down North Texas stores that reopened only a few weeks ago. Many furloughed workers still haven’t returned to their jobs.
And while the number of initial unemployment claims in recent weeks in Texas are down from the levels seen in April as economic hardship peaked, unemployment remains at historic highs still greater than those seen during the Great Recession.
Unemployment has been so consistently high that the state’s extended benefits program was triggered this week, providing seven additional weeks of unemployment pay.
Between May 20 and June 20, more than 40,000 unemployment claims were filed in Dallas County, according to TWC. Across the state, more than 400,000 claims were filed. The largest portion of claims came from workers in the restaurant, energy and home health industries.
Those numbers don’t give much of a glimpse into how Gov. Greg Abbott’s new restrictions on bars, restaurants and elective surgeries will affect the picture.
Thursday’s national jobs report is based on data gathered in the second week of June, largely before the new spike in COVID-19 around the state. Last week’s plateau in work shifts will show up in the July jobs figures to be released in early August.
Texas is struggling to balance effective public health measures with restoring economic vitality, Perryman said.
“Moving ahead with reopening before recommended safety milestones were met has led to reversals and setbacks on the path to progress,” he said. “This is an economic crisis that was spawned by a health crisis. You can only fully overcome the former by dealing with the latter.”
Perryman expects Texas’ unemployment rate to fall in June, but he doesn’t see job growth getting back to pre-pandemic levels for “a couple of years.”
Still, some bright spots in the economy have emerged in recent weeks. Manufacturers expanded in June after three months of declines, according to the Institute for Supply Management. New orders are flowing in and factories are adding more jobs, the trade group said.
Texas’ manufacturing and service sectors both saw sizable rebounds in June.
Manufacturing activity experienced a strong uptick in June, according to a Federal Reserve Bank of Dallas survey of business leaders. Nearly a third of manufacturers surveyed noted their companies saw an increase in orders.
And retailers saw sales rebound in June after dreadful months in April and May, the Dallas Fed reported. The Fed’s sales index rose in June to its highest reading in two years. But jobs are coming back more slowly.
“While retail labor market indicators improved, they continued to point toward declining employment and shortened workweeks in June,” the Fed said based on its survey of 54 retail executives.
