After cooling somewhat over the second half of 2011, the San Antonio labor market is poised to show strong gains in early 2012. San Antonio’s February unemployment rate of 6.7 percent is 1.4 percentage points below the nation’s March level. Healthy population growth, in the range of two percent, further confirms the relative attractiveness of the region’s labor markets. Development of the the Eagle Ford Shale natural gas resource and increased regional commitment from companies like Boeing will provide a further influx of jobs and activity into the San Antonio economy. Local San Antonio officials estimate a total addition of 10,000 jobs stemming from Eagle Ford Shale activity over the next three years. That said, very low natural gas prices pose a downside risk for San Antonio as drilling programs are reviewed.
Local area personal income growth, which trended 1.3 percent higher than the national average in 2011, should continue to benefit from strong job growth. Wages for oil and gas extraction workers average roughly 2.5 times the average wage for all employees in San Antonio. Over the next several years, income growth in the region is forecast to expand between roughly 4.5-6.0 percent annually. This, in turn, should provide a significant boost to local spending—good news for housing markets and local businesses.
The San Antonio housing market was insulated from the worst of the recessionary decline in home prices. 2011 home prices dipped only 0.1 percent from 2010 levels, compared to a 4.3 percent national decline over the same period. Steady population growth and migration to the region have helped keep inventories low and home prices relatively stable. The region’s recent population influx, driven by the local shale play, has helped lift construction activity in the housing market. Although most of the increases were driven by multifamily starts over the second half of 2011, single-family home construction has begun to expand, as well.
Click here for the complete San Antonio MSA Regional Economic Update for 2012Q2: SanAntonio2012Q2.