The Chamber's monthly Economic Indicators report on the Central Texas region chronicles economic activity on a monthly or quarterly basis. For this overview including links to downloadable data files please visit the Economic Indicators page within the Business section.
Central Texas Economy in Perspective
July 12, 2011 edition
The latest release of the Census Bureau's annual economy-wide profile of U.S. business, County Business Patterns (CBP), appeared June 30. According to this data, Austin and Houston are the only U.S. metros among the 100 largest to have increased the number of business establishments in 2009. Austin had 40,281 businesses with paid employees in 2009, up by 147 or 0.4% from 2008. Houston's net gain was 0.1%.
Best Performing Among the 50 Largest Metros by Rate of Job Growth (Loss) 2008-2009
At the mid-point of 2011, new economic data for 2009 may not draw many headlines, but it is worth calling attention to what is the standard reference source for small area economic data, particularly data completing the recession period (defined as December 2007 to June 2009). CPB provides data on employment, payrolls, and establishment counts by employment size as well, along with a great deal of industry detail, and is used to benchmark numerous public and private sector business statistical series and trends by industry for business and policy purposes. Like the monthly nonfarm payroll jobs data from the Bureau of Labor Statistics that we report on regularly, CBP covers businesses with paid employees (though there are differences in data sources and methodology). CBP excludes most government employees.
Establishments, Employees, Payrolls & Average Annual Salary Austin MSA
Nationally, we have seen two consecutive years of decline in the number business establishments with paid employees. The loss in 2009 was 168,000 establishments or 2.2%, and the loss in 2008 was 104,000 or 1.3%. Jobs and the value of payrolls were also negative in 2009, by 5.3% and 5.4% respectively, but had been positive in 2008 (jobs up 0.2% from 2007 and annual payroll up 2.1%). While the District of Columbia saw a small net gain (0.6%), all states lost establishments in 2009. Texas’ drop of 0.6% was among the lowest, but New York fared better with a loss of only 0.5%. California lost 2.4% of its business establishments in 2009.
Paid employees were down 5.3% nationally and 3.3% in Texas, while Austin lost only 1.5% in 2009. (Note that in CBP, employment is reported as the number paid employees for the pay period including March 12.) The value of payrolls for 2009 was down 5.4% nationally, 4.6% in Texas, but was ahead of 2008 by 0.3% in Austin.
Establishments, Employees, Payrolls & Average Salary Annual Percent Change, Austin MSA
The 10-year trend graphs above show the relatively different impacts on Austin of the latest recession compared to the previous one. While Texas has come out of the latest recession sooner than the nation, the circumstances were reversed in the recession of the early 2000s. That one is defined as lasting from March to November of 2001, however Texas did not bottom out until July 2003.
CBP’ establishment counts by employment size indicate Austin has seen increases at the low and the high ends, and net losses in the size classes between. Establishments with between 1 and 4 employees, which account for more than half of all establishments in the Austin metro, increased by 249 or 1.2% between 2008 and 2009. Establishments with 1,000 or more employees also increased from 35 to 38 (an 8.6% increase). Six of the seven employment size classes in the middle lost establishments in 2009.
Establishments by Employment Size, Austin MSA
As the table below indicates, 2009’s net gain of 147 establishments also represents a mix of gains and losses in different industries. As we might expect from what we’ve seen of industry employment data through this recession, losses are most pronounced in construction where there are 163 fewer establishments than in 2008. That’s a 4.9% decrease, which compares to a 7.8% decline in the number of construction establishments nationally. Real estate and leasing has seen the next largest decline (81 establishments or 3.3%).
Establishments by Industry, Austin MSA
Healthcare and social assistance and accommodation and food services have added the most net new establishments, 127 and 112 respectively. Healthcare and social assistance's percent change in establishments (3.3%) is in line with the percent change in the industry's employment (3.1%). In other cases, there are more substantial percentage differences between the change in employees vs. the change in establishments, which will increase or decrease average firm size for an industry.
Establishments, Employees, Payrolls & Average Salary Percent Change 2008-2009, Austin MSA
Note that industries as represented here are only the tip of the iceberg available in the CBP dataset which will provide data for NAICS industry classifications up to 6-digits. Small counties will see more data suppression than larger counties or metros due to confidentiality issues, but the opportunities for understanding almost any area’s economic base are rich.
There is also a zip code version of the CBP data that comes out shortly after release of the county data and 2009 will be available in August.
While CBP reports on establishments with paid employees and excludes self-employed individuals, there is a companion dataset called Nonemployer Statistics that covers businesses without paid employees. This data is also available by industry at the metro and county level. Data for 2009 will be available later this month.
While CBP is the most commonly cited source for data reflecting the balance between small business and larger businesses in a local area, it can be worth noting that the data in CBP is based on the size of the establishment and some small establishments may be units of a larger firm. If so, "small business" may or may not be the right characterization for all purposes. The Census Bureau also publishes, with a lag of several months from the release of CBP data, an alternative tabulation called Statistics of U.S. Business which tabulates based on size of the enterprise instead of size of the establishment.