Baytown-West Chambers County Economic Development Foundation | 1300 Rollingbrook Dr., Suite 610 | Baytown, TX 77521 | 281.420.2961 |

Study: Houston remains among top cities for manufacturing employment growth

August 7, 2018

The Houston region added 6,700 manufacturing jobs in June.

This represents a 3 percent employment increase from June 2017 to June 2018. Although that rate is among the best in the nation, it's down from six months ago when the Dallas Business Journal — a sister paper of the Houston Business Journal —examined the manufacturing sectors of the country's 15 largest metropolitan areas.

The 6,700 jobs added ranks Houston as No. 3 among the 15 largest metropolitan areas in the U.S., and the 3 percent growth rate also ranks it No. 3 in the nation, according to data compiled from the U.S. Bureau of Labor Statistics.

Recently, Business Facilities lauded Houston for its strong manufacturing presence, which was one of the factors for why the publication named the city as the No. 1 large metro for potential economic growth. The magazine noted that the region has about 6,400 manufacturers that employ more than 240,000 skilled workers and produce $80 billion in goods a year.

Six months ago, Houston and Dallas were tops in the nation in number of jobs added: They both gained 8,800 manufacturing jobs in 2017. For Houston, that was a 4 percent increase, while it was a 3.3 percent increase for Dallas.

However, manufacturing sectors in other metropolitan areas are ramping up hiring this year and catching up with the rate of growth that Houston has experienced recently. For example, Miami added 8,100 workers from June 2017 to June 2018 — a 9 percent jump — the most of the 15 cities examined.

Regardless, manufacturing in the Lone Star State is on an impressive hot streak. Every month, the Federal Reserve Bank of Dallas surveys manufacturers in Texas to get their sense of various business conditions. The key metric the Federal Reserve Bank of Dallas keeps track of is the Production Index, which measures output.

Anything above zero means a majority of respondents saw growth, while anything below zero indicates respondents saw contraction. In July, the index was 29.4. The index has been above zero for 26 straight months.

"Labor market measures suggested a pickup in net hiring and longer work hours in July. The employment index pushed up five points to 28.9, a 13-year high," the Dallas Fed's report said. "Thirty-six percent of firms noted net hiring, compared with 7 percent noting net layoffs."


A separate study expects these numbers to continue to grow. Ball State University’s Center for Business and Economic Research described Texas as "on its way to be a manufacturing powerhouse.”

Although manufacturing in Texas it at a high, businesses are worried about the negative impacts from tariffs in the ongoing trade war. In its July 31 report on the state's manufacturing sector, the Dallas Fed stated that the uncertainty index is at 17, the highest it has been since the Dallas Fed started tracking the metric at the beginning of the year. And this report came out before President Donald Trump announced Aug. 1 that Chinese tariffs could be raised to 25 percent, up from the previously announced 10 percent.

The Chinese tariffs would be on goods such as chemicals and petroleum and other manufacturing-related items.

In early July, Texas Gov. Greg Abbott asked President Donald Trump to reconsider tariffs on steel and aluminum imports because of the harm it will do to the state's economy. He estimated that the tariffs could have negative effects for the nearly 500,000 Texans who work in industries that use steel or aluminum — specifically oil and gas. Although the tariffs would be a boon to steel or aluminum producers, Texans in those industries only total about 7,600.

China is Houston's second-largest trading partner, according to the Greater Houston Partnership.

Texas accounts for 11 percent of total manufacturing goods, second only to California in factory production, per the Dallas Fed. As the economy bounced back from the recession, Houston's share of GDP accounted for by manufacturing topped out at nearly 21 percent in 2011. It's dropped since then as the oil market crashed, but manufacturing is still a larger portion of the city's economy than other Texas metros.