At 2.6%, the local unemployment rate reached an all-time low for the third time in four months, according to the College Station-Bryan Business-Cycle Index, which measures the local economy and is released monthly by the Private Enterprise Research Center (PERC) at Texas A&M.
PERC Executive Director Dennis Jansen said last week that the College Station-Bryan Index increased almost 1% this month for an annualized rate of 11.8%.
“Overall, the local economy continues to look good,” Jansen said. “The unemployment rate is still falling slightly, and therefore our index is growing.”
Jansen said that at some point, unemployment rates can drop “too low” in the eyes of economists, particularly if accompanied with fast-rising wages and inflation. He said in his analysis that was not happening currently.
He also reflected on what a low unemployment rate can mean for a community, both positively and, potentially, negatively.
“One negative aspect of a very low unemployment rate is that it’s hard for businesses to find additional workers,” Jansen said. “Some local businesses are saying that it’s hard to find unemployed workers locally because there just aren’t very many of them.
“Underemployment, the way economists typically talk about it, is people who would like to work full time but are working part time — and there’s also a separate issue about the wage level in the local community. There are various reasons why the wage profile is different here compared to other cities. We have a larger service sector and a smaller manufacturing sector than other towns.”
Jansen said that though this month’s index did not look at specific statistics related to local underemployment and wage levels, his understanding is that local wage levels trend lower and underemployment trends higher than some major metro areas in Texas.
The index runs with a lag time of nearly two months, so numbers are accurate as of the end of August. The index is sponsored by the Brazos Valley Economic Development Corporation and is built from four components: the unemployment rate, wages, total nonfarm employment and taxable sales.
Nonfarm employment also decreased slightly by 0.2% between July and August.
Real taxable sales were down by less than 0.5% in August but are up 5.1% from August of 2018, according to the index.
According to the Texas A&M Real Estate Center’s Monthly Review of the Texas Economy, Texas’ seasonally adjusted unemployment rate in September was 3.4 percent.
The Bryan-College Station metropolitan statistical area includes Brazos, Robertson and Burleson counties and is defined by the Census Bureau.
Accompanying analysis of its four regular metrics, the index observes a different topic each month to analyze area economic data. This month’s focus section looked at taxable sales.
Andy Rettenmaier, the research center’s associate executive director, said retail sales make up half of the area’s inflation-adjusted taxable sales, a number that has gone down some over the past two decades.
“In College Station-Bryan, the biggest component is retail sales — now, they comprise 50% of the total, which has gotten smaller. In 2002, the share was 57%,” Rettenmaier said.
He said that hospitality and retail sales make up 16.5% of the local taxable sales, up from 15% in 2002. Wholesale trade rose from 4% in 2002 to 6.4% in 2018.
Retail sales account for the largest share of taxable sales in each metro area in Texas, according to the index; it is 50% or more in College Station-Bryan, Lubbock and Waco. Retail’s share is the lowest in Houston, Rettenmaier said, in part because Houston has 11% of taxable sales attributed to natural resources and mining.
Rettenmaier also noted that manufacturing has a large share of taxable sales in Austin and Houston, at 13% and 9%, respectively. In College Station-Bryan, manufacturing’s share of taxable sales is only 4%, smaller than all other metro areas in the state except Lubbock.