Austin-area jobless rate rises, but still near pandemic low

The Austin-area unemployment rate ticked up in November — to 5.9% — amid rising numbers of coronavirus cases this fall, although it remained near its pandemic-era low of 5% reached in October.

About 11,300 more people were out of work in the region last month than in October, according to the Texas Workforce Commission, bringing the total officially listed as unemployed to about 74,300.

The figure is more than double the estimated 31,800 out of work in November a year ago, when the local unemployment rate was 2.5% and business activity in the region was booming.

Still, economists called the latest figure relatively strong, given the pandemic's chilling effect on commerce.

But they also said joblessness in the Austin area and elsewhere is likely to continue to climb in December and into the new year — corresponding to recent increases in virus cases — before declining as newly developed vaccines are more widely available.

That's because public infection data have become leading employment indicators, they said, with businesses adjusting payrolls according to consumer behavior and virus-related restrictions by the government.

“Based on what we see so far, a big surge in the virus in November and December should produce a decline in (business) activity," said Peter Rodriguez, dean of Rice University’s Jones Graduate School of Business. “I think the net effect will be to see unemployment rise slightly in the first part of '21."

Travis County has experienced an upturn in coronavirus cases since the end of October, as well as acceleration in the pace of new cases being reported since Thanksgiving. The trend prompted health officials to warn this week that hospitals could be overrun if the public doesn't do more to help stop the spread by adhering to requirements regarding masks, social distancing and other safety measures.

The unemployment rate in the Austin metro area, which includes Travis, Williamson, Hays, Bastrop and Caldwell counties, has come down significantly from the historic high of 12.2% it hit in April, after the pandemic first slammed the economy statewide and nationally. But the drop can be correlated to decreasing rates of infections over the summer.

For Texas overall, where there has been a surge in recent cases as well, the November unemployment rate registered 8%, according to the Texas Workforce Commission, an increase from 6.7% in October and from 3.4% in November 2019.

Adjusted for seasonal factors, the agency said the statewide jobless rate registered 8.1% last month, up from 6.9% in October and 3.5% in November 2019. 

The workforce commission doesn’t immediately adjust metro-level data for seasonal factors. But seasonally adjusted figures released by the Federal Reserve Bank of Dallas peg the November jobless rate in the Austin metro area at 6.3%, compared with 5.3% in October and 2.9% in November a year ago.

Jason Schenker, president of Prestige Economics in Austin, said business activity and employment over the coming months "are just going to depend on people's behaviors and what the (government) restrictions are."

Schenker said public complacency regarding coronavirus-related safety protocols is likely to fuel higher infection rates. The result will be tighter business restrictions, he said, as well as fears of a renewed virus wave that prompts many people to hunker down again even without government intervention.

"If people stay the course (on safety measures), we might see improvement in a few months," Schenker said. "But if people don’t, it could drastically slow the (economic) progress and the job market, and we could really see some reversal" from the gains made so far.

The economy of the Austin metro has been performing better than many other areas of the country during the pandemic, partly because it has a big high-tech sector that has been able to adjust relatively quickly to remote work.

But consumer-facing businesses in the the region's celebrated leisure and hospitality sector — such as bars, restaurants, hotels and music venues — have been hit hard by the pandemic, and the figures for November indicate a full recovery remains a long way off. Employment in the sector came in at about 109,000 people last month, up 1,500 from October but still down by more than 28,000 from November a year ago.

“Part of the pandemic's impact is it just shut down that form of activity" as people try to avoid crowds and travel, Rodriguez said. “I do think it is poised to come back with a vaccine being distributed," once the doses are widely available.

Overall, the November unemployment rate in the Austin area was the lowest among Texas’ major metro areas, according to the Dallas Fed, with the Dallas metro area in second place at a seasonally adjusted 7.4%. The McAllen region in South Texas came in highest among the state’s major metro areas at 12.7%.