A publication of the Greater Houston Partnership Volume 27 ...Houston’s growth, it could delay...

June 2018 Economy at a Glance ©2018, Greater Houston Partnership 1

HOUSTON VS. CHICAGO

The City of Houston added 8,235 residents last year, the smallest increase for the city since ’07. Houston’s popu-lation growth peaked in ’15 and has trended down since. Slower growth for the city was expected, given the per-sistent weakness in the local economy. Population esti-mates for the metro area, discussed in April’s Houston: The Economy at a Glance, display a similar trend. 1

The media quickly pounced when the U.S. Census Bureau released the data in May, reporters proclaiming the date Houston overtakes Chicago as the nation’s third most populous city had been pushed into the distant future. They were right, but for the wrong reason.

As recently as ’15, when momentum from the recent boom carried Houston forward, the city added over 43,000 residents. Chicago lost about 1,400 that year. The math seemed simple enough. With a gap of only 442,000 residents separating the Bayou City from the Windy City, Houston would overtake Chicago in less than 10 years, which at the time placed the transition around ’25.

The gap has narrowed since then. Only 404,000 residents separate the two cities today. Houston’s growth, however, has slowed to a trickle, and Chicago’s population continues to leak away. The home of the Bears, Bulls, Cubs and Blackhawks lost 3,800 residents in ’17, about 0.1 percent of the city’s population. Houston’s growth fell to about one-fifth its previous peak.2 Again, the math seems simple.

1 The U.S. Census Bureau’s population estimates are for the 12 months ending July 1, 2017. 2 Houston Mayor Sylvester Turner disagrees with the Census’ estimate for Houston and intends to challenge the Bureau.

Based on last year’s growth, Houston will overtake Chicago, but not for another 34 years. In ’52, when the Class of ’18 reaches middle age, Houston will become the nation’s third most populous city.

CITY POPULATION GROWTH Houston Chicago

Pop as of 7/1/10 2,099,256 2,697,661

Gap, Hou v Chi 598,405

Year Net Population Change

’11 26,194 9,009

’12 34,374 11,319

’13 38,420 6,493

’14 40,551 2,051

’15 43,440 -1,379

’16 22,247 -4,879

’17 8,235 -3,825

Pop as of 7/1/17 2,312,717 2,716,450

Gap, Hou v Chi 403,733

Source: Partnership calculations based on U.S. Census Bureau data

No Better Than a Ouija Board

But there’s a problem with the prognostications to ’25 and to ’52. They are what economists refer to as a “naïve forecasts,” i.e., using current data to extrapolate the future without establishing what drives growth and then adjusting accordingly. A Ouija board would produce the same result.

To use a sports example, predicting Houston’s future growth based on a few data points is like using the first four games of the Texans ’17 season (2 wins, 2 losses) or the Astros record in August (10 wins, 17 losses) to predict how each team would finish the year. For those who don’t recall, the Texans finished 4-12, the Astros won the Major League Baseball’s World Series.

Table of Contents

Houston vs Chicago ................................................. 1

A Few Words About Our Neighbors ......................... 3

Employment Update ................................................ 5

Snapshot — Key Economic Indicators ...................... 6

Economic Indicators Summary Table ....................... 7

Houston Nonfarm Employment ............................... 7

A publication of the Greater Houston Partnership Volume 27 Number 5 – June 2018

A publication of the Greater Houston Partnership Volume 26 Number 12 – December 2017

http://www.houston.org/pdf/research/glance_archives/Glance_Apr18.pdf

http://www.houston.org/pdf/research/glance_archives/Glance_Apr18.pdf


Demographers separate population growth into two components, the net natural rate of increase (i.e., resident births minus resident deaths) and net migration, (i.e., movers into the region minus movers out of the region). A more informed forecast takes into account all factors and events that might impact those components.

Yay! The Natural Increase!

The city has nearly 600,000 female residents between the ages of 15 and 50―what the Census Bureau considers to be childbearing years. In ’16, the latest year for which data are available, nearly 39,000 women gave birth to at least one child. The Bureau doesn’t provide data on deaths at the city level, but at the metro level deaths offset births by about 40 percent, which suggests a rate of natural increase for the city of about 24,000 residents per year. Houston added fewer than 9,000 residents in ’17, suggesting more people moved out of the city than moved into the city last year. That’s not surprising given the lack of job growth through July of last year, which coincides with the time frame for the Bureau’s estimates.

The city’s population gains in ’08, ’10 and ’16 also fell well below what one would expect based on the natural rate of increase, suggesting more residents moved out of Houston than into Houston in those years.

While the female population continues to grow, fertility rates (i.e., the number of births per 1,000 women of child-bearing age) have slipped over time. A natural increase of 24,000 may be the norm for Houston for the near future.

Good, Good, Good, Good Migrations

While net natural increase is important, infants and toddlers aren’t ideal consumers. They don’t buy vehicles, purchase homes, order furniture or dine out (unless they’re with their parents). Nor do they participate in the workforce. But their parents do, which is why migration is so important to Houston.

What spurs someone to pack a U-Haul and head for Houston? The desire to live closer to one’s family. The desire to escape harsh winters. Access to quality health care. A cool restaurant and bar scene. A chance to start over in a new city known for welcoming newcomers. But two factors—job growth and affordability—tend to have the greatest influence.

3 C2ER is a Washington-based organization, that among other things, gathers data and reports on living costs in the nation’s major metro areas.

The Importance of Job Growth

From July ’10 to July ’15, the recent peak of the city’s population boom, metro Houston created more than 420,000 jobs. Through migration and net natural increase, the region added about 720,000 residents, of whom 183,000 settled in the city. That suggests for every 2.3 jobs the region created, the city gained one new resident. Those jobs didn’t need to be inside the city to add to Houston’s population. Data from the Census Bureau indicate that about a third of all job holders who reside in the city work outside the city.

METRO HOUSTON GROWTH

Year Jobs

(Dec – Dec) Population (Jul – Jul)

'10 49,800 95,225

'11 83,000 110,528

'12 118,800 125,779

'13 90,000 145,827

'14 116,700 167,309

'15 -2,500 167,325

'16 -2,200 133,823

'17 62,900 94,417

Sources: U.S. Census Bureau and Texas Workforce Commission

If the regional-jobs-to-city-population ratio holds true, metro Houston needs to create 920,000 jobs for the city to add another 400,000 residents, the gap Houston must close if it’s to overtake Chicago. That’s the equivalent to two decades of growth for the region. Admittedly, the formula is an oversimplification, but it underscores the importance of regional job growth to the city’s population growth.

No Longer a Bargain

It’s no coincidence that states with the highest living costs—California, New York and Illinois—send a large number of residents to Houston each year. And cities with some of the lowest living costs (and a healthy job market) enjoyed strong population gains last year.

Houston, however, is not as affordable as it once was. According to the Council for Community and Economic Research (C2ER), the cost of living in Houston (excluding taxes) was 12.3 percent below the national average in ’07 but only 1.8 percent below in ’17. 3 Incidentally, the rise in


the cost of living in Houston coincides with years of robust economic growth.

Escalating housing costs, which account for about 28 percent of an average household budget, have driven the increase. According to the Federal Housing Finance Agency, the purchase price of a single-family home in metro Houston has risen 59.4 percent since Q1/07. And according to C2ER, Houston apartment rents are up 53.0 percent over the same period. By comparison, average wages in metro Houston are up only 27.1 percent over the same period, according to the Texas Workforce Commission.

A Series of Assumptions

So, when might Houston overtake Chicago to become the nation’s third most populous city? That depends on several factors aligning:

• Assuming the region’s job growth returns to its long-term annual average of 2.0 percent, the region should add approximately 60,000 jobs per year.

• Assuming job growth holds steady at 60,000 per year, the region should add 100,000 to 125,000 residents per year.

• Assuming the city captures about one-fourth of the region’s population gains (its share over the past decade), Houston should add 25,000 to 30,000 resi-dents per year.

• Assuming Houston maintains that pace of population growth uninterrupted, and

• Assuming that Chicago’s population remains flat . . .

The City of Houston would reach 2.7 million residents, Chicago’s population today, sometime around ’32. However, a number of factors are likely to push out that date.

• If Chicago experiences any growth—the city added 4,000 residents per year in the early part of this decade―that could push the date out to the late ‘30s.

• If population growth in the city slows precipitously—in seven of the past 20 years the city of Houston has added fewer than 10,000 residents—the date would be pushed into the early ’40s.

• If a “black swan” event occurs that precipitously slows Houston’s growth, it could delay Houston overtaking Chicago further into the future. 4

4 “Black swan” describes an event that comes as a surprise, has a major effect, and is rationalized afterwards with the benefit of hindsight. The global financial collapse which brought on the Great Recession or the flooding associated with Hurricane Harvey are examples of such events.

What Needs to Happen

Growth won’t occur without significant investments in the city. To accommodate an additional 400,000 residents, the city will need to:

• Develop an additional 160,000 housing units,

• Upgrade the streets to carry another 200,000 vehicles,

• Build enough campuses to educate an additional 80,000 school-age children,

• Expand utilities, including water, sewer, gas and electricity,

• And nurture a business climate that entices new firms to relocate in the region and existing firms to expand their current operations, creating the jobs needed to drive population growth.

Houston also needs to deal with issues of flooding, image, restructuring of the oil industry, Washington’s efforts to limit immigration, and threats to international trade. Inevitably, the U.S. will suffer another economic downturn in the next 10 years, impeding the city’s growth. To sum it up, Houstonians have a host of challenges to deal with before the Bayou City overtakes the Windy City as the nation’s third most populous in the U.S., and that’s not likely to occur for at least another 20 years.

An Addendum to the Above

The Chicago Metropolitan Agency for Planning (CMAP) forecasts population, households and employment for the Chicago metro area. CMAP expects the city of Chicago’s population to reach 3,092,262 in ’40. The Houston-Galveston Area Council (HGAC), the planning agency for this region, forecasts population, employment, and household growth for the Texas Gulf Coast. HGAC projects Houston’s population to reach 3,045,030 by that year. Based on those two forecasts, in ’40 Houston still fails to overtake Chicago as the nation’s third most populous city.

A FEW WORDS ABOUT OUR NEIGHBORS

Of the 123 cities in the nine-county metro Houston area, 104 gained population last year, according to the U.S. Census Bureau. Houston led the way, followed by Pearland, League City and Conroe.

Pearland and Pasadena have a race of their own, with the city off State Highway 288 fast approaching the city off State Highway 225 in population. Fewer than 34,000 residents separate the two, with Pearland logging healthy


population gains over the past seven years and Pasadena’s population growing only marginally.

The U.S. Census Bureau estimates are for populations as of July 1, 2017, so they don’t reflect the impact Hurricane Harvey had on the region. The surge in out-of-state workers helping with recovery efforts may add to the population, while the exodus of people whose homes were destroyed may pull down the numbers. Houstonians won’t know for another year the impact of Harvey on the region’s population, and we won’t know for another 20 years if Houston will really overtake Chicago.

EMPLOYMENT UPDATE

Metro Houston created 22,600 jobs in April, according to the Texas Workforce Commission (TWC). That’s the best April on record.

Houston always experiences significant job losses the first month of each year as employees hired for the holiday season, contracted to assist with year-end deadlines, or subject to corporate restructuring in the new year are laid off. The most recent report places year-to-date job growth

at 24,100. February, March and April job growth have more than offset the 41,300 jobs lost in January.

Year to date, the bulk of Houston’s job growth has occurred in a handful of categories: construction (6,500 jobs), employment services (e.g., contract workers) (4,700 jobs), services to buildings (e.g., janitorial and landscaping) (3,800 jobs), health care (3,500 jobs), fabricated metal products manufacturing (3,000 jobs) and other services (3,000 jobs).

Through April, mining machinery manufacturing (i.e., oil field equipment) has added 1,600 jobs and support activities for mining (i.e., oil field services) has added 900 . Engineering services has cut 400 jobs and oil and gas extraction (i.e., exploration and production) has shed. A number of sectors have experienced year-to-date losses, the most significant being 12,000 jobs in retail.

Readers are cautioned, however, that the data for April have a few anomalies. TWC reports that leisure and hospitality (i.e., hotels, restaurants and bars) added 6,900 jobs in April. A typical April would see only 2,000 to 2,500 jobs added. Administrative support added 3,200. Over the past 25 years, this category has averaged 1,600 jobs in April.

April’s report pushed Houston’s employment numbers to a new record, 3,097,500. When TWC releases data for May, the region will likely top 3.1 million.

Houston's unemployment rate was 4.2 percent in April, down from 4.6 percent in March and 4.8 percent in April ’17. Texas’ unemployment rate was 3.8 percent in April, down from 4.1 percent in March and 4.1 percent in April ’17. The U.S. rate was 3.7 percent in April, down from 4.1 percent in March and 4.1 percent in April ’17.

HOUSTON METRO AREA POPULATION GROWTH, By 20 LARGEST CITIES

Ranked by Current Population Population as of Change Since '10

City 7/1/2010 7/1/2017 # %

Houston 2,099,256 2,312,717 218,284 10.4

Pasadena 149,527 153,520 4,213 2.8

Pearland 94,075 119,940 26,820 28.8

League City 84,077 104,903 21,340 25.5

Sugar Land 79,096 88,485 9,885 12.6

Conroe 65,265 84,378 19,448 30.0

Baytown 71,865 76,804 5,095 7.1

Missouri City 67,065 74,497 7,809 11.7

Galveston 47,795 50,497 2,754 5.8

Texas 45,292 48,558 3,467 7.7

Friendswood 36,006 39,839 3,945 11.0

Rosenberg 32,048 37,661 5,785 18.1

La Porte 33,872 35,371 1,565 4.6

Deer Park 32,106 33,891 1,881 5.9

Lake Jackson 26,818 27,473 641 2.4

Alvin 24,314 26,474 2,235 9.2

Dickinson 18,751 20,359 1,682 9.0

Angleton 18,821 19,544 718 3.8

Bellaire 16,957 18,797 1,886 11.2

Stafford 17,781 18,315 593 3.3

Source: U.S. Census Bureau

4.8

4.1 4.14.6

4.1 4.1

Houston Texas U.S.

Note: The rates are not seasonally adjusted.Source: Texas Workforce Commission

% Workforce UnemployedApril '17 March '18 April '18


SNAPSHOT — KEY ECONOMIC INDICATORS

Aviation — The Houston Airport System handled 18.0 million passengers through April of this year, up 4.0 percent from the 17.3 million

handled during the same period in ’17. Year to date, international passenger volume totaled 3.7 million, up 2.9 percent from 3.6 million the previous year. Domestic volume totaled 14.3 million, a 4.3 percent increase from 13.7 million in ’17.

Building Permits — City of Houston building permits totaled $468.2 million in April ’18, down 3.5 percent from $485.0 million in April ’17.

Commercial permit values decreased 27.4 percent to $190.8 million and residential permit values increased 24.9 percent to $277.4 million.

Business-Cycle Index — Growth in the Houston Business-Cycle Index was a roaring 7.6 percent during the three months ending in April ’18,

above its longer-run average of 3.2 percent. Annualized growth in the index since September ’17 has been a robust 7.5 percent, likely buoyed in part by a strong post-Harvey stimulus and higher oil prices.

Construction — Construction starts in Houston totaled $1.575 billion in April, a 45.0 percent increase from $1.086 billion in April ’17. Through the first four months of ’18, starts totaled $6.001

billion, down 2.1 percent from $6.130 billion for the corresponding period in ’17.

Crude Oil — West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, traded between $66.80 and $72.86 a barrel in May ’18

versus $45.55 to $51.12 per barrel in May ’17. The U.S. Energy Information Administration (EIA) forecasts WTI to average $65.58 this year and $60.86 next year.

Home Sales — In April, Houston’s residential real estate market rebounded from a sluggish March. Single-family home sales, average price paid and pending sales rose both month-to-month and

year-to-year. Total sales volume topped $26.6 billion in the 12 months ending April ’18, a record for the region. Foreclosure sales continue to trend downward and now account for less than 2.0 percent of all transactions.

Inflation — Consumer prices in the Houston-The Woodlands- Sugar Land metro area grew 2.4 percent from April ’17 to April ’18. In the 12

months ending April ’18, the energy index rose 9.5 percent. Food prices rose 1.3 percent over the same period.

Natural Gas — The spot price for Henry Hub natural gas averaged $2.80 per million BTUs in May, down 12.5 percent from the average of

$3.15 in April ’17. EIA forecasts the Henry Hub spot price to average $3.01 this year and $3.11 in ’19.

Purchasing Managers Index — The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production,

registered 56.6 in April, up slightly from 56.5 in March. Readings above 50 signal economic expansion in Houston over the next three to four months. Readings below 50 signal contraction.

Rig Count — Baker Hughes reports 1,059 drilling rigs were working in the U.S. during the last week of May. That’s up 151 rigs, or 16.6 percent, from

the 908 the same week in May last year. The rig count has trended upward since early November.

Trade — Through March of this year, $52.6 billion in goods and commodities passed through the Houston/Galveston Customs District, up 12.9

percent from $46.6 billion over the same period in ’17. Exports totaled $31.4 billion, up 17.7 percent. Imports totaled $21.3 billion, up 6.6 percent.

Vehicle Sales Houston-area auto dealers sold 26,980 new vehicles in April ’18, up 19.9 percent from the 22,504 sold in April ’17. Used vehicle

sales rose 10.9 percent from 67,657 in April.

STAY UP TO DATE!

For past issues of Economy at a Glance, please click here.

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https://d14ik00wldmhq.cloudfront.net/media/filer_public/1c/0d/1c0da9a5-9fa5-45bb-b783-64a49fd5015a/0418f1.pdf

http://www.houston.org/pdf/research/narratives/COH_Building_Permits/COH_Building_Permits.pdf

https://www.dallasfed.org/research/indicators/hou/2018/hou1806.aspx

http://www.houston.org/pdf/research/narratives/Mc_Graw_Hill_Construction/McGraw_Hill_Contracts.pdf

https://www.eia.gov/outlooks/steo/

http://www.houston.org/pdf/research/narratives/Multiple_Listing_Service/Multiple_Listing_Service_Activity.pdf

http://www.houston.org/pdf/research/narratives/CPI/Consumer_Price_Index.pdf

https://www.eia.gov/naturalgas/

http://www.houston.org/pdf/research/narratives/PMI/Purchasing_Managers_Index.pdf

http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview

http://www.houston.org/pdf/research/narratives/Foreign_Trade/Foreign_Trade.pdf

http://www.houston.org/pdf/research/narratives/Vehicles/Vehicle_Sales.pdf

http://www.houston.org/economy/archives/

http://ghp.informz.net/GHP/profile.asp?fid=3299



Most Year % Most Year %

Month Recent Earlier Change Recent Earlier Change

ENERGY

U.S. Active Rotary Rigs Apr '18 991 789 25.6 966 * 742 * 30.2

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Apr '18 66.25 51.06 29.7 63.76 * 51.48 * 23.9

Spot Natural Gas ($/MMBtu, Henry Hub) Apr '18 2.69 2.88 -6.6 3.00 * 3.04 * -1.3

UTILITIES AND PRODUCTION

Houston Purchasing Managers Index Apr '18 56.6 56.5 0.2 55.9 * 53.5 * 4.5

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Apr '18 4,523,275 4,564,799 -0.9 18,562,169 18,165,442 2.2

CONSTRUCTION

Building Permits ($, City of Houston) Apr '18 468,156,818 484,964,178 -3.5 1,758,754,025 1,981,018,370 -11.2

Nonresidential Apr '18 190,800,631 262,986,485 -27.4 901,303,249 1,268,100,834 -28.9

New Nonresidential Apr '18 57,003,855 54,158,695 5.3 378,071,506 413,620,108 -8.6

Nonresidential Additions/Alterations/Conversions Apr '18 133,796,776 208,827,790 -35.9 523,231,743 854,480,726 -38.8

Residential Apr '18 277,356,187 221,977,693 24.9 857,450,776 712,917,536 20.3

New Residential Apr '18 236,861,798 194,469,151 21.8 680,826,641 616,774,096 10.4

Residential Additions/Alterations/Conversions Apr '18 40,494,389 27,508,542 47.2 176,624,135 96,143,440 83.7

Multiple Listing Service (MLS) Activity

Property Sales Apr '18 8,453 8,045 5.1 28,570 27,728 3.0

Median Sales Price - SF Detached Apr '18 240,000 228,000 5.3 229,588 0 222,250 * 3.3

Active Listings Apr '18 36,882 38,345 -3.8 34,976 * 36,612 * -4.5

EMPLOYMENT (Houston-The Woodlands-Sugar Land MSA)

Nonfarm Payroll Employment Mar '18 3,072,000 3,009,500 2.1 3,055,200 * 2,988,667 * 2.2

Goods Producing (Natural Resources/Mining/Const/Mfg) Mar '18 527,500 512,000 3.0 524,867 0 508,133 * 3.3

Service Providing Mar '18 2,544,500 2,497,500 1.9 2,530,333 0 2,480,533 * 2.0

Unemployment Rate (%) - Not Seasonally Adjusted

Houston-Sugar Land-Baytown MSA Mar '18 4.6 5.2 4.7 * 5.5 *

Texas Mar '18 4.1 4.5 4.1 * 4.8 *

U.S. Mar '18 4.1 4.6 4.3 * 4.9 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Mar '18 4,007,711 4,240,660 -5.5 11,025,502 11,203,051 -1.6

Air Passengers (Houston Airport System) Mar '18 4,935,456 4,692,517 5.2 13,312,917 12,937,463 2.9

Domestic Passengers Mar '18 3,899,763 3,731,091 4.5 10,516,167 10,229,589 2.8

International Passengers Mar '18 1,035,693 961,426 7.7 2,796,750 2,707,874 3.3

Air Freight (metric tons) Mar '18 43,907 37,796 16.2 120,465 106,176 13.5

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Apr '18 26,980 22,504 19.9 99,856 92,440 8.0

Cars Apr '18 8,494 7,266 16.9 29,704 31,079 -4.4

Trucks, SUVs and Commercials Apr '18 18,486 15,238 21.3 70,152 61,361 14.3

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) Q3/17 28,181 28,049 0.5 85,311 81,914 4.1

Consumer Price Index for All Urban Consumers ('82-'84=100)

Houston-Galveston-Brazoria CMSA Apr '18 225.1 219.9 2.4 224.400 * 219.200 * 2.4

United States Apr '18 250.5 244.5 2.5 249.200 * 243.700 * 2.3

Hotel Performance (Houston MSA)

Occupancy (%) Q4/17 72.5 57.2 66.7 * 62.3 *

Average Room Rate ($) Q4/17 110.06 99.03 11.1 107.96 * 104.67 * 3.1

Revenue Per Available Room ($) Q4/17 79.82 56.66 40.9 71.96 * 65.20 * 10.4

Aviation City of Houston Department of Aviation

Bui lding Construction Contracts Dodge Data & Analytics

Car and Truck Sa les TexAuto Facts Report , InfoNation, Inc., Sugar Land TX

Ci ty of Houston Bui lding Permits Publ ic Works & Engineering Planning & Development, Ci ty of Houston

Consumer Price Index U.S. Bureau of Labor Statis tics

Electrici ty CenterPoint Energy

Employment, Unemployment Texas Workforce Commiss ion

Hotels CBRE

Houston Purchas ing Managers Index Insti tute for Supply Management-Houston

MLS Data Houston Association of Realtors

Port Shipments Port of Houston Authori ty

Reta i l Sa les Texas Comptrol ler’s Office

Rig Count Baker Hughes Incorporated

YEAR-TO-DATE TOTAL or

YTD AVERAGE*MONTHLY DATA

HOUSTON ECONOMIC INDICATORS

SOURCES


Change from % Change from

Apr '18 Mar '18 Apr '17 Mar '18 Apr '17 Mar '18 Apr '17

Total Nonfarm Payroll Jobs 3,097.5 3,074.9 3,013.0 22.6 84.5 0.7 2.8

Total Private 2,683.0 2,659.9 2,600.2 23.1 82.8 0.9 3.2

Goods Producing 534.1 527.7 510.6 6.4 23.5 1.2 4.6

Service Providing 2,563.4 2,547.2 2,502.4 16.2 61.0 0.6 2.4

Private Service Providing 2,148.9 2,132.2 2,089.6 16.7 59.3 0.8 2.8

Mining and Logging 78.2 77.8 77.0 0.4 1.2 0.5 1.6

Oil & Gas Extraction 35.8 36.1 37.6 -0.3 -1.8 -0.8 -4.8

Support Activities for Mining 40.8 40.1 38.0 0.7 2.8 1.7 7.4

Construction 227.9 227.2 215.7 0.7 12.2 0.3 5.7

Manufacturing 228.0 222.7 217.9 5.3 10.1 2.4 4.6

Durable Goods Manufacturing 145.8 141.4 135.9 4.4 9.9 3.1 7.3

Nondurable Goods Manufacturing 82.2 81.3 82.0 0.9 0.2 1.1 0.2

Wholesale Trade 169.9 168.2 164.6 1.7 5.3 1.0 3.2

Retail Trade 312.5 312.7 306.0 -0.2 6.5 -0.1 2.1

Transportation, Warehousing and Utilities 142.5 142.9 140.0 -0.4 2.5 -0.3 1.8

Utilities 16.6 16.4 16.4 0.2 0.2 1.2 1.2

Air Transportation 21.2 21.1 21.6 0.1 -0.4 0.5 -1.9

Truck Transportation 25.5 25.4 24.9 0.1 0.6 0.4 2.4

Pipeline Transportation 11.5 11.9 11.8 -0.4 -0.3 -3.4 -2.5

Information 31.0 31.5 32.5 -0.5 -1.5 -1.6 -4.6

Telecommunications 13.3 13.6 13.7 -0.3 -0.4 -2.2 -2.9

Finance & Insurance 100.4 101.1 100.3 -0.7 0.1 -0.7 0.1

Real Estate & Rental and Leasing 61.7 60.6 57.5 1.1 4.2 1.8 7.3

Professional & Business Services 506.2 503.4 476.4 2.8 29.8 0.6 6.3

Professional, Scientific & Technical Services 232.7 233.3 221.0 -0.6 11.7 -0.3 5.3

Legal Services 25.7 25.6 25.0 0.1 0.7 0.4 2.8

Accounting, Tax Preparation, Bookkeeping 28.2 28.7 28.4 -0.5 -0.2 -1.7 -0.7

Architectural, Engineering & Related Services 66.7 66.6 64.9 0.1 1.8 0.2 2.8

Computer Systems Design & Related Services 32.4 32.2 31.6 0.2 0.8 0.6 2.5

Admin & Support/Waste Mgt & Remediation 231.1 227.9 213.1 3.2 18.0 1.4 8.4

Administrative & Support Services 219.8 216.9 201.2 2.9 18.6 1.3 9.2

Employment Services 96.2 95.3 79.7 0.9 16.5 0.9 20.7

Educational Services 60.4 60.2 59.4 0.2 1.0 0.3 1.7

Health Care & Social Assistance 327.9 325.0 325.4 2.9 2.5 0.9 0.8

Arts, Entertainment & Recreation 34.4 33.3 33.6 1.1 0.8 3.3 2.4

Accommodation & Food Services 289.8 284.0 282.8 5.8 7.0 2.0 2.5

Other Services 112.2 109.3 111.1 2.9 1.1 2.7 1.0

Government 414.5 415.0 412.8 -0.5 1.7 -0.1 0.4

Federal Government 29.0 29.0 28.7 0.0 0.3 0.0 1.0

State Government 87.1 86.4 86.0 0.7 1.1 0.8 1.3

State Government Educational Services 52.0 51.3 51.6 0.7 0.4 1.4 0.8

Local Government 298.4 299.6 298.1 -1.2 0.3 -0.4 0.1

Local Government Educational Services 210.8 212.6 209.0 -1.8 1.8 -0.8 0.9

SOURCE: Texas Workforce Commission

HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000)

January 2018 Economy at a Glance

©2018, Greater Houston Partnership 1

Editor’s Note: What follows is a summary of the Greater Houston Partnership’s ’18 employment forecast released on December 8, 2017. For the full forecast, along with Houston Economic Highlights, an analysis of economic and demographic trends over the past 10 years, see www.houston.org/economy.

JOB GROWTH TO PICK UP IN ’18

The Partnership’s employment forecast for this year calls for the region to create approximately 45,500 jobs. Growth will be driven primarily by the strength of the U.S. and global economies and Houston’s links to them. While turmoil in the energy industry has for the most part sub-sided, the forecast doesn’t anticipate the sector con-tributing to job growth in ’18, but neither does it detract from overall expansion. Only two sectors, construction and information, are forecast to finish the year with fewer jobs than they started with. All remaining sectors are expected to expand, some robustly, others modestly, in ’18.

U.S. GROWTH

Though Houstonians often hate to admit it, Texas is part of the U.S., and when the nation prospers, that’s good for Houston. Why? Because the nation buys more of what Houston sells. A few examples:

• Detroit produced more than 18 million light-duty automobiles and trucks in ’16. A typical family car contains 150 pounds of rubber, 200 pounds of fluids, and 250 pounds of plastics. These components likely

come from the plastics and chemical plants along the Houston Ship Channel.

• The value of U.S. manufacturing output exceeded $6.1 trillion in ’14, and more than 6.2 trillion cubic feet of natural gas was consumed in the process. Much of that gas is found, produced and delivered by companies based in Houston.

• Americans drove more than 3.2 trillion miles in ’16. One-fourth of the nation’s refining capacity is located on the Texas Gulf Coast.

The consensus among economists is that U.S. GDP, ad-justed for inflation, will grow 2.4 percent or more in ’18, and that’s good for Houston.

GLOBAL TIES

Global trade is important to Houston because the region’s international ties are as strong as its domestic ties.

• Metro Houston ranks second only to New York in value of exports.

• Nearly 5,000 Houston-area companies are engaged in global commerce.

• Global trade supports nearly 450,000 jobs in the re-gion.

• The Port of Houston ranks first in the U.S. in foreign tonnage.

• Many of Houston’s public companies derive a sig-nificant portion of their revenues from their overseas operations. The average is 30 percent, but companies such as Halliburton and Oceaneering receive more than half their revenues from international sales and operations.

Oxford Economics forecasts world GDP to grow 3.0 percent in ’18, and that’s good for Houston.

ENERGY

Approximately one-third of Houston’s GDP is tied directly to oil and gas. This figure doesn’t include energy’s impact on wholesale trade, transportation, and professional ser-vices. Nor does it account for the spending of energy

A publication of the Greater Houston Partnership Volume 27 Number 1 – January 2018

A publication of the Greater Houston Partnership Volume 26 Number 12 – December 2017 Table of Contents

Job Growth to Pick up in ’18 ..................................... 1

Mixed Year for Real Estate ....................................... 2

Energy Outlook Improves ......................................... 3

Post-Harvey Job Growth ........................................... 4


Houston Nonfarm Employment ............................... 7

Average Daily Production, Signatories to the “Declaration of Cooperation”*

OPEC Mb/d Non-OPEC Mb/d

Algeria 1.11 Azerbaijan 0.84

Angola 1.71 Bahrain 0.05

Ecuador 0.55 Brunei 0.18

Eq. Guinea 0.14 Kazakhstan 1.88

Gabon 0.23 Malaysia 0.71

Iran 3.55 Mexico 2.47

Iraq 4.42 Oman 1.26

Kuwait 2.88 Russia 11.34

Libya 0.39 Sudan 0.25

Nigeria 1.47 South Sudan NA

Qatar 0.65 Non-OPEC Total 18.98

Saudi Arabia 10.42 % of World 19.6%

U.A.E. 3.05 OPEC + Non-OPEC 51.79

Venezuela. 2.24 % of World 53.4%

OPEC Total 32.81 World Production 96.96

% of World 33.8% * “Declaration of Cooperation” is the formal name for the agreement among the 24 countries to cut production

Sources: U.S. Energy Information Administration, International Energy Agency, Tradingeconomics.com

Post-Harvey Rebound .............................................. 4

Gone to Texas ........................................................... 3

The Outlook for ‘18 .................................................. 6


http://www.houston.org/economy



workers at the grocers, in local restaurants or at the drug store. Factor in those expenditures, and energy’s impact on local GDP is significantly higher. The U.S. Energy Infor-mation Administration (EIA) forecasts West Texas Inter-mediate to trade on the spot market in the low $50s most of the year, not reaching the mid-$50s until Q4/18. That’s not much improvement over ’17, when crude averaged $49 per barrel much of the year. Houston needs oil at $60 or better for several quarters if the energy sector is to spur additional economic growth for Houston.

The forecast is based on several assumptions:

• U.S. GDP grows 2.4 percent or more, adjusted for in-flation.

• U.S. job creation averages 200,000 jobs per month, sustaining domestic demand for what Houston pro-duces.

• Any unrest in oil-exporting countries has a minimal impact on prices.

• The Federal Reserve’s increases in interest rates have no detrimental effect on the economy.

• The global economy grows at its current pace or better.

• The ongoing political turmoil in Washington has mini-mal impact, if any, on business or consumer confi-dence.

• Any appreciation in the dollar against other currencies has a negligible impact on exports.

• The price of WTI generally holds above $50 per barrel, and any dip below $50 proves transitory.

• Houston continues to attract residents from other cities, states and countries.

If any of these assumptions prove wrong, the Partnership’s forecast would need to be revisited.

FORECAST IN A NUTSHELL

The Partnership’s forecast calls for job growth in 14 sec-tors: oil field services, manufacturing, wholesale trade, re-tail trade, finance and insurance, real estate, business, professional and technical services, educational services, health care, administrative services, arts and entertain-ment, accommodation and food services, other services, and government. Job losses will continue in two sectors:

1 WTI traded between $55 and $58 in the weeks leading up to the forecast. Few analysts expected crude to breach $60 per barrel. The forecast initially assumed WTI would hold above $50 per barrel and was more concerned with the price dipping below $50. The current $60-plus price for WTI may prove transitory, but if the price holds for several quarters, the region may see growth in energy employment again.

construction and information. Employment growth will be flat in upstream energy. 1

COMMERCIAL REAL ESTATE: A MIXED YEAR

Houston’s office market finished ’18 with 2.0 million square feet of negative absorption, according to CBRE. JLL places the figure slightly higher, at 2.7 million; NAI, slightly lower at 1.6 million. The Central Business District, Uptown/Galleria, Greenspoint, Energy Corridor and Southwest submarkets were the worst hit, accounting for the bulk of the space thrown back on the market, according to data reported by JLL. Fortunately, office construction remains subdued, with only 1.6 million to 2.2 million square feet under construction. Sublease leasing activity ticked up as well, notes JLL, helping reduce sublease in-ventory by 2.3 million square feet. Total available sublease space stood at 9.3 million square feet at the end of ’17. Both CBRE and NAI reported positive absorption in Q4/17. Taken together, construction, Q4 absorption, and the drop in sublease space suggest the worst may be over for the office market. The effective vacancy rate is still between 20 and 25 percent, and given current leasing activity, the market will remain soft for some time.

The industrial market fared better, absorbing 7.0 million square feet of space, according to CBRE. JLL places ab-sorption at 7.6 million square feet. The vacancy rate has inched up from 4.9 percent at year-end ’15 and 5.1 percent at year-end ’16 to 5.5 percent year-end ’17. JLL estimates that 4.6 million square feet of space was under

91.0

21.3

-110.5

50.3

83.1

118.890.4

118.2

0.218.7 29.7

45.2

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17(F)

'18(F)

Source: Texas Workforce Commission (historical); Greater Houston Partnership (forecast)

Metro Houston Job Growth December to December, 000s



construction in Q4/17. CBRE places the amount much higher, at 8.5 million. Given the current pace of leasing activity, JLL’s construction data suggest a continuing tight market, while CBRE’s suggest industrial vacancy rates may tick up this year.

The retail sector absorbed 2.0 million square feet of space in ’17, well below the 4.0 million absorbed in ’16 but above the 10-year average, reports CBRE. The overall occupancy rate of 94.1 percent slipped from 94.3 percent in ’16. Average asking rates ticked up, from $23.81 per square foot in ’16 to $25.30 in ’17 on a triple-net basis.2

HOUSING MARKET HOLDS COURSE

John Burns Real Estate Consulting forecasts single-family home sales, new and existing, to tick up in ’18 as the local economy moves closer to full recovery. Home values will continue to appreciate modestly, but housing affordability remains a concern as moderate appreciation continues to outpace recent wage growth in the region.

The market currently has a 3.9-month supply of resale homes, meaning the number of months it would take to deplete current active inventory for the single-family market based on the prior 12 months’ sales activity. The typical home is on the market 55 days before closing, notes the firm. The 10-year average is 47 days. Currently, about 12 percent of all closings are above list price. The 10-year average is 15 percent.

METRO HOUSTON SINGLE-FAMILY HOUSING OUTLOOK (December to December)

’17P ’18 ’19 Existing Homes

Appreciation 4.5% 4.7% 4.0% Sales 84,600 83,200 81,900

New Homes Appreciation 0.6% 2.1% 2.4% Sales 27,590 28,000 30,500

Affordability Housing Cost to Income Ratio3 29.9% 31.7% 32.7% Source: John Burns Real Estate Consulting

2 Tenant agrees to pay all real estate taxes, building insurance, and maintenance on the property in addition to normal fees expected under the agreement (rent, utilities, etc.).

3 “Housing Cost to Income Ratio” assumes the purchase of a home at 80 percent of the market’s median-priced existing home with a

five percent down payment and a 30-year, fixed-rate mortgage. Payment includes PITI plus mortgage insurance. The annual payment is then divided by the market’s median income.

4 The Organisation for Economic Co-operation and Development is an intergovernmental economic organization with 35 member countries, founded in 1961 to stimulate economic progress and world trade. Its members include all the developed countries plus several of the larger emerging markets.

ENERGY OUTLOOK IMPROVES

Prospects for the energy industry look better in ’18 than it has in several years.

The global economy remains healthy. All 45 countries monitored by the OECD4 are growing, a phenomenon that has occurred only three times in the past 50 years. The OECD forecasts global GDP to grow 3.6 percent in ’17, strengthening to almost 3.8 percent in ’18.

Demand for crude continues to rise. The International Energy Agency estimates that oil demand rose by 1.5 million barrels a day in ’17 and will increase another 1.3 million barrels in ’18. The U.S. Energy Information Administration (EIA) expects demand to grow by more than 1.6 million barrels this year.

Crude inventories have begun to shrink, albeit slowly. Since reaching a record high of 3.09 billion barrels in July ’16, total OECD liquid fuels inventories have fallen to 2.95 billion barrels in November ’17. In the U.S., about 100 million barrels have been pulled from storage tanks since the end of Q1/17.

The November ’17 agreement between OPEC, Russia and other non-OPEC producers to extend production cuts is holding. A December Reuters survey found that OPEC members have so far exceeded adherence to the curbs. Declines in Venezuelan output helped OPEC maintain its target, but additional cuts by Gulf exporters indicate a strong commitment to the deal.

Oil prices continue to trend upward. West Texas Inter-mediate, the U.S. benchmark for light, sweet crude, aver-aged $55.26 per barrel in Q4/17, up 12.4 percent from $49.14 in Q4/16.

Expectations are for crude prices to continue rising. Though unlikely to soar above $100 per barrel, they’re also unlikely to plunge below $30. A Wall Street Journal survey of 15 investment banks suggests that Brent crude, the international oil-price gauge, will average $58 a barrel in



’18, up from an average of $54 in ’17. The banks expect WTI to average $54 a barrel in ’18, up from $51 in ’17.

Judging by their capital spending plans, U.S. producers are now more optimistic. The Federal Reserve Bank of Dallas Q4/17 survey of U.S. energy firms found 51 percent of re-spondents expect their firm’s capital spending to slightly increase in ’18 compared with ’17, 19 percent expect sig-nificant increases, and 23 percent expect spending to be near ’17 levels for ’18. Only seven percent expect to decrease spending in 2018 compared with 2017.

U.S. producers are benefiting from both higher prices and higher production. The EIA forecasts domestic production to average 10.3 million b/d in ’18, up from 9.3 million in ’17. That level would surpass the previous record of 9.6 million b/d set in ’70.

And energy stocks, which had fallen out of favor with the investing community, have begun to recover. The S&P Energy Index, which includes shares of 35 energy com-

panies, 32 with significant operations in Houston, has risen 42.7 percent since its January ’16 trough.

POST-HARVEY JOB GROWTH

Metro Houston created 15,700 jobs in November, according to the Texas Workforce Commission. That’s slightly above the 25-year average of 11,700 jobs for a November. When recession years are removed from the long-term average, November’s job growth is typical for the month. Over the 12 months ending November, the Houston region added 48,500 jobs, a 1.6 percent increase.

Retail trade recorded the strongest gains in November, adding 7,900 jobs. The increase is expected, given seasonal hiring for the holidays plus shopping related to the

replacement of goods damaged in Hurricane Harvey. Transportation, warehousing and utilities grew by 2,600 jobs, the largest November job gain for the sector since 1990, the earliest data are available. The rise of online retailers has increased demand for workers to package and deliver goods. Several distribution centers recently opened in Houston, including Amazon’s 855,000 square foot facility.

Professional and business services also experienced strong growth in November, adding 3,400 jobs. Architectural and engineering services accounted for 1,300 of that increase. An area of concern is in employment services, which lost 2,200 jobs. It is yet to be seen if that decline is due to contract workers being converted to full-time workers or contracts being terminated.

Health care posted a loss of 1,700 jobs, with ambulatory health care centers shedding 1,600 jobs. After an explosion of ambulatory care centers over the past few years, the sector is undergoing a period of contraction. Also, TWC estimated ambulatory care centers added 4,200 jobs in October, the strongest one-month gain on record, so November’s data may reflect an attempt to correct for an overestimation.

After the disruption from Hurricane Harvey, the region’s job market has rebounded. From September ’17 to November ’17, Houston gained 40,500 jobs, more than the 37,300 jobs added in the same period a year earlier. Some sectors still have not fully regained their footing. In particular, leisure and hospitality lost 11,400 jobs from September to November this year, when typically, the sector loses only 5,600 jobs during these months.

Houston’s unemployment rate was 4.3 percent in No-vember, up from 4.1 percent in October but down from 5.2 percent in November ’16. Unemployed persons must be actively seeking work to be counted as unemployed. Houston’s unemployment rate fell from 4.8 percent in September to 4.1 percent in October, the region’s largest September to October drop on record. The sharp drop in the rate in October and the subsequent uptick in November most likely reflect people whose job searches were interrupted in the wake of Harvey but were resumed a month later.

Patrick Jankowski and Jenny Philip contributed to this issue of Houston: The Economy at a Glance.

350

400

450

500

550

600

650

700

750

800

Source: Investing.com

S&P Energy Index




Aviation — The Houston Airport System handled 49.2 million passengers through November of ’17, down 1.2 percent from 49.9 million over the

same period in ’16. HAS handled 393,738 metric tons of air freight, up 3.9 percent from 379,054 metric tons handled over the same period in ’16.

Building Permits — For the 12 months ending November ’17, City of Houston building permits totaled $6.0 billion, down 12.4 percent from $6.8

billion in the 12 months ending November ’16. Residential permits were up slightly by 0.8 percent to $2.3 billion and commercial permits dropped 18.9 percent to $3.7 billion.

Business-Cycle Index —The Houston Business-Cycle Index ticked up in November, employment totals surpassed pre-hurricane levels, and

energy employment increased. Taken together, these data buttress a positive outlook for Houston.

Construction — Construction starts in the metro area totaled $16.83 billion through November ’17, up 10.1 percent from $15.28 billion over the

same period in ’16, as reported by Dodge Data and Analytics. All the growth occurred in the nonresidential sector, which rose 25.9 percent.

Crude Oil — West Texas Intermediate, the U.S. benchmark for light, sweet crude, traded be-tween $55.79 and $60.46 a barrel in December

’17, versus $49.85 to $54.01 per barrel in December ’16. The U.S. Energy Information Administration (EIA) forecasts WTI to average $52.77 next year.

Home Sales — Houston-area home sales totaled 7,270 in November ’17, up 4.9 percent from November ’16, according to the Houston Association of Realtors®. For the 12 months

ending November ’17, total property sales rose to 94,301, up 3.4 percent from the same span last year.

Inflation — Consumer prices in the Houston-Galveston-Brazoria metro area (Brazoria, Cham-bers, Fort Bend, Galveston, Harris, Liberty,

Montgomery, and Waller Counties) grew 2.3 percent from October ’16 to October ’17. Core inflation rose 1.6 percent.

Natural Gas — The spot price for Henry Hub natural gas averaged $2.81 per million BTUs in December, down 21.6 percent from the average

of $3.59 in December ’16. EIA forecasts the Henry Hub spot price to average $3.12 next year.

Purchasing Managers Index — The Houston Purchasing Managers Index, a short-term lead-ing indicator for regional production, registered

52.8 in November, up from 49.3 in October. Readings above 50 signal economic expansion in Houston over the next three to four months. Readings below 50 signal contraction. The region’s PMI finally pushed above 50 after three consecutive months pointing to contraction.

Rig Count — Baker Hughes reports 924 drilling rigs were working in the U.S. during the first week of January. That’s up 259 rigs, or 38.9

percent, from the 665 in early January last year. The rig count peaked at 958 in late July, then briefly declined, but has trended upward since early November.

Sales Tax Collections — City of Houston sales tax allocations were $56.2 million in December ’17, up significantly from $47.8 million in December

’16. For the full year, the city collected $638.7 million in sales and use taxes, up from $630.2 million in ’16.

Trade — Through October ’17, $157.3 billion in goods and commodities passed through the Houston/Galveston Customs District, up 18.6

percent from $132.7 billion over the comparable period in ’16. Exports totaled $88.0 billion, up 17.3 percent. Imports totaled $69.3 billion, up 20.2 percent

Vehicle Sales — Local auto dealers sold 30,670 vehicles in November ’17, a 35.3 percent jump from November ’16, according to TexAuto Facts,

published by InfoNation, Inc. of Sugar Land. Strong demand for replacement vehicles from Harvey continues to bolster

STAY UP TO DATE!

For past issues of Economy at a Glance, please click here.

If you are a not a member of the Greater Houston Partnership and would like to subscribe to Economy at a Glance, please click here and enter your email address. For information about joining the Greater Houston Part-nership, call Member Engagement at 713-844-3683.

The Key Economic Indicators table is updated whenever any data change — typically, six or so times per month. If you would like to receive these updates by e-mail, usually accompanied by commentary, please click here.

STAY UP TO DATE!


https://www.dallasfed.org/research/econdata/houcoini.aspx


http://www.houston.org/pdf/research/narratives/Oil_and_Gas/Oil_and_Gas.pdf




https://mycpa.cpa.state.tx.us/allocation/AllocHist








sales, though 12-month totals still lag previous years. Dealers sold 293,614 vehicles for the 12 months ending

November ’17, down 3.1 percent from the same period last year.





ENERGY

U.S. Active Rotary Rigs Dec '17 930 634 46.7 881 * 509 * 73.1

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Nov '17 56.64 45.66 24.0 50.25 * 42.34 * 18.7

Spot Natural Gas ($/MMBtu, Henry Hub) Nov '17 3.01 2.55 18.0 3.00 * 2.42 * 24.0


Houston Purchasing Managers Index Nov '17 52.8 50.5 4.6 51.7 * 46.3 * 11.7

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Nov '17 4,656,911 4,435,638 5.0 54,128,833 52,745,494 2.6

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Nov '17 1,158,225,000 912,987,000 26.9 16,827,828,000 15,282,096,000 10.1

Nonresidential Nov '17 528,305,000 283,111,000 86.6 8,524,241,000 6,768,432,000 25.9

Residential Nov '17 629,920,000 629,876,000 0.0 8,303,587,000 8,513,664,000 -2.5

Building Permits ($, City of Houston) Nov '17 642,387,340 392,251,070 63.8 5,569,237,147 6,211,158,376 -10.3

Nonresidential Nov '17 336,240,574 258,260,846 30.2 3,429,269,150 4,210,903,492 -18.6

New Nonresidential Nov '17 51,439,072 116,288,135 -55.8 1,271,475,514 1,685,042,023 -24.5

Nonresidential Additions/Alterations/Conversions Nov '17 284,801,502 141,972,711 100.6 2,157,793,636 2,525,861,469 -14.6

Residential Nov '17 306,146,766 133,990,224 128.5 2,139,967,997 2,000,254,884 7.0

New Residential Nov '17 243,778,971 95,800,710 154.5 1,682,929,928 1,537,063,498 9.5

Residential Additions/Alterations/Conversions Nov '17 62,367,795 38,189,514 63.3 457,038,069 463,191,386 -1.3


Property Sales Nov '17 7,270 7,145 1.7 86,452 83,679 3.3

Median Sales Price - SF Detached Nov '17 225,725 224,995 0.3 227,964 0 219,662 * 3.8

Active Listings Nov '17 36,318 36,151 0.5 39,700 * 35,894 * 10.6

EMPLOYMENT (Houston-The Woodlands-Sugar Land MSA)

Nonfarm Payroll Employment Nov '17 3,070,100 3,021,600 1.6 3,035,909 * 2,997,382 * 1.3

Goods Producing (Natural Resources/Mining/Const/Mfg) Nov '17 530,900 519,000 2.3 530,427 0 530,955 * -0.1

Service Providing Nov '17 2,539,200 2,502,600 1.5 2,505,482 0 2,466,427 * 1.6


Houston-Sugar Land-Baytown MSA Nov '17 4.3 5.2 5.2 * 5.2 *

Texas Nov '17 3.7 4.5 4.5 * 4.6 *

U.S. Nov '17 3.9 4.4 4.6 * 4.9 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Nov '17 3,465,226 3,524,280 -1.7 40,500,912 41,327,038 -2.0

Air Passengers (Houston Airport System) Nov '17 4,641,554 4,437,929 4.6 49,240,020 49,855,816 -1.2

Domestic Passengers Nov '17 3,795,614 3,577,243 6.1 39,032,495 39,245,282 -0.5

International Passengers Nov '17 845,940 860,686 -1.7 10,207,525 10,610,534 -3.8

Air Freight (metric tons) Nov '17 37,589 36,831 2.1 393,739 379,054 3.9

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Nov '17 30,670 22,660 35.3 269,548 275,395 -2.1

Cars Nov '17 9,579 7,315 31.0 90,304 99,632 -9.4

Trucks, SUVs and Commercials Nov '17 21,091 15,345 37.4 179,244 175,763 2.0

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) Q4/16 32,775 33,876 -3.3 124,078 118,639 4.6


Houston-Galveston-Brazoria CMSA Nov '17 223.213 218.2 2.3 220.564 * 216.200 * 2.0

United States Nov '17 246.669 241.353 2.2 244.992 * 239.878 * 2.1


Occupancy (%) Q1/17 63.7 65.8 61.8 * 67.1 *

Average Room Rate ($) Q1/17 116.12 109.83 5.7 106.06 * 108.16 * -1.9

Revenue Per Available Room ($) Q1/17 74.00 72.28 2.4 65.79 * 72.62 * -9.4

Aviation City of Houston Department of Aviation

Bui lding Construction Contracts Dodge Data & Analytics

Car and Truck Sa les TexAuto Facts Report , InfoNation, Inc., Sugar Land TX

Ci ty of Houston Bui lding Permits Publ ic Works & Engineering Planning & Development, Ci ty of Houston

Consumer Price Index U.S. Bureau of Labor Statis tics

Electrici ty CenterPoint Energy

Employment, Unemployment Texas Workforce Commiss ion

Hotels CBRE

Houston Purchas ing Managers Index Insti tute for Supply Management-Houston

MLS Data Houston Association of Realtors

Port Shipments Port of Houston Authori ty

Reta i l Sa les Texas Comptrol ler’s Office

Rig Count Baker Hughes Incorporated



HOUSTON ECONOMIC INDICATORS

SOURCES



Change from % Change from

17-Nov 17-Oct 16-Nov 17-Oct 16-Nov 17-Oct 16-Nov


Total Private 2,647.3 2,634.1 2,606.6 13.2 40.7 0.5 1.6

Goods Producing 530.9 527.9 519.0 3.0 11.9 0.6 2.3






Construction 213.4 212.4 215.4 1.0 -2.0 0.5 -0.9

Manufacturing 230.9 229.2 217.9 1.7 13.0 0.7 6.0


Nondurable Goods Manufacturing 83.2 82.8 83.4 0.4 -0.2 0.5 -0.2

Wholesale Trade 159.9 160.4 163.4 -0.5 -3.5 -0.3 -2.1

Retail Trade 316.4 308.5 314.3 7.9 2.1 2.6 0.7

Transportation, Warehousing and Utilities 141.8 139.2 140.6 2.6 1.2 1.9 0.9

Utilities 15.9 16.0 16.2 -0.1 -0.3 -0.6 -1.9

Air Transportation 21.4 21.6 21.6 -0.2 -0.2 -0.9 -0.9


Pipeline Transportation 11.0 10.9 10.9 0.1 0.1 0.9 0.9

Information 32.0 31.4 33.1 0.6 -1.1 1.9 -3.3

Telecommunications 13.6 13.5 14.1 0.1 -0.5 0.7 -3.5




Professional, Scientific & Technical Services 222.8 219.4 216.5 3.4 6.3 1.5 2.9

Legal Services 25.2 25.2 24.8 0.0 0.4 0.0 1.6

Accounting, Tax Preparation, Bookkeeping 25.4 25.3 25.1 0.1 0.3 0.4 1.2



Admin & Support/Waste Mgt & Remediation 227.1 227.2 219.9 -0.1 7.2 0.0 3.3


Employment Services 90.4 92.6 81.7 -2.2 8.7 -2.4 10.6


Health Care & Social Assistance 333.4 335.1 326.1 -1.7 7.3 -0.5 2.2

Arts, Entertainment & Recreation 32.6 33.7 32.7 -1.1 -0.1 -3.3 -0.3

Accommodation & Food Services 283.1 283.9 281.7 -0.8 1.4 -0.3 0.5

Other Services 107.9 108.6 107.2 -0.7 0.7 -0.6 0.7

Government 422.8 420.3 415.0 2.5 7.8 0.6 1.9




Local Government 308.2 306.1 301.2 2.1 7.0 0.7 2.3

Local Government Educational Services 218.6 216.6 212.7 2.0 5.9 0.9 2.8


HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000)

March 2017 ©2017, Greater Houston Partnership Page 1

A Clearer Picture Emerges — Metro Houston created 18,700 jobs in ’16, according to the

benchmark revisions issued in early March by the Texas Workforce Commission (TWC).1

That’s up from TWC’s initial estimate of 14,800 jobs for the year. The Partnership’s forecast

called for Houston to create 21,900 jobs in ’16. The Partnership’s forecast was off by 3,200

jobs, or the equivalent of 0.1 percent of the more than 3.0 million jobs in the region.

Houston had a brief spell—June, July and August of last year—when job growth turned slightly

negative. The region lost 3,800 jobs in the 12 months ending August ’16, the lowest point of

the downturn. Job growth has trended upward since.

The revised employment data show that the worst is over. Other indicators support that point.

The Houston Purchasing Managers Index registered 54.2 in February, signaling economic

expansion in metro Houston for the fifth consecutive month.

February home sales set a record for the month. The 12-month moving sales total is at an

all-time high, and foreclosures are near their lowest point since ’09, when the Partnership

first began tracking the data.

The North American rig count has risen 90 percent over the past 10 months, from a nadir

of 404 in May ’16 to 768 the first week of March ’17.

1 Metro Houston includes Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller Counties.

-150

-100

-50

0

50

100

150

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

12

-Mo

nth

Ch

ange

(0

00

)

No

nfa

rm P

ayro

ll Em

plo

ymen

t (0

00

,00

0)

Source: Texas Workforce Commission

Metro Houston Payroll Employment12-Month Change Total Employment

A publication of the Greater Houston Partnership Volume 26 Number 3 — March 2017


Houston finished the year with 3,036,000 jobs, the highest level of employment in Hous-

ton’s history.

Why Revise the Data? — Each month, when TWC reports employment data, the estimates

come from a sampling of businesses known as the Current Employment Survey (CES). Like

all surveys, the CES is subject to error. Throughout the year, TWC gathers data from records

based on unemployment insurance tax reports. TWC uses these data to revise its job estimates

and issues its “benchmark revisions,” which contain a more accurate depiction of employment

trends over the past 21 months. Trends evident in this year’s revisions:

Energy job losses in the downturn proved to be worse than initially reported.2 From De-

cember ’14 to December ’16, the sector cut 81,100 jobs, which is 13,700 more than first

reported. The total loss equates to one in every four jobs in Houston’s energy sector. Two-

thirds of those losses occurred in ’15, the remainder in ’16.

Oilfield services employment appears to have stabilized, adding 1,100 jobs since August

’16, but exploration still struggles, cutting 3,000 jobs over the same period.

Construction employment peaked at 222,600 in October ’15. Contractors have cut 14,300

jobs since then. The Partnership’s forecast for ’17 calls for construction to lose as many as

16,000 jobs this year.

The recent boom in chemical construction has begun to pay dividends. As those plants start

up, they have begun to add jobs—1,600 since December ’14. These jobs have a high mul-

tiplier, each supporting five to eight additional jobs in the community.

Wholesale trade, trucking and employment services (sectors closely tied to energy) lost

9,100 jobs in the downturn.

Real estate and finance have combined for an additional 6,000 jobs over the past two years.

The bulk of those jobs were in finance.

If not for the loss of nearly 11,000 engineering jobs, professional and business services

would have recorded job gains during the downturn. Employment in this field is down 2,700

jobs since December ’14.

Job growth in retail, health care, and accommodation and food services was less robust than

previously thought: 76,800 jobs in the initial reports, 55,700 jobs in the revisions.

Hiring in employment services (i.e., contract workers) has trended upward since January

’16. Growth in employment services tends to lead growth in other sectors. As the economy

improves, employers often bring on contract workers prior to hiring permanent staff.

The government sector added 22,400 employees over the past two years, three-fourths of

them at school districts and state-funded colleges and universities.

2 As defined here, the energy sector includes exploration and production, oilfield services, oil field equipment manufacturing, fab-

ricated metal products and engineering.


The first year of the oil price collapse proved to be worse than originally thought. TWC

revised job growth downward, from 15,200 initially to 200 jobs in the benchmarks. Given

that the energy sector cut more than 50,000 jobs that year, and that wholesale trade, trucking

and employment services cut another 9,000, the fact that Houston finished the year without

a net job loss is remarkable.

The year finished with the local unemployment rate at 5.3 percent, up from 4.6 percent in

December ’15. The rate is not seasonally adjusted.

Going Global — On May 22, the Partner-

ship will host its third annual Houston’s

Global Economy, an event that looks at the

role trade, foreign investment, and the re-

gion’s international community plays in the

region’s economy.

Keynoting the event will be Dr. Stuart Mackintosh, Executive Director of the Group of Thirty.

The Group of Thirty is an international think tank composed of senior figures from central

banking, finance and academia. The think tank’s membership includes Paul Volcker, Ben

Bernanke, Mario Draghi and Paul Krugman. Mackintosh will present the global economic

outlook. A panel of local business leaders will discuss how they are positioning their firms to

prosper in the global economy. The Partnership will present its latest research on Houston’s

ties to the global economy. Additional details about the event and how to purchase tickets

will be posted at the Partnership’s website in April.

Oil Patch Update — The earnings season is about over and most publicly traded oil and gas

firms have released their results for ’16. It should surprise no one that last year was a difficult

one for the industry. Nineteen of the two dozen energy firms listed in the table below reported

losses for the year. The firms included in the table were chosen because they are representative

of Houston’s upstream energy industry.

SELECTED HOUSTON ENERGY FIRMS, EARNINGS PER SHARE, FULLY DILUTED, CALENDAR YEARS

Firm Earnings Per Share - $



’16 ’15 ’16 ’15 ’16 ’15

Anadarko -5.90 -13.18 FMC 1.56 3.66 Oceaneering 0.25 2.34

Apache -3.71 -27.4 Halliburton -6.69 -0.79 Oil States -0.92 0.56

Baker Hughes -6.31 -4.49 Hess -4.94 -3.93 Schlumberger -1.24 1.63

BP 0.60 -35.39 Marathon -0.85 -1.28 Shell 0.58 0.31

Chevron -0.27 -2.45 Nabors -3.64 -1.29 Southwestern -6.32 -12.25

ConocoPhillips -2.66 -1.40 Newfield Exp -6.36 -21.18 Superior Energy -5.85 -12.33

EOG -1.98 -8.29 NOV -6.41 -1.99 Tesco -2.73 -3.43

ExxonMobil 1.88 3.85 Occidental -0.75 -10.23 Weatherford -3.82 -2.55

Source: Company press releases


The industry responded by cutting jobs. Outplacement firm Challenger Gray & Christmas es-

timates the industry has shed more than 300,000 jobs worldwide during the downturn. In Hou-

ston, the industry cut more than 80,000 jobs. ’17 promises to be a better year for the industry.

The U.S. Energy Information Administration (EIA) expects West Texas Intermediate

(WTI), the U.S. benchmark for light, sweet crude, to average $53.49 in ’17. Last year, WTI

averaged $43.29 a barrel.

Oil consumption continues to grow. The International Energy Agency (IEA) estimates

crude demand grew 1.6 million barrels per day (MMbbl/d) in ’16 and forecasts consumption

to grow 1.4 MMbbl/d in ’17.

The Oil & Gas Journal projects that U.S. upstream spending will surge 37.8 percent this

year to $120 billion. Simmons & Company expects upstream capital spending to increase

as much as 60 percent this year.

Many oil field services firms, hoping to recapture concessions made during the downturn,

expect to raise prices for the first time in several years. Various media and analysts reports

suggest that costs, depending on the service and location, will rise 10 to 20 percent this year.

The North American rig count continues to rise. The fleet stood at 768 the first week of

March, up from 489 the same week in March ’16. The industry has added 110 rigs since

January 1.

The agreement by the Organization of the Petroleum Exporting Countries and several large

producers to cut output by about 1.8 MMbbl/d seems to be holding. The British consulting

firm Energy Aspects estimates OPEC compliance approaches 97 percent.

The recovery remains fragile, however.

An EIA report in early March that U.S. crude stockpiles have risen to record levels sent the

spot price for WTI below $50/barrel for the first time since November ’16.

The OPEC production cuts are holding primarily because Saudi Arabia has reduced its out-

put by more than was stipulated in the agreement. The agreement lasts only through June

30 of this year, at which time the cartel will assess its effectiveness and decide whether to

extend the cuts. Most analysts assume they will.

U.S. production continues to grow, offsetting some of OPEC’s production cuts. U.S. crude

output averaged an estimated 8.9 MMbbl/d in ’16, and EIA forecasts U.S. output to average

9.2 MMbbl/d in ’17 and 9.7 MMbbl/d in ’18.

Ironically, the industry has begun to discuss the possibility that global oil supplies will struggle

to keep pace with demand after ’20, risking a spike in prices, unless major new projects are

approved. Oil demand will rise in the next five years, passing the symbolic 100 MMbbl/d

threshold in ’19 and reaching about 104 MMbbl/d by ’22, the IEA notes. The agency estimates

the world consumed 97.3 MMbbl/d in Q4/16.


But low oil prices have forced many firms to cancel plans for large-scale investments around

the world. Energy Aspects estimates more than $300 billion in projects have been postponed

or cancelled, removing six MMbbl/d in potential supply. Production from U.S. shale will be

able to fill part of the gap, but significant investment in conventional resources is needed as

well. Without that investment, the world could face another crude shortage in five years, caus-

ing prices to spike and the boom-bust cycle to start again.

Location, Location, Timing — Houston’s housing market continues to perform well despite

the weak economy. Brokers closed on 6,111 homes in February ’17. That’s the best February

on record. For the 12 months ending February ’17, brokers closed on 91,564 homes. That’s the

best 12-month period on record.

Houston, however, is slowly shifting from a seller’s to a buyer’s market. Home prices rose

only 4.0 percent over the past 12 months.3 That rate compares with double-digit price increases

at the height of the boom. An alternate measure, the Freddie Mac House Price Index, suggests

that home values have been flat since mid-year ’16. John Burns Consulting forecasts home

values to slip 0.4 percent this year.

3 Reflects the median price for a single-family home. To account for seasonal influences, the calculation is based on the median

price averaged over the previous 12 months.

*Former Soviet Union Source: Energy Aspects


The number of homes listed for

sale in the Houston Association

of Realtors® Multiple Listing

Service database in February

was up 12 percent compared to

February last year.4

Single-family inventory was

3.5 months in February, up

from the record low of 2.5

months in January ’15, the peak

of the sellers’ market.5 Conven-

tional wisdom holds that six

months of inventory represents

a balanced market. For perspective, housing inventory across the U.S. stands at a 3.6-month

supply according to the National Association of Realtors.

The time it takes for the average home to sell continues to creep up, from 45 days during

summer ’15, the peak of the buying frenzy, to 66 days in February.

MetroStudy forecasts Houston builders will start 26,500 single-family homes this year, down

about 2,500 from the 25-year average. Though starts will dip, Houston should still rank second

in total housing starts. Dallas-Fort Worth will likely rank first.

We’re Different — Houstonians are more likely to live in larger homes and have lower hous-

ing costs than their counterparts in competing metros, but they also tend be somewhat less

satisfied with their neighborhood, perceive their neighbors as having more petty crime, rate

local transit services poorly, and be more concerned about potential natural disasters.

That’s according to the U.S. Census Bureau’s 2015 American Housing Survey, the agency’s

biennial review of the nation’s housing characteristics. The survey gathers data on housing

quality, neighborhood characteristics, ownership and rentals costs, moving trends and food

insecurities. The bureau conducts the survey to provide a better understanding of housing con-

ditions to policy makers, academics and economists. The survey looks at 15 of the nation’s

largest metro areas plus a handful of smaller metros.

Details on how Houston compares with several peer metros and across several categories ap-

pear below. The full survey can be found here.

4 Again, based on a 12-month average. 5 Reflects he number of months it will take to deplete current inventory for the single-family homes market based on the prior 12

months’ sales activity.

40

50

60

70

80

90

100

'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18H

om

e Sa

les

(00

0)

Source: Houston Association of Realtors

Houston-Area Home Sales12-Month Total

https://www.census.gov/newsroom/press-releases/2017/cb17-tps01.html


HOUSING CHARACTERISTICS, HOUSTON VS. SELECTED LARGE METROS

Characteristics Houston Atlanta Boston Chicago Dallas Los

Angeles Miami

Phila-delphia

Phoenix Seattle

Total Units (000s) 2,501.9 2,239.2 1,917.3 3,812.1 2,686.7 4,585.1 2,508.2 2,455.4 1,860.0 1,530.0

Median Home Size (sq ft) 1,700 1,800 1,500 1,462 1,550 1,300 1,300 1,540 1,600 1,500

Lot Size

% Lots 1/8 – 1/4 acre 55.7 18.4 26.5 43.7 59.3 59.5 54.4 19.9 60.2 43.7

% Lots 1/4 – 1/2 acre 14.8 31.8 23.6 19.2 15.8 10.8 12.7 17.5 12.1 17.7

% 1/2 – 1 acre 4.4 18.3 16.6 5.1 4.1 2.1 3.1 9.7 2.7 6.3

Median Housing Costs

Monthly Total Costs - $ 984 1,026 1,402 1,039 1,004 1,370 1,133 1,072 1,013 1,307

Median As % of HH Income 20 20 21 21 20 26 27 20 20 21

Monthly Mortgage - $ 865 854 1,362 935 825 1,507 933 1,000 890 1,262

Monthly Rent 795 820 1,100 863 800 1,200 1,050 850 810 1,100

Opinion of Neighborhood (% agreeing with statement)

Has Good schools 81.1 78.1 83.7 79.6 82.1 75.8 78.0 76.0 76.4 77.9

Has Lots of Petty Crime 24.2 13.9 14.1 17.8 16.1 24.6 18.8 15.6 19.6 21.5

Has Good Transit Service 34.6 28.0 64.8 64.2 35.2 70.6 56.7 62.4 47.0 61.5

High Risk Natural Disaster 18.1 2.6 4.4 8.9 4.6 8.3 19.0 4.8 5.4 4.0

Overall Opinion of Present Neighborhood (1 = worst, 10 = best)

% Rating 10 23.4 30.9 32.8 25.7 24.1 23.2 30.2 28.1 29.4 20.7

% Rating 7 - 9 54.8 53.4 52.1 57.8 56.9 55.9 52.3 53.4 53.5 60.5

% Rating 4 - 6 14.9 10.9 10.3 10.7 12.9 14.8 12.5 4.2 12.3 12.5

% Rating 1 - 3 3.0 1.9 1.2 2.7 2.3 2.1 2.0 2.4 1.8 1.4

Source: U.S. Census Bureau’s 2015 American Housing Survey Note: Some percentages do not add up due to nonrespondents.

Back in the Top 10 — Houston exhibited strong economic growth in the aftermath of the

Great Recession, according to a new report by the Brookings Institution. The study, released

by the Brookings Metropolitan Policy Program, measured economic performance in three cat-

egories—growth, prosperity and inclusion—between ’10 and ’15 in the largest 100 metropol-

itan areas. Among these, Houston ranked fifth in growth, second in prosperity and 64th in

inclusion. Each category is measured by the percent change in the following indicators:

Between ’10 and ’15, Hou-

ston’s gross metropolitan

product (GMP) increased

28.5 percent, the second-

highest rate in the country. The job count grew 16.7 percent and the number of jobs at young

firms, suggesting strong entrepreneurial impact, increased by 11.3 percent.

Houston ranked among the top 10 metros across each indicator in the prosperity category,

which captures changes in wealth and income. Houston’s productivity increased 10.1 percent,

the standard of living, 14.9 percent, and average annual wage, 8.4 percent.

Growth Prosperity Inclusion

Gross Metropolitan Product Productivity Median Wage

Number of Jobs Average Annual Wage Relative Poverty Rate

Jobs at Young Firms Standard of Living Employment Rate


The only category where Houston failed to rank among the top 10 was under inclusion, where

it ranked 64th. Inclusion indicators measure how the benefits of growth and prosperity are

distributed among individuals. While Houston’s employment rate increased by 3.1 percent and

median wages increased by 7.5 percent, the relative poverty rate also increased by 5.3 per-

cent—the fifth worst rate among all metros.

The good news is that the employment rate in-

creased for all racial/ethnic groups and for

those in all educational attainment levels (e.g.,

high school diploma only, some college/asso-

ciate degree or bachelor’s degree or higher).

The bad news is that the relative poverty rate

increased for all racial/ethnic groups except

Asians, and for those whose highest level of ed-

ucation is a high school diploma, some college,

or an associate degree.

Overall, Brookings found that metros with a fo-

cus on advanced industries and research/tech-

nology, such as energy, tended to fare better than others. And even though Houston showed

strong performance in GMP, job growth, wage increases, productivity and employment rates,

some groups were left behind.

Patrick Jankowski, Jenny Philip, and Nadia Valliani contributed to the March issue of Houston: The Economy at a Glance.

BROOKINGS INSTITUTION GROWTH RANKINGS

Metro Area Rankings

Growth Prosperity Inclusion Houston 5 2 64 Dallas 11 15 55 Atlanta 20 59 40 Miami 21 71 23 Boston 36 29 57 New York 41 65 67 Chicago 49 41 41 Los Angeles 52 25 36 Washington, DC 65 93 86 Philadelphia 75 54 74 Source: Brookings, Metro Monitor

Follow me on Twitter @PNJankowski

https://twitter.com/PNJankowski





Aviation — The Houston Airport System handled 4.33 million passengers in January ’17,

down 2.4 percent from the 4.44 million handled in January ’16. Domestic passengers totaled

3.37 million, down 2.0 percent from 3.44 million. International passengers totaled 965,114,

down 3.7 percent from 1.0 million.

Building Permits — City of Houston building permits totaled $637.9 million in January ’17,

up 59.4 percent from $400.1 million in January ’16, according to the latest data released by

the City’s Department of Public Works & Engineering Planning & Development Services.

The reading marks the first over-the-year increase since June ’16. For the 12 months ending

January ’17, city building permits totaled $6.9 billion, down 14.8 percent from $8.0 billion in

the 12 months ending January ’16..

Construction Starts — Construction starts in the Houston region totaled $1.274 billion in

January, a 26.1 percent drop from $1.724 billion in January of ’16, according to the latest

report from Dodge Data & Analytics. Residential starts rose 2.8 percent while nonresidential

starts fell 44.7 percent.

Inflation — The cost of consumer goods and services as measured by the Consumer Price

Index for All Urban Consumers (CPI-U) rose 2.5 percent nationwide from January ’16 to

January ’17, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the

volatile food and energy categories) increased 2.3 percent since January ’16.

Purchasing Managers Index — The Houston Purchasing Managers Index (PMI), a short-

term leading indicator for regional production, registered 54.2 in February, signaling eco-

nomic expansion in metro Houston for the fifth consecutive month, according to the latest

report from the Institute for Supply Management-Houston (ISM-Houston). The February read-

ing is unchanged from January.

Sales Tax Collections — City of Houston sales tax collections totaled $162.6 million through

the first quarter of this year, down 1.8 percent from $165.6 million from the same period last

year.

Vehicle Sales — Houston-area auto dealers sold 20,889 vehicles in January, a slight increase

from 20,825 vehicles in January ’16, according to TexAuto Facts, published by InfoNation,

Inc. of Sugar Land. The average retail sales price per vehicle in Houston in January was

$36,719, up 1.0 percent from $36,357 in January of last year. Over the previous 12 months

(February ’16 through January ’17), local dealers sold 299,619 vehicles, down 20.4 percent

from the 376,300 sold over the prior 12 months.

http://www.fly2houston.com/newsroom/media-kit/traffic-and-statistics/





https://mycpa.cpa.state.tx.us/allocation/AllocHist



STAY UP TO DATE!

To access past issues of Economy at a Glance, please click here.

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Economy at a Glance, please click here and enter your email address. For information about

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The Key Economic Indicators table is updated whenever any data change — typically, six or so

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HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000) Change from % Change from

Dec '16 Nov '16 Dec '15 Nov '16 Dec '15 Nov '16 Dec '15


Total Private 2,620.9 2,606.6 2,617.0 14.3 3.9 0.5 0.1

Goods Producing 523.3 519.0 547.9 4.3 -24.6 0.8 -4.5



Mining and Logging 86.3 85.7 96.7 0.6 -10.4 0.7 -10.8 Oil & Gas Extraction 47.7 48.0 54.6 -0.3 -6.9 -0.6 -12.6 Support Activities for Mining 36.0 35.9 40.8 0.1 -4.8 0.3 -11.8

Construction 214.9 215.4 217.4 -0.5 -2.5 -0.2 -1.1

Manufacturing 222.1 217.9 233.8 4.2 -11.7 1.9 -5.0 Durable Goods Manufacturing 137.2 134.5 151.9 2.7 -14.7 2.0 -9.7 Nondurable Goods Manufacturing 84.9 83.4 81.9 1.5 3.0 1.8 3.7

Wholesale Trade 164.5 163.4 166.6 1.1 -2.1 0.7 -1.3

Retail Trade 318.2 314.3 315.3 3.9 2.9 1.2 0.9

Transportation, Warehousing and Utilities 144.6 140.6 144.4 4.0 0.2 2.8 0.1 Utilities 16.1 16.2 16.3 -0.1 -0.2 -0.6 -1.2 Air Transportation 21.6 21.6 21.6 0.0 0.0 0.0 0.0 Truck Transportation 24.6 24.7 25.0 -0.1 -0.4 -0.4 -1.6 Pipeline Transportation 10.9 10.9 10.7 0.0 0.2 0.0 1.9

Information 33.4 33.1 32.1 0.3 1.3 0.9 4.0 Telecommunications 14.1 14.1 14.3 0.0 -0.2 0.0 -1.4

Finance & Insurance 100.3 100.0 97.6 0.3 2.7 0.3 2.8


Professional & Business Services 472.5 473.0 473.0 -0.5 -0.5 -0.1 -0.1 Professional, Scientific & Technical Services 217.0 216.5 220.9 0.5 -3.9 0.2 -1.8 Legal Services 25.0 24.8 24.9 0.2 0.1 0.8 0.4


Architectural, Engineering & Related Services 65.2 65.0 70.4 0.2 -5.2 0.3 -7.4


Admin & Support/Waste Mgt & Remediation 218.3 219.9 214.1 -1.6 4.2 -0.7 2.0 Administrative & Support Services 206.4 208.0 202.5 -1.6 3.9 -0.8 1.9


Educational Services 59.4 59.6 57.1 -0.2 2.3 -0.3 4.0




Other Services 107.2 107.2 107.1 0.0 0.1 0.0 0.1

Government 415.1 415.0 400.3 0.1 14.8 0.0 3.7 Federal Government 29.4 28.6 28.3 0.8 1.1 2.8 3.9 State Government 85.3 85.2 80.9 0.1 4.4 0.1 5.4 State Government Educational Services 50.5 50.6 47.2 -0.1 3.3 -0.2 7.0

Local Government 300.4 301.2 291.1 -0.8 9.3 -0.3 3.2 Local Government Educational Services 212.8 212.7 205.0 0.1 7.8 0.0 3.8



Sources:

Aviation City of Houston Department of Aviation Building Construction Contracts Dodge Data & Analytics Car and Truck Sales TexAuto Facts Report, InfoNation, Inc., Sugar Land TX City of Houston Building Permits Public Works & Engineering Planning & Development, City of Houston Consumer Price Index U.S. Bureau of Labor Statistics Electricity CenterPoint Energy Employment, Unemployment Texas Workforce Commission Hotels CBRE

Houston Purchasing Managers Index Institute for Supply Management-Houston MLS Data Houston Association of Realtors Port Shipments Port of Houston Authority Retail Sales Texas Comptroller’s Office Rig Count Baker Hughes Incorporated

Houston Economic Indicators

A Service of the Greater Houston Partnership

Most Year % Most Year %Month Recent Earlier Change Recent Earlier Change

ENERGY

U.S. Active Rotary Rigs Feb '17 744 532 39.8 713 * 600 * 18.8Spot Crude Oil Price ($/bbl, West Texas Intermediate) Jan '17 52.49 32.64 60.8 52.49 * 32.64 * 60.8Spot Natural Gas ($/MMBtu, Henry Hub) Jan '17 3.32 2.12 56.6 3.32 * 2.12 * 56.6


Houston Purchasing Managers Index Feb '17 54.2 44.4 22.1 54.2 * 45.1 * 20.2Nonresidential Electric Current Sales (Mwh, CNP Service Area) Jan '17 4,620,455 4,416,725 4.6 4,620,455 4,416,725 4.6

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Jan '17 1,274,751,000 1,724,123,000 -26.1 1,274,751,000 1,724,123,000 -26.1Nonresidential Jan '17 580,082,000 1,048,372,000 -44.7 580,082,000 1,048,372,000 -44.7Residential Jan '17 694,669,000 675,751,000 2.8 694,669,000 675,751,000 2.8Building Permits ($, City of Houston) Jan '17 637,896,584 400,092,629 59.4 637,896,584 400,092,629 59.4Nonresidential Jan '17 452,090,627 259,425,039 74.3 452,090,627 259,425,039 74.3New Nonresidential Jan '17 187,679,619 100,643,691 86.5 187,679,619 100,643,691 86.5

Nonresidential Additions/Alterations/Conversions Jan '17 264,411,008 158,781,348 66.5 264,411,008 158,781,348 66.5

Residential Jan '17 185,805,957 140,667,590 32.1 185,805,957 140,667,590 32.1New Residential Jan '17 164,404,366 112,232,345 46.5 164,404,366 112,232,345 46.5

Residential Additions/Alterations/Conversions Jan '17 21,401,591 28,435,245 -24.7 21,401,591 28,435,245 -24.7

Multiple Listing Service (MLS) ActivityProperty Sales Feb '17 6,111 5,707 7.1 11,127 10,660 4.4Median Sales Price - SF Detached Feb '17 220,000 204,990 7.3 215,000 0 203,495 * 5.7Active Listings Feb '17 35,685 33,159 7.6 35,322 * 32,710 * 8.0

EMPLOYMENT (Houston-Sugar Land-Baytown MSA)

Nonfarm Payroll Employment Dec '16 3,036,000 3,017,300 0.6 3,000,600 * 2,995,900 * 0.2Goods Producing (Natural Resources/Mining/Const/Mfg) Dec '16 523,300 547,900 -4.5 530,317 0 566,883 * -6.5Service Providing Dec '16 2,512,700 2,469,400 1.8 2,470,283 0 2,429,017 * 1.7Unemployment Rate (%) - Not Seasonally AdjustedHouston-Sugar Land-Baytown MSA Dec '16 5.3 4.6 5.2 * 4.6 *Texas Dec '16 4.5 4.2 4.6 * 4.5 *U.S. Dec '16 4.5 4.8 4.9 * 5.3 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Jan '17 3,579,186 3,504,028 2.1 3,579,186 3,504,028 2.1Air Passengers (Houston Airport System) Jan '17 4,333,025 4,438,219 -2.4 4,333,025 4,438,219 -2.4Domestic Passengers Jan '17 3,367,911 3,435,688 -2.0 3,367,911 3,435,688 -2.0International Passengers Jan '17 965,114 1,002,531 -3.7 965,114 1,002,531 -3.7Air Freight (metric tons) Jan '17 34,987 31,852 9.8 34,987 31,852 9.8

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Jan '17 27,568 27,410 0.6 27,568 27,410 0.6Cars Jan '17 9,426 9,887 -4.7 9,426 9,887 -4.7Trucks, SUVs and Commercials Jan '17 18,142 17,523 3.5 18,142 17,523 3.5Total Retail Sales ($000,000, Houston MSA, NAICS Basis) Q1/16 25,146 25,980 -3.2 25,146 25,980 -3.2Consumer Price Index for All Urban Consumers ('82-'84=100)Houston-Galveston-Brazoria CMSA Jan '16 217.753 212.936 2.3 216.443 * 213.097 * 1.6United States Jan '16 242.839 236.916 2.5 242.839 * 236.916 * 2.5Hotel Performance (Houston MSA)Occupancy (%) Q4/16 57.2 64.3 62.3 * 68.6 *Average Room Rate ($) Q4/16 99.05 106.37 -6.9 104.45 * 108.51 * -3.7Revenue Per Available Room ($) Q4/16 56.67 68.41 -17.2 65.32 * 74.47 * -12.3

YEAR-TO-DATE TOTAL orYTD AVERAGE*MONTHLY DATA


3

4

5

6

7

8

9

10

11

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

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rce

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Civ

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Lab

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Unemployment Rate - Houston, Texas and U.S.

Houston Texas U.S.

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

420

460

500

540

580

620

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Serv

ice

-Pro

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Job

s (0

00

s)

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s-P

rod

uci

ng

Job

s (0

00

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Goods-Producing and Service-Providing EmploymentHouston MSA

Goods-Producing Jobs Service-Providing Jobs

September 2016 ©2016, Greater Houston Partnership Page 1

Millennials Take the Lead — Millennials came of age this year. The youngest will vote in

their first presidential election, the oldest will mark a dozen or more years in the workforce.

In Houston, Millennials now outnumber Baby Boomers; Generation X and the Greatest Gen-

eration. Only Generation Next outnumbers Millennials, which makes sense considering Gen-

eration Next is composed of their children and the children of GenXers.

Houston’s Millennial population

will continue to grow. For dec-

ades, the region has attracted col-

lege grads and young adults seek-

ing to launch careers or start a

new business, though the pace of

inmigration may slow with the

weak economy. And young im-

migrants will continue to move here from abroad, lured by opportunities not available in their

home countries. Millennials and GenXers will have more babies; Generation Next will con-

tinue to grow. But Houston’s Boomer population will shrink, the flow of older migrants into

the region not enough to offset the losses due to death or the outmigration to communities

favored by retirees, such as Kerrville, Wimberley, and Georgetown.

Because they constitute the second largest share of Houston’s population, Millennials have an

outsized influence on Houston’s economy, politics and cultural scene, just as the Baby Boom-

ers did 30 years ago. But the two genera-

tions followed different paths before as-

suming the role. Boomers came of age with

the Vietnam War, the scandal of Wa-

tergate, and the success of the Apollo pro-

gram. Millennials came of age with the

9/11 attacks, the devastation of the Great

Recession, and the birth of the Internet.

The fight for civil and women’s rights

dominated Boomers’ early adulthood.

Global climate change and LGBT issues

now hold Millennials’ attention. When

Boomers entered the workforce, the U.S.

economy grew four to six percent a year.

POPULATION ESTIMATES – METRO HOUSTON – ’14 Generation Year of Birth Current Ages Population

Generation Next ’99 –’16 0-17 1,774,900

Millennials ’82 – ’98 18-34 1,615,100

Generation X ’67 – ’81 35-49 1,374,000

Boomers ’46 – ’66 50-70 1,446,400

Greatest Generation Prior to ’45 70+ 376,900

Source: U.S. Census Bureau, 2014 American Community Survey 1-Year PUMS

A publication of the Greater Houston Partnership Volume 25 Number 9 — September 2016

Generation Next

26.9%

Millennials24.5%

Boomers22.0%

Greatest Generation

5.7%

Generation X20.9%

Each Generation's Share of Metro Houston Population


HOUSTON—THE ECONOMY AT A GLANCE


Today, the nation struggles to grow at two percent. Inflation topped 14 percent early in the

Boomers’ careers. Millennials have never known more than very modest inflation. Many

Boomers grew up with stay-at-home moms; many Millennials were raised in single-parent

households.

The Pew Research Center has studied how Millennial viewpoints differ from those of other

generations, especially those of Baby Boomers. Pew has found that:

50 percent of Millennials identify themselves as political independents; only 37 percent of

Boomers classify themselves as such.

29 percent of Millennials don’t affiliate with any religion; 16 percent of Boomers feel the

same.

19 percent of Millennials believe people can generally be trusted; 40 percent of Boomers

feel they can.

The Generation Gap — To a large extent, Boomers pull the region’s profile one way, the

Millennials another, with Houston’s overall profile falling somewhere in the middle. For ex-

ample, among Boomers, whites outnumber all other racial and ethnic groups. Among Millen-

nials, Hispanics are the largest group. As a result, the Anglo and Hispanic populations are

balanced today, but as the Boomer population declines, Hispanics will represent a larger share

of the metro Houston population.

Boomers tend to be better educated than Millennials, with a higher share of the Boomer popu-

lation holding associate’s, bachelor’s or graduate degrees. This difference is likely due to the

trailing edge of the Millennial generation still being enrolled in school. Most Boomers com-

pleted their education decades ago. It may also result from the larger number of Hispanics,

who tend to have lower levels of educational attainment, in the Millennial population. Nearly

one-third of Millennials have some college, including those currently enrolled plus those who

started but never graduated. When those currently enrolled eventually complete their educa-

tions, the population of degree-holding Millennials should grow.

32.3%

37.8%

51.2%

18.0%

16.8%

16.6%

40.7%

36.3%

23.4%

7.3%

7.3%

7.4%

1.7%

1.8%

1.4%

Millennials

MetroPopulation

Boomers

Source: U.S. Census Bureau, 2014 American Community Survey 1-Year PUMS

Houston Racial/Ethnic CompositionWhite Black Hispanic Asian Other



Surprisingly, a larger share of Mil-

lennials than Boomers have gradu-

ated from high school. Several fac-

tors may account for this differ-

ence. For one, society now places a

greater emphasis on completing

high school than when Boomers

were young. Second, local busi-

nesses and institutions have pro-

grams to help struggling students

earn their diplomas, resources not

available when Boomers were young. And third, many Boomers grew up in an era when a high

school dropout could work in a factory or at a construction site and still earn a decent wage.

Millennials now outnumber Boomers in the local workforce. Two factors account for the gap.

The Millennial population is simply larger and the leading edge of the Boomer generation has

already retired. However, Boomers in the workforce are more likely than Millennials to be

employed. The data don’t suggest why this is the case, but a Brookings Institution survey pro-

vides some insight. In a national survey of Millennials, 64 percent of respondents said they

would rather make $40,000 per year at a job they like rather than $100,000 per year at a job

they consider boring.

Boomers still represent

the bulk of the workforce

in Houston’s mining,

manufacturing, transpor-

tation, warehousing and

utility, education, health

care and public service

sectors. Millennials domi-

nate employment in con-

struction, retail trade, information, professional services, hotels, food services, and other ser-

vices. In some sectors, it’s obvious why Boomers outweigh Millennials, or vice versa. For

example, from the late ’80s to the mid-’00s, when oil prices seemed perpetually low, the min-

ing (i.e., energy) sector hired few workers. As a result, the sector is now top-heavy with Baby

Boomers. Manufacturing and health care require high-level skills, through either on-the-job

training or formal education, so these sectors are more likely to employ older workers. Con-

struction requires both strength and stamina, so these occupations are more suited to younger

workers. Retail sales and food services require minimal training or experience, making occu-

pations in these industries more suited to those entering the workforce or those with little

schooling beyond high school. The information sector includes both media and software de-

velopment, both the domain of many Millennials.

EDUCATIONAL ATTAINMENT IN HOUSTON % of Population 25+ Years and Older

Highest Level of Completion Total Pop Millennials Boomers

Less than 9th grade 9.5 5.0 9.6

9th to 12th grade, no diploma 8.5 10.6 7.8

High school graduate 22.9 26.8 23.1

Some college, no degree 21.9 29.4 22.9

Associate's degree 6.2 5.7 6.4

Bachelor's degree 19.8 16.2 18.9

Graduate or professional degree 11.2 6.2 11.3

Source: 2014 American Community Survey

WORKFORCE PARTICIPATION IN HOUSTON – ’14

Status Total Population Millennials Boomers

Number % Number % Number %

In labor force 3,302,314 67.1 1,221,510 75.6 927,913 64.2

Employed 3,112,384 94.3 1,125,575 92.2 892,015 96.1

Unemployed 187,877 3.8 94,743 7.8 35,812 3.9

Not in labor force 1,619,380 32.9 393,603 24.4 518,446 35.8

* Metro Houston population 16 years old and older. Note: Percentages may not sum to 100 due to rounding. Source: 2014 American Community Survey



OCCUPATION BY INDUSTRY – METRO HOUSTON – ’14

Industry Total Metro Employment

Millennials Boomers

Number % of Metro Number % of Metro

Agriculture, forestry, fishing and mining 132,083 46,199 35.0% 51,701 39.1%

Construction 287,697 118,590 41.2 84,337 29.3

Manufacturing 319,868 112,292 35.1 129,941 40.6

Wholesale trade 119,746 42,014 35.1 43,200 36.1

Retail trade 326,322 205,873 63.1 101,897 31.2

Transportation, warehousing, and utilities 182,545 56,833 31.1 74,946 41.1

Information 39,285 19,376 49.3 11,861 30.2

Finance, insurance, real estate 180,945 67,307 37.2 67,341 37.2

Professional services 391,054 161,460 41.3 141,556 36.2

Health care and educational services 607,774 227,039 37.4 243,208 40.0

Art, recreation, sports, hotels, food services 257,955 194,501 75.4 50,356 19.5

Other services 175,358 75,159 42.9 60,865 34.7

Public administration 91,752 31,772 34.6 38,861 42.4


The Pew Center found that only 26 percent of Millennials in the U.S. are married compared

to 48 percent of Boomers who were married when they were the same age. Reasons often

cited for Millennials delay include the shaky economy, high levels of student debt, women

wanting to establish ca-

reers before marriage,

and the belief that one

can be happy without

being married. Hous-

ton, however, some-

what diverges from the

national trend. Nearly

one-third of Houston’s

Millennials are mar-

ried. Add in those who

are separated, widowed

or divorced, and 37.1

percent of Houston’s Millennials have experienced marriage at some time in their lives. Over

time, that percentage is likely to rise, but whether Millennials reach the marriage rates of the

Boomer generation remains to be seen.

Not Just Birkenstocks and Garages – Startups and new businesses grab headlines for their

relaxed company culture or generous employee benefits, but they are also important drivers of

economic growth. According to the Kauffman Foundation, new and young companies are the

primary source of job creation in the American economy and spur innovation.

MARITAL STATUS OF THE METRO HOUSTON RESIDENTS 15 YEARS OLD OR OLDER

Status Metro Houston Millennials Boomers

Estimate % Estimate % Estimate %

Total 5,020,015 100.0 1,615,113 100.0 1,446,359 100.0

Never married 1,690,160 33.7 1,016,081 62.9 137,719 9.5

Now married 2,490,445 49.6 515,405 31.9 940,597 65.0

Separated 123,845 2.5 26,677 1.7 42,808 3.0

Widowed 222,441 4.4 2,952 0.2 84,485 5.8

Divorced 493,124 9.8 53,998 3.3 240,750 16.6

Note: Percentages may not sum to 100 due to rounding.




The Houston metro area was home to 24,116

firms that have been in business three years or

less1 as reported by the inaugural 2014 An-

nual Survey of Entrepreneurs from the U.S.

Census Bureau. These young firms repre-

sented 6.3 percent of total employment and

24.8 percent of total firms, more than the 22.2

percent share of young firms nationwide.

Among U.S. metro areas, Houston ranked

seventh in its share of entrepreneurial firms,

below Austin (27.0 percent) and barely edg-

ing out Silicon Valley (24.7 percent).

Some sectors were more prone to entrepreneurial activity

than others. A third of the firms in accommodation and

food services were in business three years or less. Within

the oil and gas sector, 29.3 percent of its firms were en-

trepreneurial, and 27.0 percent of professional, scientific,

and technical services firms were young. The Annual

Survey of Entrepreneurs reflects data collected in ’14, the

last year of the energy boom, which may have supported

strong entrepreneurial activity in the oil and gas sector.

Future releases of the survey will show how young firm

activity changed during the energy downturn.

Sectors with lower concentrations of entrepreneurial activity were manufacturing (17.1 percent

of firms were in business three years or less) and wholesale trade (16.6 percent). These indus-

tries tend to have higher costs and more barriers to entry that inhibit start-up activity.

Slowdown in the Showroom – Vehicle

sales in greater Houston continued to

weaken in July as monthly car sales

dropped to a five-year low, according to

data from TexAuto Facts, published by

InfoNation, Inc. of Sugar Land. Houston

area auto dealers sold 175,908 vehicles

through July, a 21.7 percent drop from

the 224,566 vehicles sold during the

same span last year. Sales from the most

1 For purposes of this commentary, “young” and “entrepreneurial” is defined as a firm in business for three years or less.

AGE OF FIRMS IN METRO HOUSTON

# of years in business

# of firms % of total firms

<2 years 9,569 9.8

2 to 3 years 14,547 15.0

4 to 5 years 10,072 10.4

6 to 10 years 20,835 21.4

11 to 15 years 36,007 37.0

>16 years 6,212 6.4

Source: U.S. Census Bureau, Annual Survey of Entrepreneurs

0

50

100

150

200

250

300

350

400

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Ve

hic

les

(0

00

s)

Source: TexAuto Facts Report by InfoNation

Vehicle Sales, 12-Month Total, Houston MSATotal Cars

Houston Innovation Map

Click here to view the map.

http://-research-.maps.arcgis.com/apps/Viewer/index.html?appid=6932a6ecf4564b3da84e88397f8145f3

http://-research-.maps.arcgis.com/apps/Viewer/index.html?appid=6932a6ecf4564b3da84e88397f8145f3



recent 12 months were 327,823 vehicles, down 13.2 percent from a peak of 377,705 sold during

the 12 months preceding October ’15. The rolling 12-month total has fallen for seven consec-

utive months.

In July, new vehicle sales totaled 22,145, a 38.1 percent drop from July ’15. Although overall

vehicle sales are down, low fuel costs are boosting truck/SUV market share to record levels.

The 7,843 cars that sold in July, a 45.7 percent drop from July ’15, were the fewest sold in a

single month since September ’11. The drop in car sales has increased the market share for

trucks and SUVs, which accounted for a record 64.6 percent of vehicles sold in July.

Vehicle prices also are beginning to

drop. The average retail price for a

new vehicle in metro Houston was

$34,659 in July, a 4.7 percent de-

crease from the January peak of

$36,357. The average price has

fallen for three consecutive months.

The increased share of higher-

priced trucks and SUVs has not

been enough to offset the discounts

offered by dealerships as they com-

pete in a weakened market.

Ford is the top selling auto maker in the Houston region, with 30,161 vehicles sold through

July. Rounding out the top five are Toyota (29,942), General Motors (27,482), Fiat-Chrysler

(23,347), and Nissan (16,110). The only manufacturers to beat their year-to-date sales totals

from this time last year are Volvo, up 20.1 percent with 670 sales, and Tesla, up 11.2 percent

with 228 sales.

Employment Update — Metro Houston lost 8,600 jobs in July, according to data from the

Texas Workforce Commission. Houston always experiences significant job losses mid-year as

educators on 10-month contracts are without work during the summer. This year’s loss fell

well below the typical loss of 15,000 jobs for the month. July’s job losses will likely be re-

couped when September data is released, which will reflect the resumption of school.

On a seasonally adjusted basis, the region has added jobs in three of the past four months,

adding 3,700 in July. Seasonally adjusted employment is only 5,700 jobs below Houston’s

January ’16 peak.

Of note, the mining and logging sector, which has averaged losses of 1,500 jobs per month

since January ’15, lost only 300 jobs in July. From early June to mid-July, crude prices aver-

aged $48 per barrel. Over the same period, the U.S. drilling fleet added 54 rigs. Those two

trends suggest the energy industry may have seen the worst of the downturn. As a result, en-

ergy-related job losses have begun to moderate.

30

35

40

45

50

55

60

65

70

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Mar

ket

Shar

e (

%)

Source: TexAuto Facts Report by InfoNation

Market Share, 12-Month Avg, Houston MSACars Trucks



Sectors recording notable growth in July were professional and business services (+5,100 jobs),

construction (+2,100), and trade, transportation and utilities (+1,500). Sectors recording nota-

ble job losses included local government education services (-14,400) and health care (-1,200).

Energy Snapshot —West Texas Intermediate (WTI), the U.S. benchmark for light sweet

crude, opened the first trading day of August at $40.06 and closed the last trading day of the

month at $46.97. Since WTI hit bottom at $26.19 in mid-February the price has jumped 79

percent. The U.S. Energy Information Administration’s (EIA) September ’16 Short-Term

Energy Outlook projects WTI to average $51 a barrel in ’17. That’s an improvement from

March ’16, when EIA forecast WTI to averge $40 a barrel next year.

The last week of August saw 497 drilling rigs working in the United States, up from the late-

May trough of 404 but down from 864 the same week last year. Through the first eight months

of this year, 17,390 drilling permits were issued for onshore, shallow offshore and the

deepwaters of the Gulf of Mexico. That compares with 30,666 permits issued over the same

period last year.

EIA expects global consumption to increase by 1.4 million barrels per day (bbl/d) in ’17,

mostly driven by growth in countries outside of the Organization for Economic Cooperation

and Development. EIA expects non-OPEC production to decline by 0.2 million bbl/d in ’17,

and for OPEC crude oil production to drop by 0.5 million bbl/d.

OPEC surplus crude oil production capacity is expected to be 1.3 million bbl/d next year.

Surplus capacity below 2.5 million bbl/d indicates a relatively tight oil market. However,

global oil inventories currently exceed 3.1 billion barrels, diminishing the influence OPEC’s

low surplus capacity has on prices.

Save the Date — The Greater Houston Partner-

ship’s 2017 Economic Outlook event is sched-

uled for Friday, December 9, at the Royal

Sonesta Hotel. The event will feature a panel of

experts discussing the outlook for energy,

health care, real estate, construction and profes-

sional services in the coming year. The Partnership’s employment forecast for 2017 will

be presented. And Kevin Swift, chief economist for the American Chemistry Council, will

be the luncheon keynote speaker. Additional details about the event and how to purchase

tickets will be posted at the Partnership’s website, www.houston.org, starting mid-October.

WE ARE MOVING – The Greater Houston Partnership will move into our new home at

Partnership Tower on September 12. Our new space, located on the east side of downtown

at 701 Avenida de las Americas, will open to our members and guests in early October. For

more information about the move, click here.

http://www.houston.org/

http://www.houston.org/assets/pdf/Partnership-Tower-FAQ.pdf




Aviation — The Houston Airport System handled 32.1 million passengers through the first

seven months of this year, up 0.4 percent from the 32.0 million handled over the same

period in ’15. Domestic passengers totaled 25.1 million, down 2.4 percent from 25.7 mil-

lion handled YTD in ’15. International passengers totaled 7.0 million, up 11.6 percent from

the 6.3 million handled YTD in ’15.

Building Permits — City of Houston building permits totaled $962.3 million in July ’16,

down 1.6 percent from $978.3 million in July ’15, according to the latest data released by


Year-to-date, city building permits totaled $4.4 billion, down 8.6 percent from $4.8 billion

over the same period in ’15.


Index for All Urban Consumers (CPI-U) rose 0.8 percent nationwide from July ’15 to July

’16, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the

volatile food and energy categories) increased 2.2 percent since July ’15.

Home Sales — Houston-area single-family home sales slipped 8.8 percent from 7,898 in

July ’15 to 7,204 in July ’16. The July decrease is the first over-the-year drop since January

’16, according to the Houston Association of Realtors®. Year to date, single-family home

sales totaled 43,661, up 0.7 percent from 43,346 sales during the same period in ’15. The

median price for a single-family home sold in metro Houston rose 4.1 percent to $230,000,

the highest on record for a July and the second highest of all time. The average sales price

dropped 0.5 percent to $292,316.


term leading indicator for regional production, registered 43.8 in July, up slightly from 43.7

in June, according to the latest report from the Institute for Supply Management-Houston.

With the July reading, the PMI has signaled economic contraction in Houston for 19 con-

secutive months.

Sales Tax Collections — City of Houston sales tax collections totaled $427.4 million

through August of this year, down 4.5 percent from $447.5 million from the same period

last year.

Patrick Jankowski, Roel Martinez, Josh Pherigo,

Nadia Valliani and Jenny Philip contributed to this issue of

Houston: The Economy at a Glance

http://www.fly2houston.com/newsroom/media-kit/traffic-and-statistics/





http://comptroller.texas.gov/taxinfo/allocsum/cities.html



STAY UP TO DATE!





The Key Economic Indicators table is updated whenever any data change — typically, 11 or so


commentary, please email your request for Key Economic Indicators to [email protected] with

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July '16 June '16 July '15 June '16 July '15 June '16 July '15

Total Nonfarm Payroll Jobs 2,993.3 3,001.9 2,980.0 -8.6 13.3 -0.3 0.4

Total Private 2,619.9 2,614.1 2,614.5 5.8 5.4 0.2 0.2

Goods Producing 535.7 534.1 562.7 1.6 -27.0 0.3 -4.8

Service Providing 2,457.6 2,467.8 2,417.3 -10.2 40.3 -0.4 1.7


Mining and Logging 86.5 86.8 99.9 -0.3 -13.4 -0.3 -13.4 Oil & Gas Extraction 50.2 50.4 53.5 -0.2 -3.3 -0.4 -6.2 Support Activities for Mining 37.2 36.8 45.0 0.4 -7.8 1.1 -17.3

Construction 217.9 215.8 217.5 2.1 0.4 1.0 0.2

Manufacturing 231.3 231.5 245.3 -0.2 -14.0 -0.1 -5.7 Durable Goods Manufacturing 146.1 146.7 163.9 -0.6 -17.8 -0.4 -10.9 Nondurable Goods Manufacturing 85.2 84.8 81.4 0.4 3.8 0.5 4.7

Wholesale Trade 170.1 169.9 172.8 0.2 -2.7 0.1 -1.6

Retail Trade 308.8 307.9 300.8 0.9 8.0 0.3 2.7

Transportation, Warehousing and Utilities 137.9 137.5 138.3 0.4 -0.4 0.3 -0.3 Utilities 16.1 16.2 16.1 -0.1 0.0 -0.7 0.0 Air Transportation 21.8 21.9 21.8 -0.1 0.0 -0.5 0.0 Truck Transportation 25.3 25.1 25.9 0.2 -0.6 0.8 -2.3 Pipeline Transportation 10.9 10.8 10.7 0.1 0.2 0.9 1.9

Information 30.5 31.2 32.9 -0.7 -2.4 -2.2 -7.3 Telecommunications 13.9 14.0 14.2 -0.1 -0.3 -0.7 -2.1



Professional & Business Services 463.7 458.6 473.7 5.1 -10.0 1.1 -2.1 Professional, Scientific & Technical Services 214.7 210.5 219.7 4.2 -5.0 2.0 -2.3 Legal Services 24.4 24.5 24.8 -0.1 -0.4 -0.4 -1.6



Computer Systems Design & Related Services 32.6 32.3 33.5 0.3 -0.9 0.9 -2.7

Admin & Support/Waste Mgt & Remediation 213.7 212.3 216.9 1.4 -3.2 0.7 -1.5 Administrative & Support Services 201.7 200.3 205.3 1.4 -3.6 0.7 -1.8

Employment Services 77.5 76.3 80.1 1.2 -2.6 1.6 -3.2


Health Care & Social Assistance 325.2 326.4 313.2 -1.2 12.0 -0.4 3.8



Other Services 108.3 109.2 108.6 -0.9 -0.3 -0.8 -0.3

Government 373.4 387.8 365.5 -14.4 7.9 -3.7 2.2 Federal Government 28.4 28.4 28.0 0.0 0.4 0.0 1.4 State Government 71.2 71.6 70.3 -0.4 0.9 -0.6 1.3 State Government Educational Services 38.0 38.5 37.4 -0.5 0.6 -1.3 1.6

Local Government 273.8 287.8 267.2 -14.0 6.6 -4.9 2.5 Local Government Educational Services 186.2 200.6 181.2 -14.4 5.0 -7.2 2.8







ENERGY

U.S. Active Rotary Rigs Aug '16 481 883 -45.5 484 * 1,083 * -55.3Spot Crude Oil Price ($/bbl, West Texas Intermediate) July '16 44.65 50.90 -12.3 40.06 * 52.86 * -24.2Spot Natural Gas ($/MMBtu, Henry Hub) July '16 2.82 2.84 -0.7 2.18 * 2.82 * -22.7


Houston Purchasing Managers Index July '16 43.8 49.1 -10.8 44.8 * 46.8 * -4.3Nonresidential Electric Current Sales (Mwh, CNP Service Area) June '16 5,046,097 4,958,740 1.8 27,570,315 26,869,840 2.6

CONSTRUCTION

Total Building Contracts ($, Houston MSA) July '16 1,240,479,000 1,389,281,000 -10.7 8,662,113,000 10,680,251,000 -18.9Nonresidential July '16 521,259,000 401,250,000 29.9 3,310,248,000 4,317,345,000 -23.3Residential July '16 719,220,000 988,031,000 -27.2 5,351,865,000 6,362,906,000 -15.9Building Permits ($, City of Houston) July '16 962,304,924 978,344,959 -1.6 4,427,353,634 4,844,251,694 -8.6Nonresidential July '16 801,108,877 570,456,196 40.4 2,983,371,816 3,090,776,711 -3.5New Nonresidential July '16 315,413,926 202,629,354 55.7 1,193,018,731 1,559,371,335 -23.5

Nonresidential Additions/Alterations/Conversions July '16 485,694,951 367,826,842 32.0 1,790,353,085 1,531,405,376 16.9

Residential July '16 161,196,047 407,888,763 -60.5 1,443,981,818 1,753,474,983 -17.7New Residential July '16 131,409,468 377,218,072 -65.2 1,083,708,078 1,600,220,087 -32.3

Residential Additions/Alterations/Conversions July '16 29,786,579 30,670,691 -2.9 360,273,740 153,254,896 135.1

Multiple Listing Service (MLS) ActivityProperty Sales July '16 8,571 9,374 -8.6 52,456 52,355 0.2Median Sales Price - SF Detached July '16 230,000 221,000 4.1 218,284 * 211,543 * 3.2Active Listings July '16 37,952 33,670 12.7 34,758 * 29,884 * 16.3


Nonfarm Payroll Employment July '16 2,993,300 2,980,000 0.4 2,989,671 * 2,979,400 * 0.3Goods Producing (Natural Resources/Mining/Const/Mfg) July '16 535,700 562,700 -4.8 540,971 0 570,529 * -5.2Service Providing July '16 2,457,600 2,417,300 1.7 2,448,700 0 2,408,871 * 1.7Unemployment Rate (%) - Not Seasonally AdjustedHouston-Sugar Land-Baytown MSA July '16 5.8 5.0 5.0 * 4.5 *Texas July '16 5.1 4.8 4.5 * 4.5 *U.S. July '16 5.1 5.6 5.0 * 5.6 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) July '16 3,893,616 3,654,829 6.5 26,096,412 28,222,939 -7.5Air Passengers (Houston Airport System) July '16 5,058,396 5,334,399 -5.2 32,105,884 31,981,906 0.4Domestic Passengers July '16 3,839,401 4,180,674 -8.2 25,092,403 25,697,028 -2.4International Passengers July '16 1,218,995 1,153,725 5.7 7,013,481 6,284,878 11.6Landings and Takeoffs July '16 68,987 71,607 -3.7 456,833 468,746 -2.5Air Freight (metric tons) July '16 32,421 33,790 -4.1 233,230 242,979 -4.0Enplaned July '16 15,183 17,468 -13.1 113,511 126,395 -10.2Deplaned July '16 17,237 16,322 5.6 119,719 116,583 2.7

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) July '16 22,145 35,748 -38.1 175,908 224,566 -21.7Cars July '16 7,843 14,433 -45.7 64,470 92,185 -30.1Trucks, SUVs and Commercials July '16 14,302 21,315 -32.9 111,438 132,381 -15.8Total Retail Sales ($000,000, Houston MSA, NAICS Basis) Q4/15 31,941 35,393 -9.8 112,143 125,047 -10.3Consumer Price Index for All Urban Consumers ('82-'84=100)Houston-Galveston-Brazoria CMSA July '16 217.305 213.896 1.6 215.410 * 212.062 * 1.6United States July '16 240.647 238.654 0.8 239.049 * 236.606 * 1.0Hotel Performance (Houston MSA)Occupancy (%) Q1/16 65.8 71.6 68.6 * 72.0 *Average Room Rate ($) Q1/16 109.87 111.50 -1.5 108.56 * 106.88 * 1.6Revenue Per Available Room ($) Q1/16 72.26 79.87 -9.5 74.51 * 76.98 * -3.2




Sources Rig Count Baker Hughes Incorporated Spot WTI, Spot Natural Gas U.S. Energy Information Admin. Houston Purchasing Managers National Association of Index Purchasing Management – Houston, Inc. Electricity CenterPoint Energy Building Construction Contracts McGraw-Hill Construction City of Houston Building Permits Building Permit Department, City of Houston

MLS Data Houston Association of Realtors Employment, Unemployment Texas Workforce Commission

Port Shipments Port of Houston Authority Aviation Aviation Department, City of Houston Car and Truck Sales TexAuto Facts Report, InfoNation, Inc.,

Sugar Land TX Retail Sales Texas Comptroller’s Office Consumer Price Index U.S. Bureau of Labor Statistics Hotels PKF Consulting/HospitalityAsset Advisors International Postings, Foreclosures Foreclosure Information &Listing Service



-150

-120

-90

-60

-30

0

30

60

90

120

150

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

3,000

3,100

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

12

-Mo

nth

Ch

ange

(0

00

)

No

nfa

rm P

ayro

ll Em

plo

yme

nt

(00

0)


Nonfarm Payroll Employment, Houston MSA

12-Month Change Total Payroll Employment

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

420

460

500

540

580

620

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Serv

ice

-Pro

vid

ing

Job

s (0

00

s)

Go

od

s-P

rod

uci

ng

Job

s (0

00

s)






3

4

5

6

7

8

9

10

11

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

% C

ivili

an L

abo

r Fo

rce



Houston Texas U.S.

0

2

4

6

8

10

12

14

16

0

20

40

60

80

100

120

140

160

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

Nat

ura

l Gas

, $ /

MM

Btu

WTI

, $ b

arre

l

Source: U.S. Energy Information Administration

Spot Crude and Natural Gas PricesMonthly Averages

WTI Natural Gas

July 2016 ©2016, Greater Houston Partnership Page 1

Employment Update — Houston area employment was unchanged in May at 2,995,100 jobs,

the same level at which employment stood in April. The region lost jobs in several sectors,

added jobs in several others, and remained essentially unchanged in a few more. The gains

offset the losses, resulting in the zero net job growth for the month. In the 35 years for which

employment data are readily available, this stasis is unprecedented—Houston recording nei-

ther job gains nor job losses in a month.

Examining job growth over a 12-month period helps to smooth out the impact of seasonal

factors (retail hiring in the fall, education layoffs in the summer) that occur every year, and

helps place current job growth in the context of historical job growth. For the 12 months end-

ing May ’16, the region created 5,100 jobs, a far cry from the 66,400 jobs created in the 12

months ending May ’15, or the 98,500 jobs created in the 12 months ending May ’14.

The most recent 12-month total underscores the weakness in Houston’s economy. If Houston

experiences job losses in June, something that has occurred only twice in the past 35 years,

Houston’s 12-month total may turn negative. That said, the job losses would need to exceed

2,000 to drop Houston into the red for the 12-month total.

Since December ’14, the start of the energy downturn, manufacturing has lost 31,300 jobs,

energy, 24,700 jobs, professional services, 18,200 jobs, and trade, transportation and utilities,

12,100 jobs. Over the same period, hotels, restaurants and bars have added 25,600 jobs, health

-120

-80

-40

0

40

80

120

160

2.4

2.5

2.6

2.7

2.8

2.9

3.0

3.1

'07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

12

-Mo

mth

Ch

ange

(0

00

s)

Tota

l Jo

b (

00

0s,

00

0s)

s

Source: Texas Worlforce Commission

Metro Houston Nonfarm Payroll Employment

12-Month Change Total Employment

A publication of the Greater Houston Partnership Volume 25 Number 7 — July 2016



care, 20,100 jobs, government (mainly education) 9,900 jobs, and arts, entertainment and rec-

reation, 6,300 jobs.

Houston’s unemployment rate remained unchanged in May at 4.8 percent. The Texas rate was

also unchanged at 4.2 percent. The U.S. rate dropped from 4.7 in April to 4.5 percent in May.

The Houston rate is now above that of the U.S. The rates are not seasonally adjusted.

On the Bright Side — Despite the current slump, Houston’s long-term outlook remains

bright, according the latest report by The Perryman Group.1 “The Houston-The Woodlands-

Sugar Land MSA has stabilized after adjusting to job losses associated with lower oil prices,”

the report notes. “Although additional fallout may well occur, it appears that the area is set for

stronger growth. Over the long term, oil price recovery will lead to a resurgence in energy

sector businesses, adding to the expansion across the rest of the area economy.”

Perryman forecasts Houston’s real gross area product (GAP) to grow at a 3.35 percent annual

rate over then next 25 years, top-

ping $1.12 trillion in ’40. Almost

1.63 million net new jobs are pro-

jected to be gained over the forecast

period, a 1.70 percent annual rate.

Every sector except agriculture will

add jobs, with wholesale/retail

trade, government (which includes

public education), and services ac-

counting for 85 percent of all

growth. Output will expand in

every sector, with mining, manu-

facturing, and services representing

61 percent of all gains. The forecast

calls for the nine-county metro area

population to reach 9.6 million, about the same level as the present-day population of metro

Chicago.

The report notes that business cycles are inevitable, but that moderate U.S. growth will char-

acterize the long-term, with unemployment rates trending downward and tighter labor markets

in the future. The report also expects the Federal Reserve to slowly raise target interest rates

and the retiring of Baby Boom generation to create skills gaps in some trades and professions.

It also expresses concern that a decline in the labor force participation rate could adversely

affect U.S. living standards in the future. “With a large and growing percentage of the popula-

tion not working, pressure will increase for those who do have jobs to generate output, income,

and tax receipts,” the report notes.

1 The Perryman Economic Forecast: Long-Term Outlook for the United States, Texas, Major Metropolitan Areas, and Regions, is

available for purchase from The Perryman Group, 800-749-8705 or [email protected].

$492.7$608.6

$731.5

$861.0

$993.1

$1,123.4

'15 '20 '25 '30 '35 '40

Source: The Perryman Group, Summer 2015 * '09 constant dollars

Real Gross Area Product Forecast, Billions*Houston-The Woodlands-Sugar Land MSA



U.S. GDP, measured in

’09 dollars, should more

than double, the U.S.

should gain another 63

million residents, and

the economy should

support an additional 62

million jobs by ’40.

Despite the oil indus-

try’s turmoil, the Texas

economy continues to

expand at a modest

pace, the report notes. A

primary reason for the

state’s continued success is the increasingly diverse nature of the economy. On balance, The

Perryman Group’s most recent long-term forecast indicates the Texas economy is likely to

continue to see moderate growth. Ray Perryman, the firm’s president and CEO, expects Texas

GDP, measured in ’09 dollars, to more than double, reaching $3.5 billion in ’40, the state to

add another 12.0 million residents, bringing the population to 39.0 million, and the Texas econ-

omy to create an additional 6.2 million jobs. But he adds a note of caution: “Texas also needs

to deal with unfunded pensions; restructure programs in crisis such as indigent health care,

foster care, and child protective services; improve education at all levels, and make a dent in

infrastructure shortcomings.” Otherwise, he says, the state faces slower growth and the neces-

sity of committing even more resources to public needs.

A Trickle, Not a Gusher — Crude prices appear to have bottomed in mid-February. West

Texas Intermediate, the U.S. benchmark for light sweet crude, fell to $26.19 on February

11 but has traded in the mid-$40s since mid-April. The U.S. Energy Information Admin-

istration forecasts WTI to average $47 per barrel in Q4/16, Wells Fargo, $48.50, and Gold-

man Sachs, $50.

According to the RigData count, a rival to the better-known Baker Hughes count, the U.S.

added 25 rigs in the last week of June. The North American rig count now stands at 450,

up from 396 the last week of May. Baker Hughes shows a more modest increase, up 27

rigs, from 404 in late May to 431 the last week of June.

In its Short Term Energy Outlook for June, the U.S. Energy Information Administration

forecasts global crude consumption to increase by 1.5 million barrels per day in ’16 and

by the same amount in ’17. At the beginning of ’16, the global crude surplus was estimated

at between 2.0 and 3.0 million barrels per day. Energy may have reached a somewhat

mushy bottom, and rather than a bounce back, the recovery will likely be a slow climb.

6.57.0

7.68.2

8.99.6

3.1 3.5 3.8 4.1 4.4 4.7

'15 '20 '25 '30 '35 '40

Source: The Perryman Group

Population and Employment ForecastHouston-The Woodlands-Sugar Land MSA*

Population Employment



Location, Location, Location2 — More than 10 million square feet of sublease office space

is now in the Houston market. An additional 1 million square feet is expected in Q3/16. The

additional sublease space will push Houston’s effective office vacancy rate above 21 percent.

Sublease rates are increasingly aggressive, notes CBRE, including some instances of market-

ing a $0.0 net rate (operating expenses only), as sublessors try to recoup any costs.

Total absorption remains barely positive for the year,

with 147,000 square feet leased. This time last year, 1.4

million square feet had been leased. Nine of region’s 20

submarkets report year-to-date negative net absorption.

Though the 20 largest sublease listings are offered by

energy companies, the Energy Corridor has absorbed

nearly 300,000 square feet year to date.

Office construction continues to wind down, with only

4.2 million square feet underway in Q2/16 compared

to 11.8 million square feet in Q2/15 and 16.3 million

in Q2/14. Only half of the space under construction is

preleased, potentially throwing another 2 million

square feet of empty space onto the market. Developers

by and large have tabled plans for new office buildings.

Population growth, high retail demand, and port activity continue to drive industrial leasing

activity. Despite a few big-box leases, 84 percent of deals in Q2/16 were for less than 100,000

square feet. Developers delivered 1.6 million square feet of industrial space in Q2/16 and 4

million year to date, but the vacancy rate has held steady at 5.5 percent. Of the 11.2 million

square feet of space under construction, 8.4 million square feet is preleased.

Houston absorbed 1.5 million square feet of retail

space in Q2/16, the most in any quarter since

Q4/07. Average occupancy grew 0.4 points to

94.2 percent. More than 3 million square feet is

under construction, equivalent to 1 percent of the

current inventory. Sites once slated for multifam-

ily projects are now available for retail develop-

ment, giving rise to more mixed-use develop-

ments.

The multi-family market absorbed 1,694 units in

June and 8,436 over the past 12 months. Inventory has grown by 21,600 units over the past 12

months. Overall occupancy stands at 89.7 percent, down from 91.4 percent in June ’15. On a

square foot basis, average rental rates have grown 1.5 percent since last June. Class B, C and

2 CBRE, Colliers JLL and Transwestern provided the data included in this section of Economy at a Glance.

Occupancy – Houston Apartment Market Property Type Avg. Occupancy % Class A Stable 90.8 Class A Lease Up 22.7 Class B Stable 93.3 Class B Lease Up 45.3 Class C 93.5 Class D 91.2 Note: “Stable” means the property has been operating more than 13 months; “lease up” means less than 13 months. Source: Apartment Data Services

Office Submarkets YTD Positive Absorption: Allen Parkway, Clear Lake, Energy Corridor, Far West, Greater Pearland, Katy Free-way, Kingwood, Med Center/South Main, Southwest Freeway, West Belt, Westchase Negative Absorption: Downtown, East, FM 1960, Greenspoint/North Belt, Greenway Plaza, North, North Loop, West Loop/Galleria, The Woodlands



D properties continue to perform well, while properties in lease-up are dragging down overall

Class A occupancy rates.

Population Shift Continues — Hispanics moved closer to becoming Houston’s largest racial

or ethnic group in’15, now representing 36.5 percent of the region’s 6.6 million residents, ac-

cording to recent estimates by the U.S. Census Bureau. Since the ’00 Census, Houston’s His-

panic population has grown by more than 403,000 residents, accounting for 54.7 percent of the

region’s growth. The region’s Anglo population grew by 142,000, accounting for 19.2 percent

of the region’s growth. At current growth rates, Hispanics likely will overtake Anglos as the

largest ethnic group in the Houston metro area within the next two years.

The region’s Asian population now exceeds half a million residents, or 7.6 percent of the metro

total, up from 4.9 percent in ’00. Blacks’ share of the metro population has held steady at 16.9

percent over the past decade and a half. Anglos’ share of the population has fallen from 48.9

percent in ’00 to 37.4 percent today.

A few additional observations: Austin, Chambers, Liberty and Montgomery are the only metro

counties with Anglo majorities. One in four residents of Waller County is black. One in five

residents of Fort Bend is Asian. Harris County has more Hispanics than any of the other eight

metro counties have people.

’15 Racial and Ethnic Breakdown - Houston Metro Area

Geography White Black Native

American Asian

Pacific Is-lander

Two or More Races

Hispanic Total Popu-

lation

Austin 18,626 2,624 97 146 3 308 7,759 29,563

63.0% 8.9% 0.3% 0.5% 0.0% 1.0% 26.2% 100.0%

Brazoria 170,027 45,264 1,166 21,803 132 5,108 102,812 346,312

49.1% 13.1% 0.3% 6.3% 0.0% 1.5% 29.7% 100.0%

Chambers 26,069 3,223 152 495 16 398 8,510 38,863

67.1% 8.3% 0.4% 1.3% 0.0% 1.0% 21.9% 100.0%

Fort Bend 248,046 144,146 1,524 137,645 336 11,718 172,672 716,087

34.6% 20.1% 0.2% 19.2% 0.0% 1.6% 24.1% 100.0%

Galveston 185,874 41,659 1,174 10,889 194 4,943 77,492 322,225

57.7% 12.9% 0.4% 3.4% 0.1% 1.5% 24.0% 100.0%

Harris 1,405,412 839,956 9,193 317,035 2,619 58,854 1,904,959 4,538,028

31.0% 18.5% 0.2% 7.0% 0.1% 1.3% 42.0% 100.0%

Liberty 52,484 8,193 329 478 31 1,023 17,116 79,654

65.9% 10.3% 0.4% 0.6% 0.0% 1.3% 21.5% 100.0%

Montgomery 364,212 24,697 2,014 14,275 379 7,717 124,265 537,559

67.8% 4.6% 0.4% 2.7% 0.1% 1.4% 23.1% 100.0%

Waller 20,810 12,325 175 409 9 527 14,401 48,656

42.8% 25.3% 0.4% 0.8% 0.0% 1.1% 29.6% 100.0%

Total 2,491,564 1,122,088 15,824 503,175 3,719 90,596 2,429,988 6,656,955

37.4% 16.9% 0.2% 7.6% 0.1% 1.4% 36.5% 100.0%

Source: U.S. Census Bureau Note: The six racial categories are non-Hispanic only.



SNAPSHOT — HOUSTON’S KEY ECONOMIC INDICATORS

Building Permits — City of Houston building permits totaled $595.7 million in May ’16,

down 0.2 percent from $597.0 million in May ’15, according to the City’s Department of

Public Works & Engineering Planning & Development Services. Year-to-date, city building

permits totaled $2.7 billion, down 15.6 percent from $3.1 billion from the same period in ’15.


Index for All Urban Consumers (CPI-U) rose 1.0 percent nationwide from May ’15 to May

’16, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the volatile

food and energy categories) increased 2.2 percent since May ’15.

Home Sales — Houston-area home sales strengthened in May as the supply of homes grew

and prices remained stable. Local realtors sold 7,343 homes in May, a 10.0 percent increase

from the 6,678 sold in May of last year, according to the Houston Association of

REALTORS®. Year-to-date home sales totaled 28,737, a 3.6 percent increase from the 27,740

sold over the same period last year. The average and median sales prices for single-family

homes sold in May were unchanged from a year ago.


term leading indicator for regional production, registered 45.8 in May, up from 44.2 in April,

according to the Institute for Supply Management-Houston (ISM-Houston). Readings below

the neutral point of 50 typically signal contraction over the coming three or four months. With

the May reading, the PMI has signaled economic contraction in Houston for 17 consecutive

months.

Vehicle Sales — Houston-area auto dealers sold 22,047 vehicles in May ’16, a 34.2 percent

decrease from the 33,517 sold in May the previous year, according to TexAuto Facts, pub-

lished by InfoNation, Inc. of Sugar Land. Through the first five months of ’16, local dealers

sold 127,002 vehicles, down 17.7 percent from the 154,394 sold over the comparable period

in ’15.

Patrick Jankowski and Jenny Philip

contributed to this issue of Houston: The Economy at a Glance








STAY UP TO DATE!







commentary, please email your request for Key Economic Indicators to [email protected] with

your name, title and phone number and your company’s name and address.







May '16 Apr '16 May '15 Apr '16 May '15 Apr '16 May '15


Total Private 2,601.0 2,601.6 2,604.2 -0.6 -3.2 0.0 -0.1

Goods Producing 537.5 540.6 565.5 -3.1 -28.0 -0.6 -5.0



Mining and Logging 87.3 88.6 100.7 -1.3 -13.4 -1.5 -13.3

Oil & Gas Extraction 50.4 50.4 53.2 0.0 -2.8 0.0 -5.3

Support Activities for Mining 36.6 37.1 46.1 -0.5 -9.5 -1.3 -20.6

Construction 219.0 219.5 216.3 -0.5 2.7 -0.2 1.2

Manufacturing 231.2 232.5 248.5 -1.3 -17.3 -0.6 -7.0

Durable Goods Manufacturing 147.5 148.5 167.8 -1.0 -20.3 -0.7 -12.1

Nondurable Goods Manufacturing 83.7 84.0 80.7 -0.3 3.0 -0.4 3.7

Wholesale Trade 169.1 169.8 173.0 -0.7 -3.9 -0.4 -2.3

Retail Trade 306.0 305.2 297.4 0.8 8.6 0.3 2.9

Transportation, Warehousing and Utilities 137.1 137.3 138.8 -0.2 -1.7 -0.1 -1.2

Utilities 16.1 16.1 15.8 0.0 0.3 0.0 1.9


Truck Transportation 25.0 24.8 26.0 0.2 -1.0 0.8 -3.8


Information 31.3 31.4 32.5 -0.1 -1.2 -0.3 -3.7

Telecommunications 14.1 14.1 14.0 0.0 0.1 0.0 0.7



Professional & Business Services 457.0 460.1 470.3 -3.1 -13.3 -0.7 -2.8

Professional, Scientific & Technical Services 211.5 217.0 217.5 -5.5 -6.0 -2.5 -2.8

Legal Services 23.4 23.7 24.3 -0.3 -0.9 -1.3 -3.7

Accounting, Tax Preparation, Bookkeeping 23.6 25.9 22.5 -2.3 1.1 -8.9 4.9

Architectural, Engineering & Related Services 65.6 66.5 71.8 -0.9 -6.2 -1.4 -8.6

Computer Systems Design & Related Services 33.2 33.5 33.3 -0.3 -0.1 -0.9 -0.3

Admin & Support/Waste Mgt & Remediation 210.4 207.9 216.4 2.5 -6.0 1.2 -2.8

Administrative & Support Services 198.7 196.2 205.2 2.5 -6.5 1.3 -3.2






Other Services 106.9 105.6 106.7 1.3 0.2 1.2 0.2

Government 394.1 393.5 385.8 0.6 8.3 0.2 2.2


State Government 73.7 74.6 72.9 -0.9 0.8 -1.2 1.1

State Government Educational Services 40.5 41.0 40.0 -0.5 0.5 -1.2 1.3










ENERGY

U.S. Active Rotary Rigs June '16 417 861 -51.6 492 * 1,155 * -57.4

Spot Crude Oil Price ($/bbl, West Texas Intermediate) May '16 46.83 59.27 -21.0 37.43 * 51.89 * -27.9

Spot Natural Gas ($/MMBtu, Henry Hub) May '16 1.92 2.85 -32.6 1.97 * 2.83 * -30.4


Houston Purchasing Managers Index May '16 45.8 46.1 -0.7 46.1 * 46.3 * -0.4

Nonresidential Electric Current Sales (Mwh, CNP Service Area) May '16 4,954,117 4,919,243 0.7 22,524,218 21,911,100 2.8

CONSTRUCTION

Total Building Contracts ($, Houston MSA) May '16 1,025,830,000 1,505,200,000 -31.8 5,825,510,000 7,522,068,000 -22.6

Nonresidential May '16 326,540,000 732,445,000 -55.4 2,308,510,000 3,013,192,000 -23.4

Residential May '16 699,290,000 772,755,000 -9.5 3,517,000,000 4,508,876,000 -22.0

Building Permits ($, City of Houston) May '16 595,692,428 596,954,584 -0.2 2,653,812,012 3,145,907,862 -15.6

Nonresidential May '16 384,363,386 414,981,705 -7.4 1,666,705,458 2,034,041,660 -18.1

New Nonresidential May '16 172,028,704 279,544,525 -38.5 595,533,836 1,165,194,217 -48.9

Nonresidential Additions/Alterations/Conversions May '16 212,334,682 135,437,180 56.8 1,071,171,622 868,847,443 23.3

Residential May '16 211,329,042 181,972,879 16.1 987,106,554 1,111,866,202 -11.2

New Residential May '16 126,881,862 163,549,276 -22.4 754,612,138 1,014,014,229 -25.6

Residential Additions/Alterations/Conversions May '16 84,447,180 18,423,603 358.4 232,494,416 97,851,973 137.6


Property Sales May '16 8,703 8,123 7.1 34,694 33,759 2.8

Median Sales Price - SF Detached May '16 225,000 224,900 0.0 212,998 * 206,960 * 2.9

Active Listings May '16 35,416 30,162 17.4 33,899 * 28,802 * 17.7


Nonfarm Payroll Employment May '16 2,995,100 2,990,000 0.2 2,986,880 * 2,976,460 * 0.4

Goods Producing (Natural Resources/Mining/Const/Mfg) May '16 537,500 565,500 -5.0 543,680 0 573,060 * -5.1

Service Providing May '16 2,457,600 2,424,500 1.4 2,443,200 0 2,403,400 * 1.7


Houston-Sugar Land-Baytown MSA May '16 4.8 4.4 4.8 * 4.3 *

Texas May '16 4.2 4.3 4.3 * 4.3 *

U.S. May '16 4.5 5.3 5.0 * 5.6 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) May '16 3,606,185 4,202,952 -14.2 18,374,985 20,712,778 -11.3

Air Passengers (Houston Airport System) May '16 4,635,438 4,674,242 -0.8 22,058,072 21,664,886 1.8

Domestic Passengers May '16 3,660,524 3,798,857 -3.6 17,373,294 17,534,164 -0.9

International Passengers May '16 974,914 875,385 11.4 4,684,778 4,130,722 13.4

Landings and Takeoffs May '16 65,216 67,853 -3.9 319,673 328,755 -2.8

Air Freight (metric tons) May '16 25,929 33,424 -22.4 152,195 177,015 -14.0

Enplaned May '16 12,605 17,851 -29.4 75,729 92,536 -18.2

Deplaned May '16 13,324 15,573 -14.4 76,466 84,479 -9.5

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) May '16 22,047 33,517 -34.2 127,002 154,394 -17.7

Cars May '16 7,925 13,427 -41.0 46,716 63,806 -26.8

Trucks, SUVs and Commercials May '16 14,122 20,090 -29.7 80,286 90,588 -11.4

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 4Q15 31,941 35,393 -9.8 112,143 125,047 -10.3


Houston-Galveston-Brazoria CMSA May '16 214.505 210.283 2.0 214.113 * 210.755 * 1.6

United States May '16 240.236 237.805 1.0 238.331 * 235.790 * 1.1


Occupancy (%) 4Q15 64.3 68.2 68.6 * 72.0 *

Average Room Rate ($) 4Q15 106.40 106.61 -0.2 108.56 * 106.88 * 1.6

Revenue Per Available Room ($) 4Q15 68.37 72.66 -5.9 74.51 * 76.98 * -3.2





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June 2016 ©2016, Greater Houston Partnership Page 1

On the Cusp of a Recovery? — This month marks the second anniversary of the collapse in

global oil prices. West Texas Intermediate, the U.S. benchmark for light, sweet crude, peaked

in mid-June of ’14, then tumbled nearly 75 percent over the next 21 months. Brent crude, the

European benchmark, followed the same path. Their plunge shredded exploration budgets,

decimated the rig count, and triggered a wave of energy company layoffs. In Metro Houston,

the industry lost 70,000 jobs.1

Two years on, the industry is in the nascent stages of a recovery. Oil prices have trended up-

ward since February. The North American rig count appears to have stabilized in late May.

And layoff announcements, once as common as mosquitos in August, have subsided (though

not halted completely). The worst may be over for the oil industry, which is welcome news

since the broader economy has begun to show signs of stress. A few examples:

Metro Houston retail sales have slipped from $35.4 billion in Q4/14 to $32.0 billion

Q4/15, a drop of 9.8 percent. Source: Texas Comptroller of Public Accounts

Wage growth has stagnated. The average weekly wage paid to Houston-area workers was

$1,300 in Q4/14 and $1,307 in Q4/15. Adjusted for inflation, that represents a 0.4 percent

decline. Over the previous 10 years, wage growth averaged a 3.0 percent increase per

year. Source: Quarterly Census of Employment and Wages

April year to date, local auto sales are down 13.2 percent compared to the same period in

’15. Source: TexAuto Facts, published by InfoNation, Inc. of Sugar Land

Average apartment occupancy in Houston fell to 89.7 percent in May. Below 90 percent is

considered a renter’s market. Of the 2,648 apartment communities in Houston, 341 now

offer floorplan specials, 236 offer free rent, and 23 offer other incentives to lure new ten-

ants. Source: Apartment Data Services

Through the first four months of this year, City of Houston building permits are $400 mil-

lion off last year’s pace. Source: City of Houston

May year to date, sales tax receipts have fallen in 38 of the 113 cities in the metro area

that collect the tax. Source: Texas Comptroller of Public Accounts

Local bank deposits fell from $242.6 billion in ’14 to $214.7 billion in ’15, a drop of 11.5

percent. Source: Federal Deposit Insurance Corporation

1 This figure includes exploration and production, oil field services, fabricated metal products manufacturing, oil field equipment

manufacturing, wholesale trade, architectural and engineering services, and employment services (i.e., contract workers). The loss-

es are as of April ’16.

A publication of the Greater Houston Partnership Volume 25 Number 6 — June 2016



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SPOT CRUDE PRICES & U.S. RIG COUNT

US Rotary Rig Count WTI Spot, $/Barrel

In spite of the forces aligned against Houston, the region man-

aged to eke out 15,200 jobs in ’15. Momentum from the boom

years offset the losses in the oil patch. That momentum, how-

ever, has played out. The few big wins Houston has logged so

far this year—Daikin’s 4-million-square-foot facility in Cy-

press, FedEx’s new distribution hub near Bush Intercontinen-

tal, Mitsubishi Heavy Industries’ U.S. headquarters in Greenway Plaza—won’t reverse the

inertia holding back Houston’s growth. For Houston to prosper, the oil patch needs to grow

again. Fortunately, signs have emerged that the energy industry may be on the cusp of a re-

covery.

WTI, which fell to $26.19 per barrel in February, rose steadily through the spring, closing

above $51 in early June. Research conducted by Wood MacKenzie found a large number of

firms would become cash flow neutral, i.e. their incomes match their expenses, once crude

reaches $53 per barrel.

The decline in the U.S. rig count has slowed in recent weeks. The fleet lost no rigs the last

week of May and added four rigs the first week of June. During Halliburton’s Q1 earnings

call, Chairman David Lesar said he expected the rig count to bottom out in Q2 and that there

would be an upswing in the second half of the year.

In May, daily U.S. crude production dropped by 200,000 barrels. U.S. production is now

down one million barrels from its April ’15 peak. The U.S. Energy Information Administra-

tion (EIA) forecasts domestic production to fall another half a million barrels next year.

Simmons & Company expects non-OPEC supply outside of the U.S. to drop another 600,000

barrels this year, and that’s on top of the U.S. production declines mentioned earlier. Granted,

some of the declines may be offset by increases in OPEC production.

The Boom Years, ’10 – ’14

470,000 new jobs

570,000 new residents

$125 billion in GDP growth



EIA expects global consumption to grow by 1.5 million barrels and significant inventory

draws to occur in ’17. Simmons & Company expects the withdrawals to be “cathartic.”

A Shift in Tone — The conversation

about oil has turned positive as well.

Four months ago, the media focused

on how low prices would fall. Gold-

man Sachs garnered headlines in Feb-

ruary when it prophesied, in its worst

case scenario, that crude would sink

below $20 this year. Goldman made

headlines again in May when it said

crude would soon reach $50 a barrel.

Crude was already trading in the mid-

$40s when Goldman made the call.

What’s the expected trajectory for crude? EIA forecasts WTI to average $51.82 next year.

Wells Fargo calls for $55.50. Daniel Yergin, the world’s leading scholar on energy markets,

expects crude to reach $60 by this December. In a May letter to clients, Simmons didn’t ex-

pect oil to reach $60 until ’18. What’s important is that everyone’s forecasting rising, not

falling, oil prices.

Wall Street also has begun to smile on the energy sector. During the downturn, shares of en-

ergy company stocks plunged between 25 and 75 percent in value. The rebound in oil prices

has since brought about a recovery in stock prices, some nearly doubling in value from their

troughs of just a few months ago. Their share prices, however, still remain well below their

previous peaks.

Though the outlook for the oil industry is improving, Houstonians shouldn’t expect another

boom. The industry has seen false bottoms before. Last June, energy appeared on the verge

of a turnaround. Oil prices began to climb, firms renewed drilling contracts, and layoffs were

postponed. Then, in early July, Iran agreed to dismantle its nuclear program, the West prom-

ised to lift trade sanctions, and the prospect of Iranian crude flooding the market sent oil pric-

es spiraling downward again. Once burned, twice shy, the saying goes. The industry should

respond to rising prices more cautiously this time.

Structural constraints will also temper prospects for a quick recovery. Many workers laid off

in the downturn have found work elsewhere, either in another industry or another state. Rigs

parked for months in equipment yards won’t be in optimal condition. Some will suffer from

deferred maintenance; others have been cannibalized for spare parts.

The initial impact on manufacturing will be muted as well. Any increase in orders will be met

by scheduling more overtime. Additional hiring will occur only after a sustained and pro-

longed increase in orders. Also, a diminished rig fleet will require a smaller manufacturing

SHARE PRICES, SELECTED HOUSTON AREA FIRMS

Peak Trough 6/8/16 Close

Anadarko $112.59 $30.54 $51.44

Apache 103.51 34.38 55.84

Chevron 134.85 70.02 100.66

ConocoPhillips 86.76 31.88 44.18

EOG 117.98 60.24 79.71

ExxonMobil 104.38 68.71 88.37

Hess 101.1 34.38 58.36

Marathon 41.69 6.73 13.32

Occidental 105.95 59.62 74.83

Shell 83.12 36.87 49.46

Source: Yahoo Finance



workforce to supply the parts, consumables and equipment the industry requires. Even if the

drilling fleet doubles from where it stood in early June, 800 rigs is less than half the number

that were working at the peak.

The impact on exploration and production―in particular, the white collar/office work-

ers―will occur even later in the recovery. Thirty-dollar oil taught E&P firms how to work

with leaner payrolls. Any increase in cash flow from higher oil prices will be allocated to-

ward debt reduction, dividend payments and drilling more wells. Hiring will be a low priori-

ty. During the downturn, layoffs came in the thousands. In the early stages of the recovery,

job gains in the energy sector will be measured by the handful.

The nascent recovery may have come too late for some. Planned layoffs will still be carried

out. Firms that need $80 and $90 oil to remain solvent will be forced into bankruptcy. Mer-

gers and acquisitions, delayed because no one could agree on asset values, will finally tran-

spire. Such transactions always lead to consolidations, asset sales, and more layoffs.

A Final Thought — This time last year, few Houstonians expected the Astros to finish

above .500, much less make the playoffs. The season before, the team posted a 51-111 rec-

ord, the worst in the franchise’s history. The Astros took the field in ’15 with one of the low-

est payrolls in the major leagues; yet the team surprised everyone and made the playoffs, fall-

ing one game short of appearing in the World Series.

The Astros and the local economy share a common trait. Sometimes they exceed our expecta-

tions, other times they start with great promise, only to disappoint in the end. Come Septem-

ber, we’ll know the Astros’ playoff chances. We’ll also know if the oil patch recovery is for

real, and whether the local economy is growing again. If Houston fails on either count,

there’s always ’17.

Employment Update — The nine-county Houston metro area added 6,000 jobs in April.

Over the past 25 years, in boom times April job growth has ranged between 12,000 and

20,000; in bust years the region has lost between 13,000 and 16,000 jobs. The job growth re-

ported in April falls in line with the 25-year average of 5,700 net new jobs for the month.

Given the subpar growth in February and March, “average” job growth for April is viewed as

something of an improvement.

Since February of this year, the region has created 20,000 jobs. That gain partially offsets the

47,800 jobs lost in January. The region always reports losses in January before hiring re-

sumes in February. January’s losses are typically recouped by April or May. The region

needs to add another 27,800 jobs to recoup all the jobs lost in January. Last year, Houston

didn’t recoup January’s losses until October.

On a seasonally adjusted basis, growth and losses are a bit more subdued. The region added

jobs in January (+1,100) and April (+1,800) and lost jobs in February (-5,900) and March

(-2,900). The region remains 7,000 jobs (seasonally adjusted) below its December ’15 peak.



Home Sales Remain Resilient — Houston-area single-family home sales totaled 21,235

April ’16 YTD, a 1.6 percent increase from the 20,902 sold over the same period last year,

according to the Houston Association of Realtors®. Across all properties (including town-

homes, lots, and land), year-to-date sales totaled 25,806, a 1.4 percent increase from the

25,439 sold April ’15 YTD.

Median sales price of single-family homes increased over the year, while average sales price

declined. The median price, the point at which half of the homes sold for more and half sold

for less, rose 3.3 percent from $210,000 in April ’15 to $217,000 in April ’16. In contrast, the

average sales price dropped 1.0 percent from $281,352 to $278,544. The difference in the

movement of the median and average sales price of homes can be explained by stronger sales

activity occurring among mid-range homes (those between $150,000 and $250,000) than

high-priced homes (those above $250,000).

At the end of April, 34,402 homes were listed for sale in the Houston area, a 16.7 percent in-

crease from the 29,486 listed in April of last year. Single-family inventory is now 3.6

months, up from 2.9 months in April the year before. The market is considered evenly bal-

anced between supply and demand when it has a six-month inventory. Overall inventory re-

mains tight for the Houston area, but conditions vary across submarkets. According to the

University of Houston’s Institute for Regional Forecasting, cities located along the Houston

Ship Channel (Baytown, Channelview, and Pasadena) are experiencing a sellers’ market at

2.5 months of inventory while close-in neighborhoods (Rice Military, Heights, and Galleria)

and neighborhoods south of I-10 in Memorial and the Energy Corridor are a buyer’s market,

with inventory greater than six months.

0

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Metro Houston Single-Family Home Sales

2014 2015 2016Source: Houston Assocation of REALTORS®



Although the resale market is faring relatively well considering the downturn in the energy

industry, new home construction has been hit harder. City of Houston building permits for

single-family homes declined 26.6 percent from $459.1 million (1,762 homes) April ’15

YTD to $337.2 million (1,259 homes) April ’16 YTD. MetroStudy reported 6,184 housing

starts in Q1/16, down 10.5 percent from 6,909 starts in Q1/15. The decrease is in line with

the group’s forecasted 10 percent decline in annual starts for ’16. New home closings were

up 3.7 percent from 6,519 in Q1/15 to 6,757 Q1/16, but MetroStudy believes that this was an

artificial increase driven by delayed lot deliveries due to the weather. The builders surveyed

still maintain a negative outlook for closings this year.


Building Permits — City of Houston building permits totaled $494.4 million in April ’16,

down 26.2 percent from $670.0 million in April ’15, according to the City’s Department of

Public Works & Engineering Planning & Development Services. Year-to-date, city building

permits total $2.1 billion, down 19.3 percent from $2.5 billion over the same period in ’15.


Index for All Urban Consumers (CPI-U) rose 1.1 percent nationwide from April ’15 to April

’16, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the volatile

food and energy categories) increased 2.1 percent since April ’15. Consumer prices in the

Houston-Galveston-Brazoria metro area (Brazoria, Chambers, Fort Bend, Galveston, Harris,

Liberty, Montgomery, and Waller Counties) grew 1.4 percent. Core inflation rose 3.1 percent.

Purchasing Managers Index — The Houston Purchasing Managers Index a leading indica-

tor for regional production, registered 44.2 in April, down from 45.9 in March, according to

the latest report from the Institute for Supply Management-Houston. With the April reading,

the PMI has signaled economic contraction in Houston for 16 consecutive months.

Vehicle Sales — Houston-area auto dealers sold 23,652 vehicles in April ’16, a 33.0 percent

decrease from the 35,290 sold in April the previous year, according to TexAuto Facts, pub-

lished by InfoNation, Inc. of Sugar Land. Through the first four months of ’16, local dealers

sold 104,955 vehicles, down 13.2 percent from the 120,877 sold over the same period in ’15.

For the 12 months ending April ’16, Houston sold 360,559 vehicles, a 2.0 percent decrease

from the 367,838 sold in the 12 months ending April ’15.

Patrick Jankowski and Jenny Philip contributed to this issue of








STAY UP TO DATE!







commentary, please email your request for Key Economic Indicators to [email protected]

with your name, title and phone number and your company’s name and address.









Total Private 2,600.1 2,593.5 2,597.9 6.6 2.2 0.3 0.1

Goods Producing 540.4 544.2 567.5 -3.8 -27.1 -0.7 -4.8






Construction 219.9 219.0 214.4 0.9 5.5 0.4 2.6

Manufacturing 232.3 234.7 250.8 -2.4 -18.5 -1.0 -7.4



Wholesale Trade 170.2 170.9 173.2 -0.7 -3.0 -0.4 -1.7

Retail Trade 304.8 302.9 294.4 1.9 10.4 0.6 3.5

Transportation, Warehousing and Utilities 137.6 136.9 138.7 0.7 -1.1 0.5 -0.8

Utilities 16.1 16.2 15.8 -0.1 0.3 -0.6 1.9

Air Transportation 21.8 21.8 21.7 0.0 0.1 0.0 0.5

Truck Transportation 24.8 24.7 25.9 0.1 -1.1 0.4 -4.2


Information 31.7 31.0 32.4 0.7 -0.7 2.3 -2.2

Telecommunications 14.1 14.2 13.9 -0.1 0.2 -0.7 1.4


Real Estate & Rental and Leasing 55.7 56.1 55.2 -0.4 0.5 -0.7 0.9

Professional & Business Services 459.1 459.5 471.7 -0.4 -12.6 -0.1 -2.7

Professional, Scientific & Technical Services 216.0 219.7 220.4 -3.7 -4.4 -1.7 -2.0

Legal Services 23.7 24.4 24.3 -0.7 -0.6 -2.9 -2.5











Other Services 105.7 105.7 106.3 0.0 -0.6 0.0 -0.6

Government 393.4 394.0 385.6 -0.6 7.8 -0.2 2.0

Federal Government 28.0 28.1 27.9 -0.1 0.1 -0.4 0.4












ENERGY

U.S. Active Rotary Rigs Apr '16 437 976 -55.2 527 * 1,302 * -59.5

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Apr '16 40.75 54.45 -25.2 35.07 * 50.02 * -29.9

Spot Natural Gas ($/MMBtu, Henry Hub) Apr '16 1.92 2.61 -26.4 1.98 * 2.83 * -30.0


Houston Purchasing Managers Index Apr '16 44.2 42.7 3.5 45.1 * 46.4 * -2.8

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Apr '16 4,558,616 4,389,875 3.8 17,570,101 16,991,856 3.4

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Apr '16 1,012,855,000 1,196,910,000 -15.4 4,832,756,000 6,013,768,000 -19.6

Nonresidential Apr '16 311,176,000 271,611,000 14.6 1,983,120,000 2,277,647,000 -12.9

Residential Apr '16 701,679,000 925,299,000 -24.2 2,849,636,000 3,736,121,000 -23.7

Building Permits ($, City of Houston) Apr '16 494,394,709 669,967,612 -26.2 2,058,119,584 2,548,953,278 -19.3

Nonresidential Apr '16 288,951,819 451,030,727 -35.9 1,282,342,072 1,619,059,955 -20.8

New Nonresidential Apr '16 129,760,368 309,620,296 -58.1 423,505,132 885,649,692 -52.2

Nonresidential Additions/Alterations/Conversions Apr '16 159,191,451 141,410,431 12.6 858,836,940 733,410,263 17.1

Residential Apr '16 205,442,890 218,936,885 -6.2 775,777,512 929,893,323 -16.6

New Residential Apr '16 145,820,994 201,334,101 -27.6 627,730,276 850,464,953 -26.2



Property Sales Apr '16 7,583 7,741 -2.0 25,806 25,439 1.4

Median Sales Price - SF Detached Apr '16 217,000 210,000 3.3 209,750 * 202,475 * 3.6

Active Listings Apr '16 34,402 29,486 16.7 33,520 * 28,462 * 17.8


Nonfarm Payroll Employment Apr '16 2,993,500 2,983,500 0.3 2,984,425 * 2,973,075 * 0.4

Goods Producing (Natural Resources/Mining/Const/Mfg) Apr '16 540,400 567,500 -4.8 545,175 0 574,950 * -5.2

Service Providing Apr '16 2,453,100 2,416,000 1.5 2,439,250 0 2,398,125 * 1.7


Houston-Sugar Land-Baytown MSA Apr '16 4.8 4.9 4.8 * 4.3 *

Texas Apr '16 4.2 4.5 4.4 * 4.4 *

U.S. Apr '16 4.7 5.1 5.1 * 5.7 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Apr '16 3,878,589 4,811,434 -19.4 14,768,800 16,509,826 -10.5

Air Passengers (Houston Airport System) Mar '16 4,658,322 4,654,563 0.1 13,162,637 12,633,240 4.2

Domestic Passengers Mar '16 3,650,022 3,748,623 -2.6 10,320,115 10,178,639 1.4

International Passengers Mar '16 1,008,300 905,940 11.3 2,842,522 2,454,601 15.8

Landings and Takeoffs Mar '16 66,012 68,261 -3.3 193,062 193,506 -0.2

Air Freight (metric tons) Mar '16 35,226 37,703 -6.6 97,898 108,387 -9.7

Enplaned Mar '16 17,589 19,463 -9.6 49,530 56,277 -12.0

Deplaned Mar '16 17,637 18,240 -3.3 48,368 52,110 -7.2

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Apr '16 23,652 35,290 -33.0 104,955 120,877 -13.2

Cars Apr '16 8,411 14,841 -43.3 38,791 50,379 -23.0

Trucks, SUVs and Commercials Apr '16 15,241 20,449 -25.5 66,164 70,498 -6.1






Occupancy (%) 3Q15 67.2 71.3 70.0 * 73.3 *

Average Room Rate ($) 3Q15 104.37 102.14 2.2 109.26 * 106.97 * 2.1






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, $ /

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Btu

WTI

, $ b

arre

l



WTI Natural Gas

December 2015 ©2015, Greater Houston Partnership Page 1

A New Record — Houston hit a milestone in October, surpassing 3.0 million jobs for the

first time in the region’s history. Over the past 40 years, the region has hit a series of

milestones—1.0 million jobs in July ’75, 1.5 million jobs in March of ’80, and 2.0 million

jobs in February of ’97.

The region hit the 2.5 million job mark three times, once from the wrong direction. After

12 years of steady job growth, Houston recorded 2.5 million jobs in October of ’06 and

continued on to the next milestone. But in the fall of ’08 the Great Recession set in, wiping

out job gains of previous years. Employment sank, hitting the 2.5 million benchmark in

August of ’09 on the way down and again in March of ’10 on the way up.1

October’s strong job performance helped Houston reach the 3.0 million benchmark. The

region created 20,800 jobs that month, according to the Texas Workforce Commission

(TWC). That reflects the second best October in the past 20 years. That's on the heels of

September's gain being the month’s second worst in the past 20 years. The only worse Sep-

tember was '08 with a loss of 18,900 jobs in the aftermath of Hurricane Ike.

1 Houston experienced a similar situation in the early ’80s, hitting 1.7 million jobs in March of ’82 before falling to 1.5 million in

January of ’87.

1.0

1.3

1.5

1.8

2.0

2.3

2.5

2.8

3.0

3.3

'75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15

Mill

ion

s o

f Jo

bs


Metro Houston Employment

A publication of the Greater Houston Partnership Volume 24 Number 12 — December 2015



October also helped the region eke out the first positive job growth for the year. Through

the first nine months, the region had lost 12,800 jobs. But hiring in October in construction,

retail, finance, health care, accommodations and food services, and government (almost ex-

clusively public education) offset losses in energy, manufacturing, transportation, and ad-

ministrative support services.

TWC won’t report November employment data until December 18, but if Houston follows

historical patterns, the agency will likely report job growth for November as well as De-

cember. Not once in the past 25 years has the region failed to record job growth in those

months. This includes ’09 during the depths of the Great Recession.

Seasonal layoffs which occur every January will likely wipe out some if not all of the jobs

gains of the fourth quarter. This would temporarily drop the region below the 3.0 million

benchmark. Eventually January’s losses will be recouped and Houston will surpass 3.0

million again, hopefully sometime in ’16.

Houston's October unemployment rate was 4.8 percent, up from 4.6 percent in September

and from 4.4 percent in October ’14. Texas' unemployment rate was 4.5 percent in October,

up slightly from 4.4 percent in September and unchanged from 4.5 percent in October ’14.

The U.S. rate was 4.8 percent in October, down from 4.9 percent in September and from 5.5

percent in October ’14. October ’15 marked the first month Houston’s rate was equal to the

U.S. rate in nine years. The rates are not seasonally adjusted.

3

4

5

6

7

8

9

10

11

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

% C

ivili

an L

abo

r Fo

rce



Houston Texas U.S.



What’s in Store for ’16? — This year

has been a challenging one for Houston.

Oil prices continued the slide begun in

’14, briefly slipping below $40 a barrel

in August. More than half the U.S. drill-

ing rig fleet has been mothballed and

now operates at its lowest level since

May ’02. The energy industry continues

to lay off workers. And the recent construction boom appears to be winding down. The ques-

tion now on everyone’s mind: Is Houston headed for a recession?

The answer is forthcoming. On December 7, the Partnership will host the Houston Region

Economic Outlook for ’16 and address the issues of oil prices, job growth, and the eco-

nomic prospects in the coming year. The event begins with a panel discussion among

experts from the local energy, health care, professional services, and construction indus-

tries who will share their insights into the future of the economy. Panelists are:

Kristi Chickering, CEO, Sirius Solutions

Michael Covert, President and CEO, CHI St. Luke’s Health

Daniel M. Gilbane, Senior Vice President, Gilbane Building Company

Greg P. Hill, President and COO, World Wide E&P, Hess Corporation

Chickering is the panel’s expert on business and professional services. The sector accounts

for one in every six private sector jobs in the region. Sirius serves clients across a wide

range of industries, including construction, energy, financial services, health care, manu-

facturing, utilities, retail and transportation.

Covert is the panel’s health care expert. While other sectors struggle, health care continues

to add jobs―11,400 since December. CHI St. Luke’s Health operates six hospitals, seven

emergency centers and clinics, and six medical groups in Houston.

Gilbane is the panel’s construction expert. The city has permitted $6 billion in residential

and commercial projects so far this year, and while that amount is substantial, it reflects a

12 percent drop from the same time last year. Gilbane’s high-profile Houston projects

include work for ExxonMobil, Hess, Rice University and the Houston Zoo.

Hill is the panel’s energy expert. The industry continues to struggle with low oil prices,

shrinking exploration budgets, and weak demand growth. Hess Corporation is a leading

global independent energy company engaged in the exploration and production of crude

oil and natural gas.

Shern-Min Chow, Anchor, KHOU 11 News will moderate the panel discussion, which be-

gins at 10 a.m.



Those attending the morning session will receive a copy of Houston Economic Highlights,

60 pages of insights into local economic and demographic trends over the past 10 years. A

copy of the Highlights publication distributed at last year’s event can be found here.

The luncheon portion of the event convenes at noon. Patrick Jankowski, the Partnership’s

Senior Vice President of Research, will present the Partnership’s employment forecast for

’16. (Click here to see the Partnership’s forecast for ’15.) Anthony Chan, Chief Economist,

JPMorgan Chase, will be the luncheon keynote speaker. Chan will present the U.S. and

global outlooks following the regional outlook.

Full-program tickets include the panel discussion, the Partnership’s forecast, the luncheon,

the keynote speech, a copy of the forecast and Houston Economic Highlights. Luncheon

tickets include only the Partnership’s forecast and the keynote address. To register for the

event, go to the Events section of the Partnership’s webpage or click here.

http://bit.ly/1dD54jW

http://www.houston.org/pdf/research/quickview/Employment-Forecast.pdf


http://events.houston.org/?id=247&eid=787&myid=1&Mode=ViewDetails



SNAPSHOT—HOUSTON’S KEY ECONOMIC INDICATORS

Building Permits — City of Houston building permits totaled $6.8 billion for the first ten

months of ’15, down 9.3 percent from $7.5 billion in the same period last year, according to


Both the commercial and residential sectors experienced declines in permit activity. Non-res-

idential permits dropped 9.3 percent, from $4.9 billion October ’14 YTD to $4.4 billion Oc-

tober ’15 YTD. During the same period, residential permits declined 9.1 percent from $2.6

billion to $2.4 billion.


Index for All Urban Consumers (CPI-U) rose 0.2 percent nationwide from October ’14 to

October ’15, according to the U.S. Bureau of Labor Statistics. The annual change in the U.S.

CPI-U has tracked below one percent for the past 11 months. Over this same period, core in-

flation (all items less the volatile food and energy categories) recorded annual increases be-

tween 1.6 percent and 1.9 percent. Consumer prices in the Houston region slipped 0.1 per-

cent. Houston’s core inflation rose 2.9 percent over the year.

Home Sales — The slump in the energy industry and the traditional fall slowdown caught up

with the Houston housing market in October. Total property sales dropped 12.1 percent from

7,993 units in October ’14 to 7,026 units in October ’15, the steepest over-the-year decline in

four years, according to data released today by the Houston Association of REALTORS®.

Year-to-date, Houston-area realtors closed on 76,178 properties, down 1.6 percent from last

year’s YTD total of 77,432.


term leading indicator for regional production, registered 48.0 in October, a marginal increase

from 47.6 in September according to the latest report from the Institute for Supply Manage-

ment-Houston (ISM-Houston). With the October reading, the PMI has signaled contraction

for ten consecutive months.

Vehicle Sales — Houston-area vehicle sales reached a historic high with a record 377,705

vehicles sold in the 12 months ending October ’15, surpassing the previous peak of 376,598

vehicles sold in the 12 months ending January ’15. According to TexAuto Facts, published by

InfoNation, Inc. of Sugar Land, monthly sales reached 30,408 vehicles, up 4.1 percent from

the 29,206 sold in October ’14.


Contributed to this issue of Houston: The Economy at a Glance








Stay Up to Date!


If you are a nonmember and would like to receive this electronic publication, please email

your request for Economy at a Glance to [email protected]. Include your name, title

and phone number and your company’s name and address. For information about joining

the Greater Houston Partnership, call Member Services at 713-844-3683.

The Key Economic Indicators table is updated whenever any data change — typically, 11

or so times per month. If you would like to receive these updates by email, usually accom-

panied by commentary, please email your request for Key Economic Indicators to

[email protected] with the same identifying information. You may request Glance

and Indicators in the same email.







Oct '15 Sep '15 Oct '14 Sep '15 Oct '14 Sep '15 Oct '14


Total Private 2,608.9 2,596.7 2,585.6 12.2 23.3 0.5 0.9

Goods Producing 565.9 560.9 581.4 5.0 -15.5 0.9 -2.7






Construction 214.6 205.3 210.4 9.3 4.2 4.5 2.0

Manufacturing 241.5 244.4 257.9 -2.9 -16.4 -1.2 -6.4



Wholesale Trade 167.9 168.3 172.1 -0.4 -4.2 -0.2 -2.4

Retail Trade 306.6 304.8 296.5 1.8 10.1 0.6 3.4


Utilities 16.2 16.2 15.8 0.0 0.4 0.0 2.5


Truck Transportation 25.9 26.0 25.5 -0.1 0.4 -0.4 1.6

Pipeline Transportation 10.6 10.7 10.5 -0.1 0.1 -0.9 1.0

Information 34.0 34.6 32.5 -0.6 1.5 -1.7 4.6


Finance & Insurance 92.7 92.4 93.8 0.3 -1.1 0.3 -1.2

Real Estate & Rental and Leasing 52.2 51.4 55.8 0.8 -3.6 1.6 -6.5

Professional & Business Services 472.8 473.5 469.1 -0.7 3.7 -0.1 0.8

Professional, Scientific & Technical Services 219.7 219.6 221.5 0.1 -1.8 0.0 -0.8

Legal Services 24.3 24.4 24.6 -0.1 -0.3 -0.4 -1.2




Admin & Support/Waste Mgt & Remediation 220.0 220.9 213.8 -0.9 6.2 -0.4 2.9

Administrative & Support Services 207.9 209.0 203.2 -1.1 4.7 -0.5 2.3




Arts, Entertainment & Recreation 30.6 31.5 29.5 -0.9 1.1 -2.9 3.7


Other Services 105.0 103.8 105.0 1.2 0.0 1.2 0.0

Government 391.7 383.1 381.9 8.6 9.8 2.2 2.6













ENERGY

U.S. Active Rotary Rigs Nov '15 760 1,925 -60.5 1,006 * 1,860 * -45.9

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Nov '15 42.31 75.52 -44.0 49.80 * 96.26 * -48.3

Spot Natural Gas ($/MMBtu, Henry Hub) Nov '15 2.14 4.15 -48.4 2.69 * 4.37 * -38.4


Houston Purchasing Managers Index Oct '15 48.0 58.5 -17.9 47.0 * 57.2 * -17.8

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Oct '15 4,708,496 4,809,100 -2.1 46,802,735 45,189,492 3.6

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Oct '15 1,180,384,000 1,728,871,000 -31.7 14,076,425,000 29,693,611,000 -52.6

Nonresidential Oct '15 450,987,000 848,320,000 -46.8 5,420,233,000 21,159,962,000 -74.4

Residential Oct '15 729,397,000 880,551,000 -17.2 8,656,192,000 8,533,649,000 1.4

Building Permits ($, City of Houston) Oct '15 736,851,703 622,865,368 18.3 6,794,542,349 7,487,543,723 -9.3

Nonresidential Oct '15 515,255,428 399,611,713 28.9 4,431,924,022 4,887,001,072 -9.3

New Nonresidential Oct '15 382,957,401 122,208,002 213.4 2,334,555,701 2,798,739,790 -16.6

Nonresidential Additions/Alterations/Conversions Oct '15 132,298,027 277,403,711 -52.3 2,097,368,321 2,088,261,282 0.4

Residential Oct '15 221,596,275 223,253,655 -0.7 2,362,618,327 2,600,542,651 -9.1

New Residential Oct '15 195,081,481 159,483,294 22.3 2,116,553,415 2,314,676,150 -8.6

Residential Additions/Alterations/Conversions Oct '15 26,514,794 63,770,361 -58.4 246,064,912 285,866,501 -13.9


Property Sales Oct '15 7,026 7,993 -12.1 76,178 77,432 -1.6

Median Sales Price - SF Detached Oct '15 205,000 192,300 6.6 211,130 * 196,379 * 7.5

Active Listings Oct '15 33,692 28,333 18.9 31,055 * 28,717 * 8.1


Nonfarm Payroll Employment Oct '15 3,000,600 2,967,500 1.1 2,976,940 * 2,912,450 * 2.2

Goods Producing (Natural Resources/Mining/Const/Mfg) Oct '15 565,900 581,400 -2.7 566,830 0 566,210 * 0.1

Service Providing Oct '15 2,434,700 2,386,100 2.0 2,410,110 0 2,346,240 * 2.7


Houston-Sugar Land-Baytown MSA Oct '15 4.8 4.4 4.4 * 5.2 *

Texas Oct '15 4.5 4.5 4.4 * 5.3 *

U.S. Oct '15 4.8 5.5 5.4 * 6.3 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Sep '15 3,404,471 3,941,462 -13.6 35,134,928 35,260,938 -0.4

Air Passengers (Houston Airport System) Sep '15 4,158,133 4,061,706 2.4 40,885,531 39,819,447 2.7

Domestic Passengers Sep '15 3,430,077 3,390,053 1.2 32,886,441 32,298,869 1.8

International Passengers Sep '15 728,056 671,653 8.4 7,999,090 7,520,578 6.4

Landings and Takeoffs Sep '15 62,380 65,688 -5.0 598,625 611,065 -2.0

Air Freight (metric tons) Sep '15 32,247 36,609 -11.9 310,066 323,106 -4.0

Enplaned Sep '15 16,022 19,159 -16.4 162,729 169,998 -4.3

Deplaned Sep '15 16,225 17,450 -7.0 147,337 153,108 -3.8

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Oct '15 30,408 29,206 4.1 324,484 320,777 1.2

Cars Oct '15 11,429 12,165 -6.1 131,284 138,975 -5.5

Trucks, SUVs and Commercials Oct '15 18,979 17,041 11.4 193,200 181,802 6.3



Houston-Galveston-Brazoria CMSA Oct '15 214.569 214.791 -0.1 213.048 * 210.700 * 1.1

United States Oct '15 237.838 237.433 0.2 237.034 * 236.987 * 0.0


Occupancy (%) 2Q15 71.2 74.9 71.5 * 74.3 *







SourcesRig Count Baker Hughes Incorporated Spot WTI, Spot Natural Gas U.S. Energy Information Admin. Houston Purchasing Managers National Association of Index Purchasing Management – Houston, Inc. Electricity CenterPoint Energy Building Construction Contracts McGraw-Hill Construction City of Houston Building Permits Building Permit Department, City of Houston






-150

-120

-90

-60

-30

0

30

60

90

120

150

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

3,000

3,100

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

12

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460

500

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580

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'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

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7

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'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

% C

ivili

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abo

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Houston Texas U.S.

0

2

4

6

8

10

12

14

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0

20

40

60

80

100

120

140

160

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Nat

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, $ /

mcf

WTI

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WTI Natural Gas

November 2015 ©2015, Greater Houston Partnership Page 1

What’s in Store for ’16? — This year

has been a challenging one for Houston.

Oil prices continued the slide begun in

’14, briefly slipping below $40 a barrel

in August. More than half the U.S. drill-

ing rig fleet has been mothballed and

now operates at its lowest level since

May ’02. The energy industry continues

to lay off workers. And the recent construction boom appears to be winding down. The ques-

tion now on everyone’s mind: Is Houston headed for a recession?

The answer is forthcoming. On December 7, the Partnership will host the Houston Region

Economic Outlook for ’16 and address the issues of oil prices, job growth, and the eco-

nomic prospects in the coming year. The event begins with a panel discussion among

experts from the local energy, health care, professional services, and construction indus-

tries who will share their insights into the future of the economy. Panelists are:

Kristi Chickering, CEO, Sirius Solutions

Michael Covert, President and CEO, CHI St. Luke’s Health

Daniel M. Gilbane, Regional Manager, Gilbane Building Company

Greg P. Hill, President and COO, World Wide E&P, Hess Corporation

Chickering is the panel’s expert on business and professional services. The sector accounts

for one in every six private sector jobs in the region. Sirius serves clients across a wide

range of industries, including construction, energy, financial services, health care, manu-

facturing, utilities, retail and transportation.

Covert is the panel’s health care expert. While other sectors struggle, health care continues

to add jobs―11,400 since December. CHI St. Luke’s Health operates six hospitals, seven

emergency centers and clinics, and six medical groups in Houston.

Gilbane is the panel’s construction expert. The city has permitted $6 billion in residential

and commercial projects so far this year, and while that amount is substantial, it reflects a

12 percent drop from the same time last year. Gilbane’s high-profile Houston projects

include work for ExxonMobil, Hess, El Paso, Rice University and the Houston Zoo.

Hill is the panel’s energy expert. The industry continues to struggle with low oil prices,

shrinking exploration budgets, and weak demand growth. Hess Corporation is a leading

A publication of the Greater Houston Partnership Volume 24 Number 11 — November 2015



global independent energy company engaged in the exploration and production of crude

oil and natural gas.

Lisa Shumate, General Manager, Houston Public Media (KUHT TV 8, News 88.7 and Clas-

sic 91.7) will moderate the panel discussion, which begins at 10 a.m.

Those attending the morning session will receive a copy of Houston Economic Highlights,

60 pages of insights into local economic and demographic trends over the past 10 years. A

copy of the Highlights publication distributed at last year’s event can be found here.

The luncheon portion of the event convenes at noon. Patrick Jankowski, the Partnership’s

Senior Vice President of Research, will present the Partnership’s employment forecast for

’16. (Click here to see the Partnership’s forecast for ’15.) Anthony Chan, Chief Economist,

JPMorgan Chase, will be the luncheon keynote speaker. Chan will present the U.S. and

global outlooks following the regional outlook.

Full-program tickets include the panel discussion, the Partnership’s forecast, the luncheon,

the keynote speech, a copy of the forecast and Houston Economic Highlights. Luncheon

tickets include only the Partnership’s forecast and the keynote address. To register for the

event, go to the Events section of the Partnership’s webpage or click here.

A Question of Affordability — The U.S. Bureau of Labor Statistics (BLS) reports that the

Consumer Price Index (CPI) rose 0.3 percent in Houston during the 12 months ending August

’15, the first increase since

January of this year. Local

inflation had been negative

throughout much of ’15, a

dramatic change from ’13

and ’14, when inflation in

Houston outpaced the na-

tion.1

A 13.1 percent drop in the

cost of household energy

(electricity and natural gas)

and a 27.2 percent drop in

the cost of motor fuels have

helped keep inflation in check. The drop in consumer energy costs is not surprising, given

that crude oil prices fell 55.6 percent and natural gas 29.2 percent over the same period.

(Almost half of the electricity generated in Texas comes from natural gas-fired power

1 For calculating the local Consumer Price Index, BLS classifies Houston as Brazoria, Chambers, Fort Bend, Galveston, Har-

ris, Liberty, and Montgomery counties.

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Source: U.S. Bureau of Labor Statistics, not seasonally adjusted

Inflation, 12-Month Change

Houston CPI-U U.S. CPI-U

http://bit.ly/1dD54jW



http://events.houston.org/?id=247&eid=787&myid=1&Mode=ViewDetails



plants.) The shelter component of the CPI continues to rise, however, up 5.1 percent since

August ’14 and 19.2 percent since January ’10.

The CPI suggests local housing costs have increased nearly one-fifth during the recent

economic boom. Based on anecdotal evidence, that figure seems to understate the escala-

tion in housing costs. This apparent underestimate may result from the method BLS uses

to measure housing inflation.2 In the following pages, the Partnership offers alternative

views of housing appreciation and affordability in Houston.

The Home Price Index — The Federal Housing Finance Agency (FHFA) publishes a

quarterly Home Price Index (HPI) that measures appreciation in single-family values over

time. The index is based on the repeated sale or refinancing of the same homes as they are

resold multiple times with the mortgages on those homes having been purchased or secu-

ritized by the Federal National Mortgage Association or the Federal Home Loan Mortgage

Corporation.3 The FHFA publishes the index for all 50 states, the District of Columbia, and

all U.S. metro areas.4

Not surprisingly, the index shows Houston home prices rose 37.9 percent from Q1/10 to

Q3/15. Several factors fed the increase, among them a shortage of lots on which to build

new homes (which pushes buyers into the resale market), the influx of newcomers to the

region boosting housing demand (both rental and purchase), and the tendency of buyers to

bid above a home’s list

price to trump other buy-

ers vying for the same

house.

This run-up in home

prices begs the question:

Has Houston forfeited its

claim to being one of the

most affordable regions

in which to live? The an-

swer depends on one’s

perspective.

Metro Comparisons — In the broadest sense, Houston’s cost of living is still below the

nation as a whole. Three times a year the Council for Community and Economic Research

(C2ER) conducts a cost of living survey in the nation’s urban areas.5 Like the BLS survey,

2 BLS uses a method known as “owners’ equivalent rent”―the amount a homeowner would pay to rent or would earn from

renting his or her home in a competitive market―to track increases in shelter costs over time. 3 Also known as Fannie Mae and Freddie Mac. 4 More information in the FHFA Home Price Index can be found at http://www.fhfa.gov/. 5 As a matter of full disclosure, the Research Department at the Greater Houston Partnership gathers and submits the Houston

market data that go into calculating the C2ER Cost of Living Index.

150

170

190

210

230

250

270

290

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Source: Federal Housing Finance Agency, seasonally adjusted data

FHFA Home Purchase Index, Q1/91 = 100

http://www.fhfa.gov/



the C2ER analysis is based on various items—groceries, housing, utilities, transportation,

health care, and miscellaneous goods and services—that represent the typical buying pat-

terns of urban middle management consumers. While the CPI measures changes in prices

over time, the C2ER Index compares costs of identical items at a single point in time across

different urban areas. The survey for Q3/15 found Houston’s overall cost of living to be

7.2 percent below the U.S. average, with housing costs 7.7 percent below the average.6

Houston Cost of Living Index, U.S. Average = 100.0 All items Grocery Housing Utilities Transportation Health Care Misc

Houston Index

92.8 83.3 92.3 95.7 91.2 96.7 96.5

Source: Council for Community & Economic Research, Cost of Living Index, Third Quarter 2015

C2ER’s survey includes data from small and large metros alike—and the former, which

tend to have lower costs, far outnumber the latter. If one recalculates the index using only

data for the nation’s largest metros, Houston would have the fifth lowest housing costs.

6 More information on the C2ER Cost of Living Index can be found at https://www.coli.org/.

-28.5

-22.5

-17.2

-10.3

-7.7

-4.8

-3.7

7.8

19.3

20.4

35.9

38.0

44.0

100.9

115.6

122.8

143.3

152.9

177.9

-30 20 70 120 170

St. Louis, MO

Tampa, FL

Atlanta, GA

Detroit, MI

Houston, TX

Dallas, TX

Phoenix, AZ

Minneapolis, MN

Chicago, IL

Philadelphia, PA

Seattle, WA

Miami, FL

Baltimore, MD

Boston, MA

Los Angeles, CA

Washington, DC

San Diego, CA

New York, NY

San Francisco, CA

Source: Council for Community and Economic Research, Cost of Living Index, Q3 2015

Housing Cost Comparison, 20 Most Populous U.S. Metros

% Below/Above U.S. Average

https://www.coli.org/



The C2ER index indicates the

cost of living is lower in Hou-

ston than in most of the nation.

That doesn’t necessarily mean

housing is cheap. But afforda-

bility can be gauged in several

ways, one being the burden that

homeownership places on a

family’s income. By that meas-

ure, Houston fares well compared to the nation. Data from the American Community Sur-

vey (ACS) show 63.6 percent of local households spent less than 25 percent of their income

on monthly housing costs compared with 58.1 percent for the nation.

The Income Test —Wendell Cox, a well-known urban planner and host of the website

www.Demographia.com, has devised an alternative method for determining housing af-

fordability. Cox’s methodology is based on the multiples of median household income re-

quired to purchase a home: the lower the multiple, the more affordable the housing in that

market. His methodology allows him to rate affordability not just in the U.S. but in global

metros as well. In a recent report, Cox identified the world’s least affordable housing mar-

kets (in order) as Hong Kong, Vancouver, Sydney, San Francisco and San Jose, Melbourne,

London, San Diego, Auckland and Los Angeles.7

Applying Cox’s methodology, the Partnership

calculated housing affordability in the nation’s 20

most populous metro areas using median house-

hold income data from the ACS and median home

prices from the National Association of Realtors

(NAR). The results show that only Atlanta, Min-

neapolis and St. Louis have affordable housing

markets. Houston, with a multiple of price to in-

come of 3.3, falls at the low end of “moderately unaffordable.” Over the past three years,

16 of the nation’s 20 largest metro areas have seen housing affordability decline. Houston

was rated “affordable” in ’12 but slipped to “moderately unaffordable” in ’14.8

The magazine Governing recently completed a study of housing affordability in the na-

tion’s 25 largest cities, looking to determine whether families are being priced out the mar-

ket for homes with two or more bedrooms. Like the Demographia methodology, Governing

7 The full report, 11th Annual Demographia International Housing Affordability Survey, can be found at www.de-

mographia.com. 8 NAR did not report housing prices for Detroit last year, so the Partnership was unable to determine whether housing has

become more or less affordable in the Motor City metro.

BURDEN OF HOME OWNERSHIP COSTS

% Of Households

Share of Income Spent on Housing U.S. Houston

Less than 20.0 percent 42.1 47.4

20.0 to 24.9 percent 16.0 16.2

25.0 to 29.9 percent 11.1 10.5

30.0 to 34.9 percent 7.4 6.0

35.0 percent or more 23.4 19.9

Source: American Community Survey

Housing Affordability Ratings

Rating Median Income

Multiplier

Severely Unaffordable 5.1 and over

Seriously Unaffordable 4.1 to 5.0

Moderately Unaffordable 3.1 to 4.0

Affordable 3.0 and under

Source: Wendell Cox, www.Demographia.com

http://www.demographia.com/






HOUSING AFFORDABILITY IN ’14, 20 MOST POPULOUS METROS, HIGHER MULTIPLIERS = LESS AFFORDABILITY

----- Median ----- ----- Median -----

Metro Market Home Price $000

HH Income

$000

Affordability Multiplier

Metro Market Home Price $000

HH Income

$000

Affordability Multiplier

San Francisco 737.6 83.2 8.9 Philadelphia 220.7 62.2 3.5

San Diego 497.9 66.2 7.5 Baltimore 244.1 71.5 3.4

Los Angeles 449.5 60.5 7.4 Chicago 205.9 61.6 3.3

New York 395.9 67.1 5.9 Houston 198.4 60.1 3.3

Miami 266.0 48.5 5.5 Tampa 151.5 46.9 3.2

Boston 389.8 75.7 5.2 Dallas/Fort Worth 188.3 59.5 3.2

Riverside 273.9 54.6 5.0 Minneapolis 210.1 69.1 3.0

Seattle 356.6 71.3 5.0 Atlanta 159.5 56.2 2.8

Washington, D.C. 383.8 91.2 4.2 St. Louis 141.7 55.5 2.6

Phoenix 198.5 53.4 3.7 Detroit NR NR NR

Source: Partnership calculations using American Community Survey and National Association of Realtors data

relied on median household income as reported in the ACS, but focused on the median

income for family households, which is slightly higher than that for non-family households.

Governing found that families in Houston earning $69,000 or more annually could qualify

to purchase 65 percent of the homes with two of more bedrooms listed in the Trulia home

sale database. The number dropped to 54 percent for Dallas and to 40 percent for Austin.

Not surprisingly, San Francisco had the smallest share of available housing, 10 percent.

The study did not address the location or desirability of the housing.

A separate report from John Burns Real Estate Consulting supports the findings of Gov-

erning. JBRE estimates that based on a 20 percent down payment and a 30-year fixed-rate

conventional mortgage, 65 percent of households in Houston could afford to purchase the

median priced home in ’14. That share dipped slightly from 69 percent in ’12 but remained

in line with the long-term median, which is also 65 percent.

Dollars and Cents — Indexes, percentages and multipliers are abstractions, however.

They don’t reflect the actual impact on the homebuyer’s pocket book. Mortgage payments,

property taxes, and insurance are easier to grasp and reflect a homeowner’s true financial

concerns. In ’10, a median-priced home posted in the Houston Association of Realtors®

Multiple Listing Service database sold for $155,000. With 10 percent down, based on a 15-

year mortgage at interest rates of the day, the monthly expense for principal, interest, taxes

and insurance was $1,492. Over the next four years, the median-priced home rose to

$199,000 and the comparable monthly expense to $1,908, reflecting a 28.4 percent increase

in home prices and a 27.9 percent increase in monthly payments. Median household income

in Houston grew by $6,130, or 11.3 percent over the same period.



Monthly Payments on the Median-Priced Home Sold Through HAR

Median Home

Price 1 Mortgage In-terest Rate 2

Monthly Mort-gage Note 3

Monthly Taxes & Ins 4

Total Monthly Payment

'10 $155,000 4.35 $1,116 $376 $1,492

'11 $155,530 4.11 $1,101 $378 $1,479

'12 $164,800 3.50 $1,123 $402 $1,525

'13 $182,000 4.49 $1,322 $448 $1,770

'14 $199,000 4.16 $1,415 $493 $1,908

'15 $208,000 3.89 $1,454 $516 $1,970 1 Median single-family home, sold in August of that year. 2 Average rate for conventional mortgage in August of that year; 3 Calculated using the mortgage rate calculator available at the Freddie Mac website; 4 Accounts for all available homestead exemptions and assumes insurance premium would be equal to 1.0 percent of the value of the home. Sources (in order): Houston Association of Realtors, Federal Reserve Bank of St. Louis, Federal Home Loan Mortgage Corporation, Harris County Appraisal District, and Texas Department of Insurance

A Different Perspective — What Houstonians actually face is a limited supply of afford-

able housing in close-in neighborhoods, not a dearth of affordable housing altogether. Take

the Heights, for example, one of Houston’s trendiest neighborhoods. In ’97, the typical

Heights home sold for $81.73 per square foot. Last year, home prices averaged $285.22

per square foot. A search of HAR’s MLS database found 79 homes in the Heights listed at

$1 million or more, 11 between $200,000 and $250,000, and only one below $200,000. On

the other hand, Jersey Village has 28 homes listed between $150,000 and $250,000;

1960/Cypress Creek South, 112 in that range.

The disparity between the Heights, Jersey Village, and 1960/Cypress neighborhoods un-

derscores an old Houston adage—you drive until you can afford. The Heights is inside the

Loop, Jersey Village and Cypress outside Beltway 8. The adage also acknowledges the

tradeoff between convenience and price. Even with a weakened economy, Houston’s pop-

ulation growth will continue: conservative projections expect the region to add another

million residents over the next 10 years.9 Those new residents will need both apartments

and single-family homes. Houston won’t lose its affordable neighborhoods, but residents

may have to drive farther to reach them.

Commercial Real Estate Beginning to Turn — Houston’s commercial real estate market

has begun to feel the consequences of energy companies adjusting to a “lower for longer”

oil price outlook. After 19 consecutive quarters of positive net absorption, the Houston

office market recorded negative net absorption of 87,904 square feet in the Q3/15, accord-

ing to JLL’s quarterly Office Insight. Although Class A properties experienced positive net

absorption of 135,108 square feet, Class B properties saw a loss of 225,000 square feet.

9 Long-time readers of Glance will recall that slightly less than half of Houston’s population growth comes from natural increase

(births minus deaths) and slightly more than half comes from net in-migration (more residents moving in than out).



Negative net absorption is expected to continue in the upcoming quarters as leasing activity

has slowed. Third quarter leasing activity was the lowest in the past 15 years, decreasing

44.0 percent from 2.7 million square feet in Q2/15 to 1.5 million square feet in Q3/15.

Three factors contribute to a sobering outlook for the Houston office market:

Construction: A total of 10.7 million square feet of office space across 32 buildings is

under construction, with 52.4 percent of the space preleased. According to CBRE, 13

are speculative developments that are 9.2 percent preleased. More than 580,000 square

feet of new construction was delivered in the third quarter.

Sublease space: Sublease space has nearly doubled in the past year, from 3.6 million

square feet in Q3/14 to 7.1 msf in Q3/15. CBRE has not seen an impact on asking rents,

which have risen from $26.10 to $27.74 per square foot during this period. However,

negotiated effective rents have declined and concessions are on the rise.

Shadow space: As new buildings are delivered and companies with preleased space

move in, vacant square footage, or shadow space, is left behind. Depending on the lease

terms, the space will add to available inventory on a direct or sublease basis.

Houston’s industrial market recorded positive net absorption in the third quarter, but still

experienced over-the-year declines as activity was constricted by a lack of available space.

Colliers International reports 1.6 msf of net absorption in Q3, down from 2.7 msf in Q2.

Absorption was strongest in the warehouse/distribution properties as manufacturing activ-

ity slowed.

The industrial vacancy rate stood at 4.8 percent in Q3, unchanged from a year earlier even

though 10.2 msf of new construction was delivered during that period. Currently, 9.6 msf

of industrial space is under construction, of which Daikin Industries, an HVAC manufac-

turer, is responsible for almost half. Average asking rents increased from $6.37 per square

foot per year in Q3/14 to $6.96 in Q3/15.

Houston’s retail market has yet to be impacted by the slowdown in the energy industry.

According to CBRE, occupancy is at 94.1 percent, the highest on record for the market.

Class A space is even tighter with 97.6 percent occupancy.

Currently, 2.4 msf of retail space is under construction. In projects set to be delivered in

Q1/16, 81 percent of the space is preleased. Grocery-anchored developments continue to

fuel retail development, particularly in the suburbs. Kroger has four locations under con-

struction (Humble, Cypress, Lake Jackson, and Katy). H-E-B will add two locations (Katy

and Clear Lake) after opening a store in Lake Jackson this quarter. Luxury retailers are

targeting the Galleria and Inner Loop area and creating strong demand for limited high-

quality space in these markets.



Employment Update —The Houston-The Woodlands-Sugar Land metro area created

6,400 jobs in September, according to the Texas Workforce Commission (TWC). Houston

area employment peaked at 2,992,600 in December ’14, slipped well below that level in

the spring, and has struggled to regain that summit ever since.

Several sectors have reported significant losses from the employment peak, while others

have reported healthy gains. Sectors with the greatest year-to-date job losses include trade,

transportation and utilities (-15,000), manufacturing (-14,200) and energy (-4,000). The

Partnership believes TWC has underreported job losses in energy this year and expects the

data to be revised downward in the future. Sectors with the largest jobs gains so far this

year include health care (+11,400), accommodation and food services (+12,500) and arts,

entertainment and recreation (+3,000). Unfortunately, the gains have not been enough to

offset the losses. Total nonfarm payroll employment in Houston stood at 2,983,400 in Sep-

tember, down 9,200 jobs since the first of the year.

Aviation Update — The

Houston Airport System

reached a milestone in Octo-

ber when Southwest Airlines

launched international air

service from Hobby Airport,

making Houston one of only

five U.S. cities with dual in-

ternational air hubs, the

other cities being Chicago,

New York, Orlando, and

Washington, D.C. The Hou-

ston airport system already

ranks as the nation’s eighth busiest international gateway. With Hobby expected to even-

tually handle a million or more international passengers each year, HAS could potentially

overtake San Francisco and Atlanta to become the nation’s sixth busiest global gateway.

Twenty foreign flag and three U.S. air carriers now offer international passenger service

from Bush Intercontinental and Hobby. They connect Houston with 74 markets in 35 coun-

tries. Initial service from Hobby is to Aruba, Cancún, Mexico City, Puerto Vallarta and

San Jose del Cabo/Los Cabos in Mexico, San Jose and Liberia in Costa Rica, Belize City,

Belize and Montego Bay, Jamaica.

International traffic has been the fastest growing segment of HAS passenger activity, rising

at a 4.4 percent compound annual growth rate during the past ten years compared to a 1.2

percent for domestic passenger traffic. Nearly one in every five HAS passengers is travel-

ing internationally.

90

100

110

120

130

140

150

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Houston Air Passengers, Domestic vs. International Growth12-month totals, Indexed August '05=100

Domestic Passengers International Passengers

Source: Houston Airport System, Partnership calculations




Building Permits — City of Houston building permits totaled $6.1 billion for the first nine

months of ’15, down 11.8 percent from $6.9 billion in the same period last year, according

to the City’s Department of Public Works & Engineering Planning & Development Ser-

vices. Both the commercial and residential sectors experienced declines in permit activity.

Nonresidential permits dropped 12.7 percent, from $4.5 billion September ’14 YTD to $3.9

billion September ’15 YTD. During the same period, residential permits declined 9.9 per-

cent from $2.4 billion to $2.1 billion.


Index for All Urban Consumers (CPI-U) was unchanged nationwide from September ’14

to September ’15, according to the U.S. Bureau of Labor Statistics. The annual change in

the U.S. CPI-U has been below one percent for the past 10 months. Over this same period,

core inflation (all items less the volatile food and energy categories) recorded annual in-

creases between 1.6 percent and 1.9 percent.

Home Sales — The Houston housing market recorded over-the-year gains in sales, dollar

volume, and price in September, according to the Houston Association of REALTORS®.

Total property sales increased 2.2 percent from 7,848 units in September ’14 to 8,024 units

in September ’15. Housing inventory stood at 3.5 months for the third consecutive month,

an improvement from the average inventory of 2.9 months during the same period last year.


term leading indicator for regional production, registered 47.6 in September, a marginal

increase from 47.3 in August, according to the Institute for Supply Management-Houston.

With the September reading, the Houston PMI has fallen below 50 for nine consecutive

months. During the Great Recession, Houston’s PMI registered below 50 for 10 consecu-

tive months, from November ’08 through August ’09.

Vehicle Sales — Houston-area auto dealers sold 376,503 vehicles in the 12 months ending

September ’15, nearly matching the record 376,598 vehicles sold in the 12 months ending

January ’15. According to TexAuto Facts, published by InfoNation, Inc. of Sugar Land,

monthly sales reached 38,922 vehicles, up 10.6 percent from the 35,203 sold in September

’14. The strong September performance helped offset slow activity from earlier in the year

to push the year-to-date total to 294,076, up 0.9 percent from the 291,571 vehicles sold in

the same period last year.










Stay Up to Date!

















Sep '15 Aug '15 Sep '14 Aug '15 Sep '14 Aug '15 Sep '14


Total Private 2,599.7 2,614.5 2,572.9 -14.8 26.8 -0.6 1.0

Goods Producing 561.3 562.3 577.1 -1.0 -15.8 -0.2 -2.7



Mining and Logging 111.5 111.3 111.7 0.2 -0.2 0.2 -0.2

Oil & Gas Extraction 54.8 55.3 54.7 -0.5 0.1 -0.9 0.2

Support Activities for Mining 54.2 53.5 55.6 0.7 -1.4 1.3 -2.5

Construction 205.3 204.6 208.6 0.7 -3.3 0.3 -1.6

Manufacturing 244.5 246.4 256.8 -1.9 -12.3 -0.8 -4.8



Wholesale Trade 168.1 169.1 171.1 -1.0 -3.0 -0.6 -1.8

Retail Trade 305.0 305.8 293.7 -0.8 11.3 -0.3 3.8


Utilities 16.2 16.0 15.9 0.2 0.3 1.3 1.9




Information 34.5 34.5 32.4 0.0 2.1 0.0 6.5


Finance & Insurance 92.3 92.7 93.7 -0.4 -1.4 -0.4 -1.5




Legal Services 24.3 25.1 23.9 -0.8 0.4 -3.2 1.7



Computer Systems Design & Related Services 32.8 33.1 32.6 -0.3 0.2 -0.9 0.6



Employment Services 80.7 81.0 83.3 -0.3 -2.6 -0.4 -3.1





Other Services 103.7 106.3 104.3 -2.6 -0.6 -2.4 -0.6

Government 383.7 362.5 374.3 21.2 9.4 5.8 2.5













ENERGY

U.S. Active Rotary Rigs Sep '15 848 1,930 -56.1 1,059 * 1,845 * -42.6

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Sep '15 45.26 93.37 -51.5 51.09 * 100.08 * -49.0

Spot Natural Gas ($/MMBtu, Henry Hub) Sep '15 2.66 3.89 -31.6 2.79 * 4.47 * -37.6


Houston Purchasing Managers Index Sep '15 47.6 58.1 -18.1 46.9 * 57.1 * -17.9

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Sep '15 4,754,992 5,128,460 -7.3 42,094,239 40,380,392 4.2

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Sep '15 1,182,015,000 1,426,582,000 -17.1 12,591,807,000 27,963,740,000 -55.0

Nonresidential Sep '15 424,522,000 658,045,000 -35.5 4,928,696,000 20,310,642,000 -75.7

Residential Sep '15 757,493,000 768,537,000 -1.4 7,663,111,000 7,653,098,000 0.1

Building Permits ($, City of Houston) Sep '15 598,438,344 1,229,818,665 -51.3 6,057,690,646 6,864,678,355 -11.8

Nonresidential Sep '15 435,474,161 795,366,136 -45.2 3,916,668,594 4,487,389,359 -12.7

New Nonresidential Sep '15 164,473,093 631,895,620 -74.0 1,951,598,300 2,676,531,788 -27.1

Nonresidential Additions/Alterations/Conversions Sep '15 271,001,068 163,470,516 65.8 1,965,070,294 1,810,857,571 8.5

Residential Sep '15 162,964,183 434,452,529 -62.5 2,141,022,052 2,377,288,996 -9.9

New Residential Sep '15 140,873,854 414,409,469 -66.0 1,921,471,934 2,155,192,856 -10.8

Residential Additions/Alterations/Conversions Sep '15 22,090,329 20,043,060 10.2 219,550,118 222,096,140 -1.1


Property Sales Sep '15 8,024 7,848 2.2 69,199 69,439 -0.3

Median Sales Price - SF Detached Sep '15 208,000 199,000 4.5 211,644 * 196,832 * 7.5

Active Listings Sep '15 34,041 28,946 17.6 30,762 * 29,866 * 3.0


Nonfarm Payroll Employment Sep '15 2,983,400 2,947,200 1.2 2,974,711 * 2,906,333 * 2.4

Goods Producing (Natural Resources/Mining/Const/Mfg) Sep '15 561,300 577,100 -2.7 566,978 0 564,522 * 0.4

Service Providing Sep '15 2,422,100 2,370,100 2.2 2,407,733 0 2,341,811 * 2.8


Houston-Sugar Land-Baytown MSA Sep '15 4.6 4.9 4.4 * 5.2 *

Texas Sep '15 4.4 5.0 4.3 * 5.4 *

U.S. Sep '15 4.9 5.7 5.5 * 6.4 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Aug '15 3,507,519 4,121,463 -14.9 31,730,458 31,319,476 1.3

Air Passengers (Houston Airport System) Aug '15 4,788,616 4,694,479 2.0 36,765,703 35,757,744 2.8

Domestic Passengers Aug '15 3,782,749 3,788,437 -0.2 29,479,777 28,908,819 2.0

International Passengers Aug '15 1,005,867 906,042 11.0 7,285,926 6,848,925 6.4

Landings and Takeoffs Aug '15 67,499 69,444 -2.8 536,245 545,377 -1.7

Air Freight (metric tons) Aug '15 32,202 37,009 -13.0 275,180 286,498 -4.0

Enplaned Aug '15 16,696 19,108 -12.6 143,091 150,840 -5.1

Deplaned Aug '15 15,507 17,901 -13.4 132,089 135,658 -2.6

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Sep '15 38,922 35,203 10.6 294,076 291,571 0.9

Cars Sep '15 15,612 14,914 4.7 119,855 126,810 -5.5

Trucks, SUVs and Commercials Sep '15 23,310 20,289 14.9 174,221 164,761 5.7

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 4Q14 34,260 37,618 -8.9 123 116 5.6


Houston-Galveston-Brazoria CMSA Sep '15 214.652 214.102 0.3 212.662 * 213.188 * -0.2

United States Sep '15 237.945 238.031 0.0 236.820 * 236.801 * 0.0


Occupancy (%) 4Q14 68.1 65.9 71.8 * 69.1 *


Revenue Per Available Room ($) 4Q14 72.49 66.77 8.6 76.76 * 69.92 * 9.8

POSTINGS AND FORECLOSURES

Postings (Harris County) Mar '14 993 1,652 -39.9 1,151 1,804 -36.2

Foreclosures (Harris County) Mar '14 337 469 -28.1 380 499 -23.8





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October 2015 ©2015, Greater Houston Partnership Page 1

Batting .333 — Three factors drive Houston’s economy—the price of oil, the value of the

dollar, and the health of the U.S. economy. Two of the three are currently struggling at the

plate.

The stats show oil to be in a slump. Crude trades at less than half its June ’14 peak. Explo-

ration firms have slashed their budgets 50 percent or more. The rig count has fallen nearly

60 percent. Drilling permits are down 40 percent. Layoff notices appear in the media almost

daily. One week, analysts forecast crude will slip below $20 in the spring; the next, they

predict crude will top $80 by the fall.

What’s certain is that the industry is in transition, with more layoffs, bankruptcies, mergers

and acquisitions to come. Oil prices, a catalyst for growth in recent years, are now a drag

on Houston’s economy. The industry is restructuring, but it’s too early to know how long

the reorganization will last or what the industry will look like when it’s done. Houston is

in no danger of losing its role as “Energy Capital of the World,” but the industry will look

much different in the future—fewer firms, a smaller workforce, greater capital discipline,

and even more reliance on technology.

Foreign trade is as important to Houston as energy. The Houston-Galveston Customs Dis-

trict routinely handles $250 billion in trade (exports and imports) per year. More than 5,000

Houston companies do business overseas. And The Brookings Institution estimates that

exports account for nearly one-fifth of the region’s gross domestic product. Unfortunately,

growth has slowed in many emerging markets, reducing the demand for Houston’s exports.

To make matters worse, the U.S. dollar has appreciated nearly 20 percent in value over the

past 18 months, making U.S. goods and commodities more expensive overseas. As a result,

exports via the customs district have slipped $10.3 billion (13.3 percent) through August

U.S. ENERGY INDUSTRY OVERVIEW

Peak Date Recent Date % From

Peak

West Texas Intermediate Spot Price ($/barrel) $107.95 6/20/14 $45.38 9/30/15 -58.7

North American Active Rig Count 1,931 9/26/14 848 9/25/15 -56.6

U.S. Drilling Permits Issued (YTD) 51,532 Aug ’14 30,101 Aug ‘15 -41.6

Domestic Crude Output (Million Barrels/Day) 9.612 Apr ’15 9.296 Jun ’15 -3.3

U.S. Energy Industry Employment 540,800 Sep ’14 485,700 Jul ’15 -10.2

Sources: U.S. Energy Information Administration, Baker Hughes, RigData, and Bureau of Labor Statistics

A publication of the Greater Houston Partnership Volume 24 Number 10 — October 2015



compared to the same period last year. Though data are not available, the strong dollar has

undoubtedly hurt the Houston firms that export their services overseas.

The U.S. economy is the only power hitter in the lineup. The Bureau of Economic Analysis

estimates that U.S. gross domestic product (GDP) grew 3.9 percent in the second quarter.

Employment growth is averaging 250,000 jobs per month. And the nation is on pace to

start nearly 1.2 million housing units this year. All of these signs translate into improved

domestic demand for the chemicals, plastics, industrial and electrical equipment that Hou-

ston produces. The improving U.S. economy helps, but it won’t offset the impact of weak

oil prices and a strong dollar on Houston. Growth here will sputter along until at least one

of the other two—the price of oil and the value of the dollar―swings in Houston’s favor.

Job Count Still in the Hole — Houston employment remains 22,200 jobs below its De-

cember ’14 peak. Some seasonal losses are always expected as employees hired for the

holiday shopping season are let go, construction activity drops off, and companies com-

plete year-end reorganizations. Over the past two decades, employers have cut an average

of 45,000 jobs the first month of the year. The region typically recoups those losses in

February and March, and payroll employment reaches a new peak by April. Nine months

into this year, however, Houston continues to lose ground. The sectors that are growing

haven’t added enough jobs to offset losses elsewhere.

The September employment report (due out

October 16) may provide some clue as to how

the year will finish. Houston typically adds

6,000 to 18,000 jobs in the month, 10,000 be-

ing the 20-year average. Job growth comes

from several sources, with the return of edu-

cators to the classroom accounting for the

bulk of the gains. If the Texas Workforce

Commission reports at least minimal job

growth for Houston in September, the year

should end on a positive note. Since ’95, the

region has created an average of 29,000 jobs

in the fourth quarter. If Houston fails to add

any jobs in September, hiring in Q4 might not

be enough to offset the job losses so far this

year.

The Partnership recently revised its employment outlook to better reflect current economic

conditions. The forecast now calls for the region to add 20,000 to 30,000 jobs in ’15. That

compares to 104,700 created in ’14 and 89,900 created the year prior.

METRO HOUSTON EMPLOYMENT CHANGES SINCE DECEMBER ’14

Sector Jobs Gained/Lost

Leisure and Hospitality +21,900

Business Services +8,800

Health Care +5,700

Information +1,400

Wholesale Trade -3,100

Retail Trade -3,200

Finance and Real Estate -4,600

Transport, Warehouse, Utils -5,100

Mining and Logging -5,500

Construction -5,800

Manufacturing -12,200




Shuffling the Lineup — From ’05 to ’14, Metro Houston1 created nearly 650,000 jobs,

gross domestic product grew by more than $200 billion, and the region added 1.3 million

residents. About 45 percent of the new residents arrived via the maternity ward and 55

percent via the moving van. This leap in local population has altered Houston’s demo-

graphic profile. Each September, the U.S. Census Bureau releases data from the American

Community Survey (ACS), an annual snapshot of the nation’s economic, housing and so-

cial characteristics. By comparing Houston ACS data for ’05 and ’14, one can see changes

in the region’s population over that period. The Partnership has compared data from the

’05 and ’14 ACS2 for the nine-county Houston region and finds the following:

Houston’s population continues to diversify. Hispanic residents accounted for more than

half the region’s population growth since ’05. If that trend continues, by the end of the

decade Hispanics will be the largest racial/ethnic group in the region. Black and Asian

population growth outpaced

Anglo growth as well. Hous-

ton’s black population now

exceeds 1.0 million resi-

dents, and the region’s Asian

population should surpass

half a million next year.

Houston continues to age. In

’05, the median age for the

region was 32.9 years. By

’14, it had risen to 34.0. The

median age for the U.S. as a whole is 37.7 years. Likewise, the population 65 and older

rose by 236,000 residents over the past nine years. Seniors (i.e., those 65 and older) repre-

sent 9.8 percent of the region’s population, up from 7.7 percent in ’05. The share of house-

holds receiving Social Security income rose from 18.8 to 21.0 percent from ’05 to ’14.

The local labor force participation rate has fallen, but not to the same extent as the national

rate. In ’05, 68.8 percent of Houstonians 16 and older were in the labor force (i.e., em-

ployed or actively looking for work). By ’14, the labor force participation rate had slipped

to 67.1 percent. The U.S. rate fell from 66.0 to 62.9 percent over the same period.

There’s a reason traffic has worsened. The ACS reports that 2.9 million Houstonians com-

mute to work each day, up from 2.2 million in ’05. Nine out of 10 drive alone or ride in a

1 Metro Houston is shorthand for the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, which includes Aus-

tin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller Counties. Prior to 2012, the Houston

metro area also included San Jacinto County. 2 ’05 is the earliest year for which ACS data are available.

HOUSTON METRO AREA RACE AND ETHNICITY, '05 AND '14 ------- ’14 ------- ------- ’05 -------

Count % Count %

Total population 6,490,180 100.0 5,193,448 100.0

Anglo 2,452,709 37.8 2,313,993 44.6

Hispanic 2,356,245 36.3 1,686,048 32.5

Black 1,092,194 16.8 830,445 16.0

Asian 471,037 7.3 290,923 5.6

American Indian 11,938 0.2 12,969 0.2

Hawaiian/Pacific Islander 3,654 0.1 3,502 0.1

Some other race 11,801 0.2 10,638 0.2

Two or more races 90,602 1.4 44,930 0.9

Source: American Community Surveys, ’05 and ’14



carpool. That’s essentially unchanged from ’05. Only 2.4 percent of Houston commuters

use public transit, down from 2.8 percent in ’05. The share who work at home rose from

2.9 to 3.5 percent over that period. Average travel time to work is 29.2 minutes, up from

28.1 minutes in ’05.

More Houstonians work in the energy industry now. That’s not surprising given the rise in

oil prices and drilling activity from ’05 to ’14. Nine years ago, only 2.5 percent of the

region’s 2.4 million workers identified themselves as employed in the oil and gas industry.

Last year, 4.2 percent of the region’s 3.1 million did so.

Houston has grown

smarter. The number of

adults with a bachelor’s

degree or higher has

grown by more than

380,000, and the number

completing high school by

more than 850,000. The

share of adults without a

high school diploma has

dropped from 21.3 percent

to 18.0 percent over the

past nine years.

Fewer Houstonians are self-employed. In ’05, 7.1 percent of the region’s population was

self-employed. That figure dropped to 6.2 percent in ’14. That number may creep up in

coming years as the weaker economy forces many to become entrepreneurs by circum-

stance, not by choice.

Incomes have outpaced inflation. The median household income for Houston was $46,706

in ’05. Adjusted for inflation, that would be $56,615 in ’14. The ACS found the median

household income in ’14 was $60,072. (Note: The annual inflation rate hovered around 4

percent in the middle of the last decade, but for the past six years has averaged less than 2

percent.)

Houston has more middle class and affluent households now. The ACS recorded 450,000

households earning between $100,000 and $200,000 in ’14, up from 273,000 in ’05. The

ACS also reported 178,000 households in Houston with incomes of $200,000 or more in

’13, nearly triple the 65,500 households in ’05.

The war on poverty hasn’t ended, however. In ’14, 188,000 families, 12.2 percent of all

families in the region, lived in poverty, up from 172,000 in ’05 but down from 13.4 percent

in ’05.

EDUCATION ATTAINMENT, METRO HOUSTON, POPULATION 25 AND OLDER

Highest Education Level

’14 Popula-tion

% ’05 Popula-

tion %

Less than 9th grade 391,205 9.5 330,497 10.3

9th to 12th grade, no diploma 350,025 8.5 352,958 11.0

High school graduate 943,010 22.9 789,342 24.6

Some college, no degree 901,830 21.9 654,576 20.4

Associate's degree 255,313 6.2 186,105 5.8

Bachelor's degree 815,354 19.8 596,820 18.6

Graduate or professional degree 461,210 11.2 298,410 9.3

High school graduate or higher 3,376,717 82.0 2,525,252 78.7

Bachelor's degree or higher 1,276,564 31.0 895,229 27.9

Population 25 years and over 4,117,947 100.0 3,208,707 100.0

Note: Total may not sum evenly due to rounding Source: American Community Surveys, ’05 and ’14



Female-headed households continue to struggle. For families headed by a female with

children but with no husband present, the poverty rate dropped from 41.5 to 37.7 percent.

However, the number of these families rose from 74,000 to 79,000.

Fewer are uninsured. In ’09, 75.4 percent of Houstonians had health insurance. In ’14,

80.4 percent had coverage. (Insurance status data for ’05 are not available.)

Houston continues to draw population from overseas. The ’14 ACS found that nearly 1.5

million Houston residents were born outside the U.S., up from 1.1 million in ’05. Today,

23.1 percent of all Houstonians are foreign born compared to 21.1 percent in ’05.

Two distinct groups of foreign-

born residents have emerged.

Those who have been naturalized

(i.e., received U.S. citizenship) are

more likely to be married, in the

workforce, and have attained a col-

lege degree than U.S.-born Hous-

tonians. Naturalized residents are

also more likely to have a median

household income that exceeds the

average household income for the

region ($60,072).

Noncitizens are more likely to be

married and in the workforce than

U.S.-born Houstonians, but they

are likely to be less educated and

live in a household with substan-

tially less income than native born

residents.

Foreign-born, regardless of citi-

zenship status, are more likely to

be enrolled in college or graduate

school than native born.

An Urban Myth That Refuses to Die — In spite of what Bloomberg, the Huffington Post

and various media outlets have reported, the city of Houston is not on the verge of over-

taking Chicago as the nation’s third most populous city. True, the Bayou City is growing

faster than the Windy City, but Chicago’s population exceeds Houston’s by more than

482,000 residents. Even in the most optimistic of scenarios, decades will pass before Hou-

ston closes that gap. This is explained below.

SELECTED CHARACTERISTICS BY CITIZENSHIP STATUS METRO HOUSTON POPULATION

Citizenship Status - % or #

Native Born

Natural-ized

Non- Citizen

Population 15 years and over 3,595,078 534,229 890,708

Never married 37.0% 15.1% 31.4%

Now married 44.9 68.3 57.6

Divorced or separated 13.5 11.0 8.1

Widowed 4.6 5.6 3.0

Population 3 years and over enrolled in school

1,632,325 55,802 141,740

Nursery school, preschool 7.1% 1.2% 1.6%

Elementary school (grades K-8) 51.7 14.8 33.0

High school (grades 9-12) 20.1 16.7 26.7

College or graduate school 21.2 67.3 38.7


Less than high school graduate 9.4% 22.2% 47.0%

High school graduate 24.1 18.6 21.3

Some college or associate's degree 33.6 20.9 12.4

Bachelor's degree 21.8 22.8 10.7

Graduate or professional degree 11.1 15.5 8.6


In labor force 66.1% 70.9% 68.7%

In the Civilian labor force 66.0 70.9 68.7

Employed 62.0 68.3 65.1

Unemployed 4.1 2.6 3.6

Median household income (dollars) 64,885 65,445 37,381




Scenario I –Growth Based on Recent History3

According to the U.S. Census Bureau, Chicago

added 25,000 residents over the past four years, or

approximately of 6,250 residents per year. The city

of Houston added approximately 137,000 residents

over the same period, an average of 34,250 resi-

dents per year. If both cities maintain those growth

rates, Houston would overtake Chicago in ’32, or

17 years from now.

But one shouldn’t expect Houston to maintain the

recent pace indefinitely. The metro area boomed

from ’10 to ’14, adding $125 billion to GDP and

creating nearly 370,000 jobs. That economic ex-

pansion brought 300,000 newcomers to the region,

many settling inside the city. Beginning late in ’14, the region’s economy entered a slower

growth phase and will likely create significantly fewer jobs, perhaps none at all, in coming

years. That change translates into fewer people moving here. As a result, Houston will gain

ground more slowly on Chicago. The day the home of Sam Houston overtakes the home

of Rahm Emanuel will be pushed still further into the future.

Scenario II: Growth based on separate histories.

From ’00 to ’10, the city of Houston added about

130,000 residents, or 13,000 per year.4 That was a

decade in which the region completed a full busi-

ness cycle—slow growth, rapid growth, a peak, a

recession, a trough and then growth again. That

mixture of ups and downs suggests that population

growth in the decade was closer to what should be

normal for Houston. If Chicago’s population grows

by 6,000 residents per year (Scenario I above) and

Houston grows by 13,000 residents per year (a

more normal average), the Bayou City wouldn’t

overtake the Windy City until ’82, or 67 years from

now.

3 Data are for the period from July 1, 2010 through July 1, 2014. 4 That the city of Houston’s population growth from ’10 to ’14 nearly matched that from ’00 to ’10 underscores how the pace

of the past few years is unstainable and should not be used to extrapolate the city’s population growth.

Scen

ari

o I

–R

ecen

t H

isto

ry

Year Actual Populations

Chicago Houston

'10 2,697,319 2,102,421

'14 2,722,389 2,239,558

, '10-'14 25,070 137,137

Avg Annual 6,268 34,284

Year Projected Populations

'15 2,728,657 2,273,842

'20 2,759,994 2,445,264

'25 2,791,332 2,616,685

'30 2,822,669 2,788,106

'32 2,835,204 2,856,675

Source: Census data and Partnership calculations

Scen

ari

o I

I – D

iffe

ren

t H

isto

ries

Year Population Projections

Chicago Houston

Avg Annual 6,000 13,000

'15 2,728,657 2,253,020

‘30 2,822,669 2,454,953

‘45 2,916,682 2,656,886

‘60 3,010,694 2,858,819

‘75 3,104,707 3,060,752

'83 3,148,579 3,154,988

Source: Census data and Partnership calculations



Scenario III: What Official Forecasters Say

The Houston-Galveston Area Council (HGAC) forecasts population, employment, and

land use for the cities and counties on the Texas Gulf Coast. The Chicago Metropolitan

Agency for Planning (CMAP) forecasts population, households and employment for its

respective metro area. CMAP expects Chicago’s population to reach 3,092,262 in ’40.

HGAC projects Houston’s population to reach 2,939,131 by then. In other words, 25 years

from now Houston’s population still falls 150,000 short of Chicago’s. The Windy City’s

forecast doesn’t extend past ’40, but if one extrapolates, Houston would overtake Chicago

in ’52, or 37 years from now.

To summarize, in Scenario I, Houston won’t overtake Chicago until today’s kindergarten-

ers have graduated from college, in Scenario III, not until they’re in their 30s, and Scenario

II, not until they’re well into retirement. To put it bluntly, the city of Houston is unlikely

to overtake the city of Chicago any time soon.

Half a Trillion Dollars — The U.S. Bu-reau of Economic Analysis (BEA) esti-mates Houston’s gross domestic product (GDP) reached $525.4 billion in ’14, ranking it as the nation’s fourth largest metro economy. If Houston were an inde-pendent nation, the region would have the 26th largest economy in the world, placing it behind Belgium ($527.8 billion) and ahead of Norway ($511.6 billion).5

Sectors accounting for the largest share of GDP were mining ($101.1 billion; 19.2 percent), manufacturing ($80.5 billion; 15.3 percent), and professional and busi-ness services ($64.4 billion; 12.3 per-cent). Mining’s share of GDP has ranged from 24.2 percent in ’08 to 15.1 percent in ’03, averaging 18.0 percent from ’03 to ’14.6

5 BEA’s estimates are for the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, which includes Austin, Bra-

zoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller counties. The comparison of Houston’s econ-

omy to global economies is based on International Monetary Fund reports of national GDP. 6 The BEA began releasing detailed data for the mining industry in ’03. Therefore, we are unable to assess mining’s contribu-

tion to Houston GDP prior to ’03.

INDUSTRY SHARES OF HOUSTON GDP – ’14

Sector $ Billions % GDP Agriculture, Forestry, Fishing 0.452 0.1 Mining 101.068 19.2 Construction 27.789 5.3 Manufacturing 80.495 15.3

Durable goods 28.810 5.5

Nondurable goods 51.684 9.8

Wholesale Trade D D Retail Trade 22.728 4.3 Utilities 18.173 3.5

Transportation and Warehousing D D Information D D Finance, Insurance, Real Estate 62.738 11.9

Finance and insurance 17.292 3.3

Real estate and rental and leasing 45.445 8.6

Professional, Business Services 64.360 12.3 Educational Services, Health Care 23.425 4.5

Educational services 3.230 0.6

Health care and social assistance 20.195 3.8 Arts, Entertainment, Recreation, Accommodation and Food Services 12.888 2.5 Other Services 9.790 1.9 Government 31.841 6.1 Total All Sectors $525.397 100.0 D = Not reported to avoid the disclosure of confidential information. Source: U.S. Bureau of Economic Analysis



Houston’s economy grew 1.8 percent (net of inflation) in ’14, a slowdown from the 6.5 percent growth recorded in ’13. That was also the smallest increase since ’10, when GDP grew 1.1 percent. The slow growth reported for ’14 is surprising, given that the drop in oil prices did not oc-cur until the latter half of ’14 and job losses were not posted until early in ’15. The BEA also revised Houston’s ’13 GDP down $2.2 billion from $517.4 billion

In contrast, the BEA revised the Dallas metro’s ’13 GDP up $13.7 billion to $461.3 billion. Of the top 20 metro econ-omies, Dallas posted the fastest growth in ’14, 8.5 percent, and overtook Washing-ton, D.C. to become the fifth largest metro economy. The reasons for the revisions were not explained in the September data release, but the BEA stated that more in-formation would be available in the Octo-ber issue of its monthly journal, the Sur-vey of Current Business.

Partnership to Host Annual Economic Out-

look — Plan to attend the Greater Houston

Partnership’s 2016 Economic Outlook, sched-

uled for Monday, December 7, at the Hyatt

Regency Houston, 1200 Louisiana. The event

features a panel of experts discussing the out-

look for energy, health care, real estate, construction and professional services in the com-

ing year. The Partnership’s employment forecast for 2016 will be presented. And Anthony

Chan, chief economist for JP Morgan Chase, will be the luncheon keynote speaker. He

will provide the U.S. and global outlooks. Two publications, the 2016 Employment Fore-

cast and Houston Economic Highlights, a 10-year review of local economic and demo-

graphic trends, will also be distributed at the event. Tickets go on sale October 15. Addi-

tional details about the event and how to purchase tickets will be posted at the Partner-

ship’s website, www.houston.org, starting October 15.

GROSS DOMESTIC PRODUCT 20 Largest Metro Economies

Rank Metro ’14 GDP

($ Billions) % Change

’13-’14*

1 New York 1,558.518 2.4

2 Los Angeles 866.745 2.3

3 Chicago 610.552 1.8

4 Houston 525.397 1.8

5 Dallas-Fort Worth 504.358 8.5

6 Washington, D.C. 471.584 0.3

7 San Francisco 411.969 5.2

8 Philadelphia 391.118 1.1

9 Boston 382.459 2.6

10 Atlanta 324.881 3.0

11 Seattle 300.827 3.4

12 Miami 299.161 3.0

13 Detroit 236.500 2.2

14 Minneapolis 235.733 2.0

15 Phoenix 215.214 1.8

16 San Jose 213.819 6.7

17 San Diego 206.817 1.4

18 Denver 187.111 5.0

19 Baltimore 173.516 1.4

20 Portland 159.328 4.3

* Net of inflation

Source: U.S. Bureau of Economic Analysis

http://www.bea.gov/scb/

http://www.bea.gov/scb/





Building Permits — City of Houston building permits totaled $5.5 billion for the first eight

months of the year, down 3.1 percent from $5.6 billion in the same period last year, ac-

cording to the City’s Department of Public Works & Engineering Planning & Development

Services. Despite the decline from the previous year, permitting activity in ’15 has bene-

fited from strong momentum and is the second-highest August YTD total since the Part-

nership began tracking City of Houston building permits in ’02.

Inflation —The cost of consumer goods and services as measured by the Consumer Price

Index for All Urban Consumers (CPI-U) rose 0.2 percent nationwide from July ’14 to July

’15, according to data released by the U.S. Bureau of Labor Statistics. Core inflation (all

items less the volatile food and energy categories) rose 1.8 percent over the 12 months.

Home Sales — Houston realtors sold 8,836 single-family homes, townhomes, condos, du-

plexes, county homes, high rise units and lots in August, according to the Houston Asso-

ciation of REALTORS®. That’s essentially flat compared to the 8,838 units sold last Au-

gust. Year to date, area realtors have recorded 61,382 closings, off 0.3 percent from last

year’s YTD total of 61,591. However, the 51,233 single-family closings to date are 0.7

percent ahead of last year’s YTD total of 50,889 closings.


term leading indicator for regional production, registered 47.3 in August, down from 49.1

in July according to the latest report from the Institute for Supply Management-Houston

(ISM-Houston). With the August reading, the Houston PMI has fallen below the neutral

point of 50 for eight consecutive months.

Vehicle Sales — Houston-area auto dealers sold 30,588 vehicles in August ’15, down 0.3

percent from the 30,677 sold in August ’14. Year-to-date sales volumes, down as much as

10.6 percent in March, have nearly recovered from doldrums of the first quarter. Through

the first eight months of this year, dealers sold 255,154 vehicles, off only 0.5 percent from

the 256,368 vehicles sold in the same period last year, according to TexAuto Facts, pub-

lished by InfoNation, Inc. of Sugar Land.










Stay Up to Date!

















Aug '15 Jul '15 Aug '14 Jul '15 Aug '14 Jul '15 Aug '14

Total Nonfarm Payroll Jobs 2,970.4 2,982.2 2,932.0 -11.8 38.4 -0.4 1.3

Total Private 2,609.4 2,615.2 2,578.3 -5.8 31.1 -0.2 1.2

Goods Producing 559.5 562.7 575.4 -3.2 -15.9 -0.6 -2.8






Construction 203.0 203.4 206.7 -0.4 -3.7 -0.2 -1.8

Manufacturing 246.5 248.8 257.0 -2.3 -10.5 -0.9 -4.1



Wholesale Trade 169.3 169.4 170.7 -0.1 -1.4 -0.1 -0.8

Retail Trade 305.5 305.5 296.5 0.0 9.0 0.0 3.0

Transportation, Warehousing and Utilities 133.9 133.9 135.1 0.0 -1.2 0.0 -0.9

Utilities 16.0 16.1 15.9 -0.1 0.1 -0.6 0.6




Information 34.0 34.1 32.9 -0.1 1.1 -0.3 3.3


Finance & Insurance 93.0 93.6 94.4 -0.6 -1.4 -0.6 -1.5

Real Estate & Rental and Leasing 51.7 52.3 54.9 -0.6 -3.2 -1.1 -5.8



Legal Services 25.1 25.3 24.1 -0.2 1.0 -0.8 4.1



Computer Systems Design & Related Services 33.1 33.3 33.1 -0.2 0.0 -0.6 0.0








Other Services 106.5 105.9 104.5 0.6 2.0 0.6 1.9

Government 361.0 367.0 353.7 -6.0 7.3 -1.6 2.1













ENERGY

U.S. Active Rotary Rigs Sept '15 848 1,930 -56.1 1,059 * 1,845 * -42.6

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Sept '15 45.26 93.37 -51.5 51.09 * 100.08 * -49.0

Spot Natural Gas ($/MMBtu, Henry Hub) Sept '15 2.66 3.89 -31.6 2.79 * 4.47 * -37.6


Houston Purchasing Managers Index Aug '15 47.3 55.6 -14.9 46.8 * 57.0 * -17.9

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Aug '15 5,184,990 5,025,459 3.2 37,339,247 35,251,932 5.9

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Aug '15 1,196,707,000 3,914,003,000 -69.4 11,342,143,000 26,536,158,000 -57.3

Nonresidential Aug '15 408,152,000 2,902,865,000 -85.9 4,491,754,000 19,651,597,000 -77.1

Residential Aug '15 788,555,000 1,011,138,000 -22.0 6,850,389,000 6,884,561,000 -0.5

Building Permits ($, City of Houston) Aug '15 615,000,608 695,960,968 -11.6 5,459,252,302 5,634,859,690 -3.1

Nonresidential Aug '15 390,417,722 370,587,621 5.4 3,481,194,433 3,692,023,223 -5.7

New Nonresidential Aug '15 227,753,872 88,272,884 158.0 1,787,125,207 2,044,636,168 -12.6

Nonresidential Additions/Alterations/Conversions Aug '15 162,663,850 282,314,737 -42.4 1,694,069,226 1,647,387,055 2.8

Residential Aug '15 224,582,886 325,373,347 -31.0 1,978,057,869 1,942,836,467 1.8

New Residential Aug '15 180,377,993 302,815,828 -40.4 1,780,598,080 1,740,783,387 2.3

Residential Additions/Alterations/Conversions Aug '15 44,204,893 22,557,519 96.0 197,459,789 202,053,080 -2.3


Property Sales Aug '15 8,836 8,838 0.0 61,382 61,382 0.0

Median Sales Price - SF Detached Aug '15 215,100 205,000 4.9 211,838 * 196,561 * 7.8

Active Listings Aug '15 34,089 29,574 15.3 30,353 * 28,736 * 5.6


Nonfarm Payroll Employment Aug '15 2,970,400 2,932,000 1.3 2,972,800 * 2,901,225 * 2.5

Goods Producing (Natural Resources/Mining/Const/Mfg) Aug '15 559,500 575,400 -2.8 567,338 0 562,950 * 0.8

Service Providing Aug '15 2,410,900 2,356,600 2.3 2,405,463 0 2,338,275 * 2.9


Houston-Sugar Land-Baytown MSA Aug '15 4.6 5.1 4.4 * 5.3 *

Texas Aug '15 4.4 5.3 4.3 * 5.4 *

U.S. Aug '15 5.2 6.3 5.5 * 6.5 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Aug '15 3,507,519 4,121,463 -14.9 31,730,458 31,319,476 1.3

Air Passengers (Houston Airport System) Jul '15 5,333,311 5,036,899 5.9 31,977,087 31,063,265 2.9

Domestic Passengers Jul '15 4,180,674 4,022,231 3.9 25,697,028 25,120,382 2.3

International Passengers Jul '15 1,152,637 1,014,668 13.6 6,280,059 5,942,883 5.7

Landings and Takeoffs Jul '15 71,607 71,490 0.2 468,746 475,933 -1.5

Air Freight (metric tons) Jul '15 33,790 39,032 -13.4 242,978 249,489 -2.6

Enplaned Jul '15 17,468 20,176 -13.4 126,395 131,731 -4.1

Deplaned Jul '15 16,322 18,856 -13.4 116,582 117,757 -1.0

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Aug '15 30,588 30,677 -0.3 255,154 256,368 -0.5

Cars Aug '15 12,058 12,742 -5.4 104,243 108,127 -3.6

Trucks, SUVs and Commercials Aug '15 18,530 17,935 3.3 150,911 148,241 1.8



Houston-Galveston-Brazoria CMSA Aug '15 214.652 214.102 0.3 212.662 * 213.188 * -0.2

United States Aug '15 238.316 237.852 0.2 236.820 * 236.801 * 0.0


Occupancy (%) 4Q14 68.1 65.9 71.8 * 69.1 *







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August 2015 ©2015, Greater Houston Partnership Page 1

The Energy Outlook — After two months of relative stability, crude prices fell signifi-

cantly in July. West Texas Intermediate (WTI), the U.S. benchmark for light, sweet

crude, opened the month at $59.30 on the NYMEX spot market. When the final bell rang

and markets closed on July 31, WTI had slipped to $47.20, a decline of $12.10, or 20.4

percent.

Crude prices fell for a variety of reasons:

Growing concern over slowing growth in China: The International Monetary Fund

(IMF) forecasts the Chinese economy will grow 6.8 percent in ’15, down from 7.4

percent in ’14 and from double-digit growth as recently as ’10. Slower growth trans-

lates into weaker demand for oil. China’s oil consumption is slated to increase only

2.5 percent this year, compared to 3.3 percent last year and 16.8 percent in the boom

year of ’04.

Anxiety over the lifting of Iranian sanctions: Iran will likely boost exports by 500,000

barrels per day once sanctions are lifted later this year or early next. Within a year, ex-

ports could climb to 1 million barrels per day. Iran also has 40 million barrels of crude

in storage that could quickly flood the market once sanctions are lifted.

Marginal declines in domestic production: The North American rig count has been cut

in half, but the reduction has not impacted crude output. The U.S. Energy Information

Administration (EIA) estimates the nation produced 9.6 million barrels of oil per day

in June, up from 8.9 million barrels when the rig count peaked in September.

Stubbornly high inventories: Analysts had expected crude stockpiles to shrink as re-

fineries revved up for the summer driving season. The inventory reductions have been

marginal, however. Crude in storage peaked at 483 million barrels in April, slipping to

466 million barrels in June. That’s still well above the 384 million barrels in June last

year. As vacations end and refineries begin their fall maintenance programs, invento-

ries are likely to rise again.

A World Awash in Crude — EIA estimates the world currently produces 95.7 million

barrels, consumes 93.1 million barrels, and generates a surplus of 2.6 million barrels of

oil per day. Ironically, the 2.6 million barrel surplus equates to U.S. production growth

over the past two years. Production continues to flow despite low prices. Collectively,

Angola, Canada, China, Egypt, Iraq, Libya, Nigeria, Saudi Arabia and the United King-

dom pumped 2 million barrels more in April ’15 than they did in April ’14. For some,

A publication of the Greater Houston Partnership Volume 24 Number 8 — August 2015



it’s a case of holding onto market share; for others, the need to offset in volume what

they’ve lost in price.

A similar story is playing out at home, with several firms (e.g., Anadarko, Marathon, No-

ble Energy) reporting they’ve managed to boost production even though they’ve slashed

their exploration budgets. And even though the rig count has plummeted 57 percent from

the peak in the Eagle Ford, 56 percent in the Bakken, and 64 percent in the Permian, out-

put in the nation’s three most prolific basins has fallen less than 2 percent. The reason:

better technology, more experience drilling and fracking, and a keener understanding of

the geology associated with tight oil. Five years ago, initial production from an Eagle

Ford well averaged 102 barrels per day. In June this year, initial production averaged 717

barrels per day, according to data from the EIA.

The increased production has not flowed to the bottom line, however. Exxon, the biggest

U.S. energy producer, recently reported its lowest quarterly profit since ’09. Chevron

posted its worst quarter in 12 years. Earnings from Shell Oil’s upstream business fell 80

percent compared to the same quarter last year. And many independents such as Cono-

coPhillips, Marathon, and Chesapeake reported outright losses for the quarter.

Prior to the downturn, conventional wisdom held that the typical well in the Eagle Ford

would be profitable as long as oil remained above $70 per barrel. Oil hasn’t traded above

that level since November ’14. As prices fell, exploration firms demanded price conces-

sions from the service firms, and the break-even point fell as well. Some E&P companies

boasted their wells could make a profit at $50 and even $40 per barrel. The importance of

that metric has begun to fade, however. The new focus is on corporate overhead, cash

flow, debt service, capital discipline, and cost-cutting measures. Investors realize that

even though individual wells are profitable, the company overall may be losing money.

A gradual realization seems to be emerging that the price of oil will remain low for the

foreseeable future. Baker Hughes, in its second quarter earnings report, said headwinds

from tumbling oil prices will persist for the rest of the year. The NYMEX futures market

shows oil not trading above $56 a barrel until late in ’17. In its earnings report, Shell Oil

stated crude prices may remain depressed for the next five years.

The industry continues to sell assets and reduce headcounts to better function in a low-

price environment. This commodity cycle is following the typical pattern—the first wave

of layoffs in the field and on the shop floor, impacting blue-collar and hourly workers;

the second wave in the corporate offices, impacting white collar and professional staff.

It’s too soon to tell what impact these layoffs will have outside the energy sector. The en-

ergy sector—exploration, oil field services, and oil field equipment manufacturing—

accounts for 5.0 percent of total nonfarm payroll employment and 14.3 percent of total

wages and salaries in the region. Two other sectors closely aligned with energy—

fabricated metal products and engineering—account for another 4.5 percent of total em-



6.57.1

7.78.4

9.29.9

3.0 3.4 3.7 4.0 4.3 4.6

0

2

4

6

8

10

12

'15 '20 '25 '30 '35 '40

Mill

ion

s

Population and EmploymentHouston-The Woodlands-Sugar Land MSA

Population Employment

Source: The Perryman Group, Summer 2015

ployment and 4.9 percent of total wages. These sectors are part of Houston’s economic

base and as such support a significant number of jobs in the secondary sectors—retail,

restaurants, real estate, etc. These jobs are at risk as well. The impact of the downturn on

these sectors won’t be apparent until the end of this year or early next year.

On the Brighter Side — De-

spite the current slump in the

energy industry, Houston’s

long-term outlook remains

bright. The metro area’s real

(i.e., net of inflation) gross area

product (GAP) is projected to

more than double between ’15

and ’40, according to the recent-

ly released forecast by Ray Per-

ryman, the Waco-based econo-

mist who has studied the U.S.,

Texas and metro economies

since the ’70s.1

Perryman forecasts Houston’s

real GAP to grow from $504.1 billion in ’15 to $1.15 trillion in ’40―an average annual

growth rate of 3.4 percent. The industries with the fastest annual growth rates from ’15 to

’40 are: services (3.9 percent), manufacturing (3.8 percent), and mining (3.3 percent).

These fastest-growing industries are also the largest industry sectors by dollar value.

Mining is the largest contributor to Houston’s GAP in ’15 at $138.8 billion (23.1 percent

of total GAP) followed by

services at $113.4 billion

(18.9 percent) and manufac-

turing at $109.5 billion

(18.2 percent).

“While the end of the oil

surge will affect perfor-

mance in the near term,” the

Perryman report states, “the

Houston area’s economy is

far more diversified than in

decades past and the down-

1 The Perryman Economic Forecast: Long-Term Outlook for the United States, Texas, Major Metropolitan Areas, and

Regions, is available for purchase from The Perryman Group, 800-749-8705 or [email protected].

$504.1$627.4

$754.0$887.2

$1,022.1$1,154.1

'15 '20 '25 '30 '35 '40

Source: The Perryman Group, Summer 2015 * '09 constant dollars

Real Gross Area Product ForecastHouston-The Woodlands-Sugar Land MSA

$ Billions*




turn in oil prices is not likely to derail economic performance for an extended period of

time.” The report also notes the importance of growth in non-energy sectors to compen-

sate for the negative impact from lower energy prices.

Over the next quarter-century, the metro area is expected to add 3.4 million residents―an

average annual growth rate of 1.7 percent. Wage and salary employment is forecasted to

gain 1.5 million jobs―an average annual rate of 1.6 percent. The region is expected to

account for one-fourth of Texas’ job growth during this period.

Employment Update — The Houston metro area gained 55,700 jobs in the 12 months

ending June ’15, according to the Texas Workforce Commission (TWC). The corre-

sponding 1.9 percent 12-month growth rate is the slowest since November ’11. The em-

ployment numbers are somewhat misleading, since all the job gains occurred in the latter

half of ’14. Since December, the region has posted a net loss of 5,600 jobs. Employment

gains in the service sectors so far this year have not been able to offset losses in the goods

producing sectors. Some of the losses date back to the fall of last year. The employment

numbers reflect the weakness in the oil patch. The sectors still adding jobs are those

which depend heavily on population growth, activity outside the energy sectors, or are

benefiting from the momentum built up over the past five years of robust economic ex-

pansion.

RECENT CHANGES IN HOUSTON EMPLOYMENT

Sector Peak Gains/Losses1

Leisure and Hospitality Still Growing +22,900

Business Services Still Growing +7,300

Health Care Still Growing +4,200

Other Services Still Growing +1,800

Information Still Growing +1,300

Manufacturing December ’14 -11,700

Government2 April ’15 -7,700

Mining and Logging December ’14 -6,600

Retail December ’14 -6,600

Construction October ’14 -5,200

Transportation, Warehousing Utilities December ’14 -3,700

Finance & Real Estate October ’14 -2,900

Wholesale Trade December ’14 -2,300 1 Gains measured from December ’14; losses measured from previous peak 2 Primarily includes local education Source: Partnership calculations based on Texas Workforce Commission data.



Still on Top — Houston exported $118.9 billion in goods and commodities in ’14, up

$4.0 billion (3.5 percent) from the previous year, according to data recently released by

the U.S. International Trade Administration (ITA). Houston led the nation in export sales

last year, ahead of New York, Los Angeles, Seattle and Detroit. This marks the third con-

secutive year Houston has garnered the top spot.

Houston’s exports have grown by $77.2 billion, a 185 percent increase, since ’05. No

other U.S. metro has experienced comparable growth.

Five sectors accounted for the bulk of Houston’s shipments in ’14: petroleum and coal

products ($34.8 billion), basic chemicals ($16.6 billion), oil and gas extraction ($12.5 bil-

lion), resins and synthetic rubber ($11.2 billion), and heavy industrial machinery ($7.9

billion).

Houston supplied 48.7 percent of Texas exports in ’14, down slightly from 51.2 percent

in ’13. By comparison, the state’s next largest exporter, Dallas-Fort Worth, accounted for

11.7 percent of Texas exports. Houston’s and San Antonio’s contributions to state exports

have grown significantly since ’05 while Austin’s and Dallas’ have shrunk, a reflection of

the greater importance of global trade plays in the Houston and San Antonio economies.

Readers should be aware that ITA’s export data differ somewhat from the Houston-

Galveston Customs District data often cited in local publications. Customs district data

reflect cargo that passes through the region’s ports. ITA data are an “origin of move-

ment” (OM) series and reflect the metro from which cargo began its overseas journey.

OM includes goods manufactured locally shipped out of Houston, goods manufactured

locally that leave the U.S. from a port outside the Houston metro area, and goods pro-

duced elsewhere and consolidated in Houston for export.

TOP 10 U.S. EXPORTING METROS - $ BILLION

Exports Change Since ’05 Rank Metro '05 '14 $ Value Percent

1 Houston, TX 41.748 118.966 77.218 185.0

2 New York, NY 55.565 105.267 49.702 89.4

3 Los Angeles, CA 43.814 75.471 31.657 72.3

4 Seattle, WA 30.676 61.938 31.262 101.9

5 Detroit, MI 40.360 50.279 9.919 24.6

6 Chicago, IL 26.172 47.340 21.168 80.9

7 Miami, FL 20.383 37.969 17.587 86.3

8 New Orleans, LA 4.858 34.882 30.024 618.1

9 Dallas, TX 20.541 28.669 8.128 39.6

10 San Francisco, CA 14.707 26.864 12.157 82.7

Source: U.S. International Trade Administration




Building Permits — City of Houston construction permits totaled $8.3 billion in the 12

months ending June ’15, up 10.2 percent from $7.6 billion in the preceding 12 months,

according to the city’s Department of Public Works & Engineering Planning & Devel-

opment Services. The 12-month building permit total experienced its first uptick in June

after three months of declines.

Inflation — From June ’14 to June ’15, consumer prices in the Houston-Galveston-

Brazoria metro area (Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Mont-

gomery and Waller Counties) slipped 0.4 percent, the third consecutive 12-month de-

cline. In contrast, core inflation, as measured by the index for all items without food and

energy, rose 2.5 percent over the year.

Home Sales — Houston realtors set a record in June, selling 9,480 single-family homes,

townhomes, condos, duplexes, county homes, high rise units and lots, according to the Hous-

ton Association of REALTORS®. The second-best month on record was June ’06, when lo-

cal realtors sold 9,287 units. Over the past 12 months, local realtors recorded 90,814 clos-

ings. The 12-month pace has held above 90,000 units since October ’14.


term leading indicator for regional production, registered 46.7 in June, up from 46.1 in May,

according to the latest report from the Institute for Supply Management-Houston (ISM-

Houston).

Vehicle Sales — Houston-area auto dealers experienced their best June on record, selling

34,424 vehicles in the month, an 8.7 percent increase over the 31,662 sold in June ’14. This

brings the second quarter total to 103,231, making it the highest Q2 sales on record, accord-

ing to TexAuto Facts, published by InfoNation, Inc. of Sugar Land. Replacement of vehicles

lost in Memorial Day weekend flooding contributed to the June performance.










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Jun '15 May '15 Jun '14 May '15 Jun '14 May '15 Jun '14


Total Private 2,607.6 2,596.1 2,557.4 11.5 50.2 0.4 2.0

Goods Producing 561.1 561.5 567.3 -0.4 -6.2 -0.1 -1.1



Mining and Logging 108.9 108.1 109.2 0.8 -0.3 0.7 -0.3

Oil & Gas Extraction 55.3 54.7 54.0 0.6 1.3 1.1 2.4

Support Activities for Mining 53.3 52.7 53.9 0.6 -0.6 1.1 -1.1

Construction 205.2 204.4 202.8 0.8 2.4 0.4 1.2

Manufacturing 247.0 249.0 255.3 -2.0 -8.3 -0.8 -3.3



Wholesale Trade 170.1 170.5 168.7 -0.4 1.4 -0.2 0.8

Retail Trade 302.1 303.3 292.6 -1.2 9.5 -0.4 3.2


Utilities 16.1 16.0 15.9 0.1 0.2 0.6 1.3




Information 33.9 33.8 33.3 0.1 0.6 0.3 1.8

Telecommunications 15.0 14.9 15.1 0.1 -0.1 0.7 -0.7





Legal Services 25.1 25.1 24.1 0.0 1.0 0.0 4.1











Other Services 106.1 104.5 105.5 1.6 0.6 1.5 0.6

Government 379.4 386.6 373.9 -7.2 5.5 -1.9 1.5













ENERGY

U.S. Active Rotary Rigs Jul '15 866 1,876 -53.8 1,108 * 1,821 * -39.2

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Jul '15 51.13 103.83 -50.8 52.89 * 101.51 * -47.9

Spot Natural Gas ($/MMBtu, Henry Hub) Jul '15 2.81 4.10 -31.5 2.81 * 4.65 * -39.6


Houston Purchasing Managers Index Jun '15 46.7 52.4 -10.9 46.4 * 57.3 * -19.0

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Jun '15 5,015,448 4,675,695 7.3 26,844,566 25,417,761 5.6

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Jun '15 1,646,848,000 4,353,370,000 -62.2 8,912,790,000 16,289,032,000 -45.3

Nonresidential Jun '15 832,402,000 3,443,662,000 -75.8 3,804,151,000 11,233,890,000 -66.1

Residential Jun '15 814,446,000 909,708,000 -10.5 5,108,639,000 5,055,142,000 1.1

Building Permits ($, City of Houston) Jun '15 719,998,873 561,461,160 28.2 3,865,906,735 4,205,528,707 -8.1

Nonresidential Jun '15 486,278,855 402,775,097 20.7 2,520,320,515 2,828,230,849 -10.9

New Nonresidential Jun '15 191,547,764 181,382,592 5.6 1,356,741,981 1,754,925,253 -22.7

Nonresidential Additions/Alterations/Conversions Jun '15 294,731,091 221,392,505 33.1 1,163,578,534 1,073,305,596 8.4

Residential Jun '15 233,720,018 158,686,063 47.3 1,345,586,220 1,377,297,858 -2.3

New Residential Jun '15 208,987,786 138,147,264 51.3 1,223,002,015 1,223,993,928 -0.1

Residential Additions/Alterations/Conversions Jun '15 24,732,232 20,538,799 20.4 122,584,205 153,303,930 -20.0


Property Sales Jun '15 9,480 9,177 3.3 43,198 43,645 -1.0

Median Sales Price - SF Detached Jun '15 225,000 214,500 4.9 209,933 * 194,165 * 8.1

Active Listings Jun '15 31,963 29,513 8.3 29,175 * 28,406 * 2.7


Nonfarm Payroll Employment Jun '15 2,987,000 2,931,300 1.9 2,967,740 * 2,884,980 * 2.9

Goods Producing (Natural Resources/Mining/Const/Mfg) Jun '15 561,100 567,300 -1.1 570,860 0 557,940 * 2.3

Service Providing Jun '15 2,425,900 2,364,000 2.6 2,396,880 0 2,327,040 * 3.0


Houston-Sugar Land-Baytown MSA Jun '15 4.5 5.3 4.3 * 5.2 *

Texas Jun '15 4.4 5.4 4.3 * 5.4 *

U.S. Jun '15 5.5 6.3 5.6 * 6.5 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Jun '15 3,855,332 4,023,010 -4.2 24,568,099 22,915,308 7.2

Air Passengers (Houston Airport System) Jun '15 4,976,040 4,774,405 4.2 26,635,902 26,026,366 2.3

Domestic Passengers Jun '15 3,982,190 3,846,786 3.5 21,516,354 21,098,151 2.0

International Passengers Jun '15 993,850 927,619 7.1 5,119,548 4,928,215 3.9

Landings and Takeoffs Jun '15 67,853 68,909 -1.5 328,755 335,892 -2.1

Air Freight (metric tons) Jun '15 32,173 35,327 -8.9 209,188 210,457 -0.6

Enplaned Jun '15 16,392 18,652 -12.1 108,927 111,556 -2.4

Deplaned Jun '15 15,782 16,675 -5.4 100,261 98,902 1.4

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Jun '15 34,424 31,662 8.7 188,818 195,164 -3.3

Cars Jun '15 13,946 16,798 -17.0 77,752 86,850 -10.5

Trucks, SUVs and Commercials Jun '15 20,478 14,864 37.8 111,066 108,314 2.5



Houston-Galveston-Brazoria CMSA Jun '15 213.896 214.668 -0.4 212.062 * 212.836 * -0.4

United States Jun '15 238.638 238.343 0.1 236.625 * 236.384 * 0.1


Occupancy (%) 4Q14 68.1 65.9 71.8 * 69.1 *







-150

-120

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Near Record Year — Metro Houston created 104,700

jobs in ’14, according to data revisions released in early

March by the Texas Workforce Commission (TWC).

That’s down from the 120,600 jobs TWC previously re-

ported for the year. Even with the revision, ’14 still ranks

as one of the best years on record for job creation.1

Why the change? — The adjustments came from the

annual benchmark revisions, a review that TWC starts

each fall, culminating with the release of updated em-

ployment data in March. The jobs reports that TWC re-

leases throughout the year are based on a survey sample

of area employers. The revised jobs counts released in

March are based on data from unemployment insurance

accounts, and are therefore more accurate.

Traditionally, TWC revises data for the previous 21 months starting with December, i.e.,

December ’14 back through April ’13. This year, data were revised back to January ’90.

The revisions started out small, TWC adding 9,500 jobs to total employment for Decem-

ber ’90, but adding a few thousand jobs each year over a quarter of a century resulted in

significant revisions to more recent employment data. For instance, TWC added 47,800

jobs to Houston’s total nonfarm employment in December ’13.

In spite of their magnitude, the revisions tweaked but didn’t rewrite Houston’s economic

history:

Between January ’90 and December ’14, the region created 23,300 more jobs than

previously reported (1,268,600 prior report versus 1,291,900 revised).

The duration of the Great Recssion in Houston remained unchanged (December ’08-

January ’10). Losses were marginally higher (155,600 prior report versus 156,400

revised). The date the region returned to its previous employment peak (November

’11) remained unchanged.

1 “Metro Houston” refers to the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, which includes Austin, Brazoria,

Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller Counties.

ANNUAL JOB GROWTH – METRO HOUSTON METRO AREA Year Jobs* Year Jobs*

'91 -8,100 '03 -11,600

'92 18,700 '04 39,300

'93 44,300 '05 91,100

'94 53,400 '06 107,000

'95 54,400 '07 90,700

'96 53,000 '08 21,.600

'97 106,000 '09 -110,600

'98 92,800 '10 49,700

'99 17,800 '11 82,900

'00 59,700 '12 118,500

'01 1,300 '13 89,900

'02 -1,700 '14 104,700

*December to December Source: Texas Workforce Commission

A publication of the Greater Houston Partnership Volume 24 Number 3 — March 2015


The number of jobs Houston created in the recovery and expansion was revised

upward for December ’14 but slipped in January due to seasonal factors. Houston has

created 445,400 jobs since the bottom of the recession―nearly three for every one

lost.

The revisions also show that local employment growth in ’12 and ’13 was stronger than

originally reported.

Revisions to Metro Houston Payroll Employment Growth Year Original Estimate Revised Estimate Net Change ’12 115,400 118,500 +3,100 ’13 76,200 89,900 +13,700 ’14 120,600 104,700 -15,900


TWC places total nonfarm payroll employment at 2,946,500 in January ’15. If the region

experiences moderate growth in coming months, Houston could approach 3.0 million

jobs by the end of the year.

The Recent Past — The benchmark revisions provide a clearer picture of employment in

’14. The construction, wholesale, retail, and administrative support sectors performed bet-

ter than previously reported; energy, manufacturing, health care, engineering, air transpor-

tation and clothing stores performed worse.

A handful of sectors accounted for half of all jobs

created—construction (16,700), professional and

business services (15,600), restaurants (13,100),

health care (10,400), wholesale (8,200) and retail

(6,100). Construction benefited from the $8.7 bil-

lion in permits the City of Houston issued in ’14

and the tens of billons in chemical plant construc-

tion occurring in the region. Growth in population,

income and consumer confidence drove wholesale,

retail, health care and restaurant employment. The

expansion of the energy sector supported job gains

in professional services.

A handful of industries reported job losses of 2.0 percent or more—clothing stores (-5.6

percent), computer manufacturing (-3.8 percent), information (-3.6 percent), air transporta-

tion (-3.3 percent), and credit intermediation (-2.2 percent). Most of the losses resulted

from ongoing restructuring in their sectors.

2 Though mining and logging was revised downward, the sector still added 7,900 jobs in ’14, the third best year in the past ten.

Significant Revisions by Sector Upward Revisions Jobs Wholesale Trade +15,000 Administration Support Service +14,900 Retail Trade +5,400 Construction +5,000 Downward Revisions Jobs Manufacturing -5,100 Health Care -4,900 Architecture & Engineering -3,400 Mining and Logging2 -3,100 Air Transportation -2,900 Clothing Stores -2,200 Source: Texas Workforce Commission


TWC reported employment data for January ’15 as well. The region lost 46,100 jobs in the

month, which is within the normal range of job losses for the month. Houston typically

loses 40,000 to 50,000 jobs in January due to seasonal factors but regains those jobs over

time and reaches a new employment peak each spring. The ongoing downturn in the ener-

gy industry may disrupt that pattern this year.

Houston’s January unemployment rate was 4.5 percent, up from 4.0 percent in December.

The rate typically rises between 0.3 and 0.6 percentage points in January, so the increase

should be no cause for alarm. The rates are not seasonally adjusted.

Energy Update — Four data points for the energy industry:

Baker Hughes reports that the U.S. rig count fell to 1,192 the first week of March, a

drop of 739 rigs, or 38.3 percent, from its September ’14 peak.

The U.S. Energy Information Administration (EIA) reports that West Texas Interme-

diate, the U.S. benchmark for light, sweet crude, traded between $47 and $52 a barrel

in February, half of what crude traded for six months earlier.

RigData notes U.S. exploration firms started one-fifth fewer wells in January and

February of ’15 than in the same two months of ’14.

TWC reports energy employment fell by 1,400 jobs in Houston in January.

The industry has begun to contract. That’s certain. What’s uncertain is how far the rig

count, oil prices, drilling

activity and energy em-

ployment will fall, and

what impact their fall

will have on Houston’s

economy. Since the early

’80s, oil prices have fal-

len 30 percent six times.3

Only twice have the tum-

bles had a significant im-

pact on the region’s

economy.

During the ’82-’86 recession, oil prices fell 70 percent, the rig count fell 83 percent, and

Houston lost 221,000 jobs―one in every seven in the region. Causes of the ’80s reces-

sion: Saudi Arabia flooding the market with cheap oil, overbuilt commercial and resi-

3 The period of significantly falling oil prices included the mid-’80s, ’90-’91, ’98-’99, ’01-’03, ’08-’09 and June ’14 to present.

1,000

1,200

1,400

1,600

1,800

2,000

Sep Oct Oct Nov Dec Jan Feb MarSource: Baker Hughes

U.S. Rotary Rig Count, '14 - '15


dential real estate markets, and the collapse of the Texas banking system. The economy

bottomed in January ’87. By March ’90, Houston returned to its previous jobs peak.4

During the ’08-’09 downturn, oil prices fell 70 percent, the rig count slid 59 percent, and

the region lost 153,800 jobs―one in every 17 in the region. Causes of the ’08-’09 reces-

sion: Collapse of global credit markets and the ensuing collapse in oil prices. For Hou-

ston, the trough was January ’10. By November ’11, Houston had recovered as many

jobs as it had lost in the Great Recession.

Once again, the outlook for Houston depends on the path oil prices will take over the

next few months. On that, there’s no clear consensus.

EIA forecasts WTI will average $55.02 in ’15 and $71.00 in ’16.

Ed Morse, Citigroup’s head of commodities research, worries oil prices may slump to

$20 a barrel and remain there “for a while.”

ExxonMobil expects oil prices to remain low over the next two years, with Brent, the

benchmark European crude, averaging $55 a barrel through ’17.

Saudi Arabia’s Prince Alwaleed bin Talal told Bloomberg News the world will never

see $100 oil again.

U.S. production growth must flatten and global demand rise for prices to stabilize.5 Es-

timates of global excess supply range from 1.0 to 2.4 million bbl/d. EIA forecasts global

consumption to grow by 1.0 million bbl/d in ’15 and ’16. Politics may play a role as

well. Recent attacks by Islamic rebels have rendered 11 of Libya’s oil fields non-

operational. Sanctions against Moscow over its support of the Ukrainian rebels will

eventually impact Russia’s ability to produce oil. If sanctions against Iraq are lifted,

within three months the nation could increase production by 600,000 to 800,000 bb/d.

Houstonians shouldn’t bemoan the region’s energy ties. Oil remains key to global

growth. BP, in its Energy Outlook 2035, forecasts global liquid fuels demand (oil and

other liquids) to rise by 19 million bbl/d to 111 million bbd/ by ’35. In The Outlook for

Energy: A View to 2040, Exxon Mobil sees global energy consumption rising 35 percent

by ’40.The International Energy Agency expects global energy demand to grow 37 per-

cent by ’40.6 In spite of current uncertainties, oil remains a good long-term bet.

4 For a detailed overview of the ’80s recession, go to http://www.houston.org/pdf/comm/Glance-March-2012.pdf.

5 EIA estimates U.S. production averaged 9.2 million bbl/d in ’14 and will reach 9.3 million bbl/d in ‘15 and 9.5 million in ’16.

6 BP’s Energy Outlook 2035 can be found by visiting BP’s website or by clicking here. ExxonMobil’s The Outlook for Energy

can be found by visiting Exxon’s website or clicking here. The International Energy Agency’s report can be found at IEA’s web-

site or by clicking here.

http://www.houston.org/pdf/comm/Glance-March-2012.pdf

http://www.bp.com/en/global/corporate/about-bp/energy-economics/energy-outlook.html

http://corporate.exxonmobil.com/en/energy/energy-outlook/global-landscape/overview

http://www.iea.org/publications/freepublications/publication/WEO_2014_ES_English_WEB.pdf


A Favorite Again – For the second consecutive year, Site Selection magazine has ranked

Houston second among U.S. metros for corporate relocations and expansions. Chicago

ranked first; Cincinnati ranked third. To qualify as a relocation or expansion, a project must

meet at least one of three criteria: involve a capital investment of at least $1 million; create

at least 50 new jobs; or

add at least 20,000 square

feet of new floor area. Site

Selection does not include

retail stores, government

projects, schools or hospi-

tals in its rankings. Over

the past five years, more

than 1,500 companies

have announced signifi-

cant projects in the region.

A list of those projects

may be purchased through

Partnership’s Publication

Sales, 713-844-9366.

Construction Activity in ’15 — Construction cranes will continue to dot Houston’s sky-

line through ’15. According to Dodge Data and Analytics, a record $30.5 billion in con-

struction contracts was awarded in the Houston metro in ’14 and the City of Houston is-

sued $8.7 billion in construction permits, also an historic high. In the fourth quarter of ’14,

CBRE reported 17.6 million square feet (msf) of office construction underway in 50 build-

ings, 8.4 msf of industrial construction in 85 buildings, and 2.7 msf of retail space.

In the residential market, MetroStudy projects 30,000 single-family homes to be built this

year. A shortage of lots continues to constrain building activity, but builders are expected

to catch up to demand by the end of the year. The addition of new homes to the market will

provide some relief to the resale home market, which has experienced tight inventory for

the past two years. Among real estate sectors, multi-family is the most vulnerable to over-

building. At the end of ’14, 26,630 apartment units were under construction with 18,781

units proposed. Typically, one apartment unit is needed for every five to seven new jobs

created. Given the projected slowdown in employment growth, Kiley Advisors believes

multi-family will need to scale back to around 10,000 additional units in ’15, or else land-

lords will find themselves providing incentives to fill their vacancies. The January report

from the City of Houston building permit office reported a 45.7 percent over-the-year drop

in multi-family permit values, signaling restraint in pursuing more projects in this market

segment.

179 153

265 298

248

307

392

'08 '09 '10 '11 '12 '13 '14

Source: Greater Houston Partnership New Business Database

New Business Announcements 50+ jobs or 20,000+ Sq Ft or $1+ million Investment


While the slowdown

in the energy industry

will dampen future

construction activity,

a substantial amount

of work will still oc-

cur as the region’s in-

frastructure catches

up to its strong popu-

lation growth. Hous-

ton commuters will

continue to see high

levels of roadway

construction with an

estimated $2.2 billion dedicated to highway and civil sector activity in ’15. The Texas De-

partment of Transportation expects $496 million of work, mostly allocated to the US-290

expansion, METRO has designated $172.7 million for rail expansion, Harris County has

$188 million budgeted for construction, and the City of Houston has $610.4 million in

work planned for the year. Additionally, 29 area school districts anticipate $1.365 billion of

construction activity.

Health care construction will also be strong, with nearly $2.0 billion in announced projects,

including $533 million for the Memorial Hermann TMC expansion, $540 million for the

Methodist North Tower and $506 million for the Texas Children’s Hospital expansion. Al-

so, the desire of care providers to reach suburban markets has prompted a $110 million

project by CHI St. Luke’s at Springwoods and $168 million by Memorial Hermann in Cy-

press.

0

1

2

3

4

5

6

7

8

9

10

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

$ B

illio

ns

Source: City of Houston

CITY OF HOUSTON BUILDING PERMIT VALUE 12-Month Total

Residential Nonresidential Total



Building Permits — Construction permitting in the City of Houston totaled $8.7 billion

for the 12 months ending January ’15, a 38.8 percent increase from the $6.2 billion issued

during the same period last year. For the 12 months ending January, residential permit

values rose 26.4 percent from $2.4 billion to $3.0 billion. Nonresidential permits grew

46.4 percent, from $3.9 billion to $5.6 billion.

Inflation — The cost of consumer goods and services as measured by the Consumer

Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent nationwide from

January ’13 to January ’14, the first decline since October ’09. According to the U.S. Bu-

reau of Labor Statistics, the decrease can be attributed largely to the 19.6 percent drop in

the energy index, the sharpest in a series of five consecutive declines. Had the energy in-

dex remained unchanged, the CPI-U would have increased 1.9 percent. Core inflation (all

items less the volatile food and energy categories) rose 1.6 percent over the 12 months.

Home Sales — Houston-area realtors began ’15 on a strong note with a 6.1 percent in-

crease in single-family home sales, from 3,799 sold in January ’14 to 4,032 sold in Janu-

ary ’15. The Houston Association of REALTORS®

reports that the median price of a sin-

gle-family home rose 6.7 percent to $190,000.

Purchasing Managers Index — The Houston Purchasing Managers Index (PMI), a

short-term leading indicator for regional production, registered 48.9 in January, down

from 51.5 in December, according to the latest report from the Institute for Supply Man-

agement-Houston (ISM-Houston). The decline in the PMI was expected, given the sharp

decline in oil prices since their peak in June ’14. January is the first month since August

’09 that the Houston PMI has registered less than 50, signaling anticipated contraction in

production over the next three to four months.

Vehicle Sales — Houston-area auto dealers sold 27,591 vehicles in January ’15, a 10.4

percent increase from the 24,991 sold January ’14, according to TexAuto Facts, published

by InfoNation, Inc. of Sugar Land. Trucks and SUVs accounted for the majority of the

growth, increasing 15.1 percent over the year while car sales rose 4.2 percent.









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If you are a nonmember and would like to receive this electronic publication, please email your

request for Economy at a Glance to [email protected]. Include your name, title and phone

number and your company’s name and address. For information about joining the Greater

Houston Partnership, call Member Services at 713-844-3683.



commentary, please email your request for Key Economic Indicators to [email protected]

with the same identifying information. You may request Glance and Indicators in the same

email.







Dec '14 Nov '14 Dec '13 Nov '14 Dec '13 Nov '14 Dec '13


Total Private 2,608.9 2,598.8 2,510.0 10.1 98.9 0.4 3.9

Goods Producing 583.0 579.9 552.0 3.1 31.0 0.5 5.6






Construction 208.8 209.1 192.1 -0.3 16.7 -0.1 8.7

Manufacturing 258.7 257.4 252.3 1.3 6.4 0.5 2.5



Wholesale Trade 172.4 171.4 164.2 1.0 8.2 0.6 5.0

Retail Trade 308.7 303.7 302.6 5.0 6.1 1.6 2.0


Utilities 16.0 15.9 15.9 0.1 0.1 0.6 0.6




Information 32.6 32.7 33.8 -0.1 -1.2 -0.3 -3.6






Legal Services 25.1 24.7 24.0 0.4 1.1 1.6 4.6


Architectural, Engineering & Related Services 76.8 77.0 71.9 -0.2 4.9 -0.3 6.8




Employment Services 80.5 82.0 78.9 -1.5 1.6 -1.8 2.0


Health Care & Social Assistance 305.0 305.1 294.6 -0.1 10.4 0.0 3.5



Other Services 104.3 104.9 100.9 -0.6 3.4 -0.6 3.4

Government 383.7 383.9 377.9 -0.2 5.8 -0.1 1.5













ENERGY

U.S. Active Rotary Rigs Feb '15 1,348 1,769 -23.8 1,516 * 1,769 * -14.3

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Feb '15 50.38 101.43 -50.3 49.45 * 98.14 * -49.6

Spot Natural Gas ($/MMBtu, Henry Hub) Feb '15 2.82 5.62 -49.8 2.90 * 5.11 * -43.2


Houston Purchasing Managers Index Jan '15 48.9 57.1 -14.4 48.9 * 57.1 * -14.4

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Jan '15 4,409,854 4,202,519 4.9 4,409,854 4,202,519 4.9

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Jan '15 1,069,965,000 2,217,170,000 -51.7 1,069,965,000 2,217,170,000 -51.7

Nonresidential Jan '15 435,230,000 1,604,564,000 -72.9 435,230,000 1,604,564,000 -72.9

Residential Jan '15 634,735,000 612,606,000 3.6 634,735,000 612,606,000 3.6

Building Permits ($, City of Houston) Jan '15 580,179,350 580,228,831 0.0 580,179,350 580,228,831 0.0

Nonresidential Jan '15 389,143,624 373,754,501 4.1 389,143,624 373,754,501 4.1

New Nonresidential Jan '15 220,802,201 177,555,227 24.4 220,802,201 177,555,227 24.4

Nonresidential Additions/Alterations/Conversions Jan '15 168,341,423 196,199,274 -14.2 168,341,423 196,199,274 -14.2

Residential Jan '15 191,035,726 206,474,330 -7.5 191,035,726 206,474,330 -7.5

New Residential Jan '15 171,510,471 189,809,880 -9.6 171,510,471 189,809,880 -9.6

Residential Additions/Alterations/Conversions Jan '15 19,525,255 16,664,450 17.2 19,525,255 16,664,450 17.2


Property Sales Jan '15 4,874 4,752 2.6 4,874 4,752 2.6

Median Sales Price - SF Detached Jan '15 190,000 178,000 6.7 190,000 * 178,000 * 6.7

Active Listings Jan '15 26,556 28,211 -5.9 26,556 * 28,211 * -5.9


Nonfarm Payroll Employment Dec '14 2,992,600 2,887,900 3.6 2,924,983 * 2,827,525 * 3.4

Goods Producing (Natural Resources/Mining/Const/Mfg) Dec '14 583,000 552,000 5.6 568,750 0 545,967 * 4.2

Service Providing Dec '14 2,409,600 2,335,900 3.2 2,356,233 0 2,281,558 * 3.3


Houston-Sugar Land-Baytown MSA Dec '14 4.1 5.5 5.1 * 6.2 *

Texas Dec '14 4.1 5.6 5.2 * 6.3 *

U.S. Dec '14 5.4 6.5 6.2 * 7.4 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Dec '14 3,910,898 3,735,453 4.7 46,636,693 44,756,323 4.2

Air Passengers (Houston Airport System) Dec '14 4,642,859 4,526,540 2.6 53,196,844 50,908,865 4.5

Domestic Passengers Dec '14 3,773,081 3,714,308 1.6 43,384,558 41,922,650 3.5

International Passengers Dec '14 869,778 812,232 7.1 9,812,286 8,986,215 9.2

Landings and Takeoffs Dec '14 74,246 69,227 7.3 823,755 808,364 1.9

Air Freight (metric tons) Dec '14 43,743 35,635 22.8 446,152 414,686 7.6

Enplaned Dec '14 18,195 17,866 1.8 230,175 219,476 4.9

Deplaned Dec '14 25,548 17,769 43.8 215,977 195,210 10.6

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Jan '15 27,591 24,991 10.4 27,591 24,991 10.4

Cars Jan '15 11,216 10,761 4.2 11,216 10,761 4.2

Trucks, SUVs and Commercials Jan '15 16,375 14,230 15.1 16,375 14,230 15.1

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 2Q14 29,665 29,545 0.4 57,177 55,326 3.3


Houston-Galveston-Brazoria CMSA Jan '15 212.169 209.814 1.1 213.366 * 207.574 * 2.8

United States Jan '15 233.707 233.916 -0.1 233.700 * 233.900 * -0.1


Occupancy (%) 2Q14 74.7 71.9 74.0 * 71.2 *







-150

-120

-90

-60

-30

0

30

60

90

120

150

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

3,000

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

12

-Mo

nth

Ch

ange

(0

00

)

No

nfa

rm P

ayro

ll Em

plo

yme

nt

(00

0)




1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

420

460

500

540

580

620

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Serv

ice

-Pro

vid

ing

Job

s (0

00

s)

Go

od

s-P

rod

uci

ng

Job

s (0

00

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Goods-Producing and Service-Providing Employment Houston MSA




3

4

5

6

7

8

9

10

11

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

% C

ivili

an L

abo

r Fo

rce



Houston Texas U.S.

0

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4

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8

10

12

14

16

0

20

40

60

80

100

120

140

160

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Nat

ura

l Gas

, $ /

mcf

WTI

, $ b

arre

l


Spot Crude and Natural Gas Prices Monthly Averages

WTI Natural Gas

January 2015 ©2015, Greater Houston Partnership Page 1

A publication of the Greater Houston Partnership Volume 24 Number 1 • January 2015

Here We Go Again — For the third time in as many decades, Houston faces a period of low oil prices and high economic uncertainty. The first episode occurred in the mid-’80s when Saudi Arabia flooded the world with crude, thus driving down prices. The second episode coincided with the Great Recession. Energy demand fell, taking oil prices with it. The most recent drop began in mid-’14 and traces its roots to U.S. overproduction, weak global growth, and the Saudis deciding to put a greater priority on market share than price. On June 23, 2014, West Texas Intermediate (WTI) traded at $107.95 per bar-rel. At market open on January 13, 2015, the price had fallen to $44.91.

When will prices re-bound? The consen-sus is that they won’t recover this year. Per-haps in ’16, if two events transpire—cur-rent low oil prices drive a significant a-mount of production from the market and global economic growth heats up, stimulating demand for energy. Given the weakness of the European and Asian economies, the restructuring of the Chi-nese economy, and slower growth in Latin America, production cutbacks are likely to play a larger role in boosting oil prices. How low will oil prices fall before they recover? That’s anyone’s guess. However, the NYMEX futures strip suggests that WTI will trade between $46 and $54 through the end of the year.1 CitiGroup expects WTI to average in the mid-$50s much of the year. BNP Paribas forecasts WTI to average $55 for the year. The Saudi oil minister, however, has said OPEC will not cut production to prop up prices, even if oil falls to $20 per barrel. Will Houston see a repeat of the ’80s? Not likely. The region’s economy has matured since then. Factors that exacerbated the ’80s collapse are not present today. And there’s enough impetus from other sectors to support growth, albeit at a much slower pace than

1 NYMEX stands for New York Mercantile Exchange, the commodity futures market where fuels, metals and agricultural products are traded.

SPOT PRICES WEST TEXAS INTERMEDIATE, $/BBL

Event Oil Peak Oil Trough % Change

‘80s Recession

Aug ’80 $39.50 Mar ’86 $11.98 69.9

Great Recession Jul ’08 145.31 Dec ’08 30.28 79.2

Current Downturn Jun ’14 107.95 Jan ’15 44.91* 58.4

* Not the trough but the price as of 8 a.m. January 13 Source: U.S. Energy Information Administration


in recent years. Houston’s economy this year and next will probably look more like a melding of ’04 and ’05, when oil traded at $40 to $60 a barrel and the region still found a way to add 57,000 jobs. The heady growth of ’12, ’13 and ’14 is behind us for now. Then vs. Now — The differences between Houston today and in the ’80s were discussed in the November’ 14 issue of Glance, but they’re worth revisiting here. Office and housing are not overbuilt, banking is better regulated and better capitalized, and Houstonians with memories of the ’80s knew high oil prices wouldn’t last forever and planned accordingly. A few examples of the differences:

• From ’82 to ’86, developers built more than 100,000 single-family homes, most on “spec,” i.e., without a signed contract from a purchaser. And they continued to build homes while the region lost more than 200,000 jobs. Today, few homes are built on spec, the resale market has half the inventory needed to meet demand, and the region is still creating jobs, just not in energy.

• In the early ’80s, developers added more than 71.7 million square feet of office space at the same time companies were laying off staff and declaring bankruptcy. The office market is much tighter now. JLL reports only 16.2 million square feet under construction at the end of ’14, of which 56.0 percent is preleased. Overall vacancy rates may rise from 14.6 percent (Q4/14), but they won’t approach any-where near the 30.0 percent rate of July ’87.

• In the mid-’80s, many Texas banks made questionable real estate and energy loans that quickly turned sour and led to the institutions’ demise. Texas banks are now part of the banking networks of JP Morgan Chase, Wells Fargo, Bank of America, Comerica and BB&T, thus providing a larger cushion for any nonperforming loans that may emerge. The banks are also more closely supervised now than they were in the ’80s, and thus less likely to overstretch on loan commitments.

• In the ’80s, corporate functions included champagne and caviar. Businessmen crossed town via helicopter. “Drive 90 and freeze a Yankee” appeared on bumper stickers around town. Oilman Eddie Chiles appeared on television shouting, “If you don’t have an oil well, get one.” The world saw John Travolta in Urban Cow-boy as the image of the typical Houstonian. Many of today’s business leaders be-gan their careers in the ’80s, remembered the excesses, and didn’t let things get out of hand during the recent boom. The image Houston now projects to the world is the work ethic of J.J. Watt and the humility of Craig Biggio.

That’s not to say Houston won’t face challenges in the coming months. Even if crude stabilizes at $50 a barrel, energy companies will face severe restrictions on cash flow. Exploration budgets have already been slashed, sources of outside capital are drying up,

Additional insights into the drop in oil prices and the impact on Houston can be found in the

Partnership’s 2015 Employment Forecast available on the econ-omy tab at www.houston.org/

http://www.houston.org/economy/archives/glance/Glance-Nov14.pdf





banks are starting to audit reserves, orders for oil field equipment have fallen off, and service companies have begun quietly handing out pink slips. Don’t expect to see a flood of press releases announcing the layoffs. One’s more likely to hear of them at the soccer field, in the checkout line, or on the church parking lot before the trend appears in the data reported by the Texas Workforce Commission. As of early January, more than 40 energy companies have released their exploration budgets for ’15, according to Tudor Pickering Holt. Overall, spending will be down ap-proximately 40 percent from last year. Exploration firms are trying to stretch those budgets by demanding price concessions from service firms. The requested cuts range from 10 to 50 percent, reports Tudor Pickering Holt. Agreeing to the cuts will compress margins for some firms and result in outright losses for others. A few will accept short-term losses, hoping to keep crews together until oil prices rebound and margins improve, but most are likely to release their crews, hoping to rehire them later. A drop of 40 percent in exploration spending suggests 9,000 to 12,000 fewer wells will be drilled this year than last. Fewer new wells will lead to slower production growth and eventually an outright decline in crude output. The recent surge in U.S. production comes from oil shale formations tapped by horizontal drilling and hydraulic fracturing. Seventy percent of their production occurs in the first year, so any slowdown in U.S. drilling will impact the global oil glut. It’s not just U.S. production that’s under pressure, but high-cost production throughout the world. Production in Canada (oil sands) and Russia (older fields) is thought to be especially vulnerable. With exploration tapering off, Houston will need to look to other sectors for growth.

• The U.S. economy should expand at 4.0 percent or better this year. Houston’s economy benefits whenever U.S. economic growth exceeds 3.0 percent.

• Dodge Data & Analytics reports that $28.7 billion in construction contracts was awarded in the metro area in the first 11 months of ’14, more than double the con-tract value awarded during the same period the previous year. Much of that work is concentrated in chemicals plants along the Houston Ship Channel, across Gal-veston Bay, and in Brazoria County. This should continue to provide opportunities for blue collar workers.

• Houston’s expanding population (via births and relocations) and aging population (via baby boomers) continues to drive the need for health care.

The Partnership’s employment forecast calls for growth in all sectors except oil field services, oil field equipment manufacturing, and oil field exploration. Losses may be a bit steeper in energy (a net loss of 9,200 jobs), and growth may be a bit slower (net gain of 62,900 total jobs) than originally forecast, but the Partnership still expects to see em-ployment growth in ’15―just not at the pace of recent years.


Employment Update — The Houston-Sugar Land-Baytown metro area led the state in employment growth, creating 125,300 jobs in the 12 months ending November, according to the Texas Workforce Commission (TWC). The Dallas-Fort Worth-Arlington metro ranked second, adding 111,500 jobs, followed by San Antonio-New Braunfels with 29,100 jobs, Austin-Round Rock-San Marcos with 28,600 jobs, and McAllen-Edinburg-Mission with 7,200 jobs. Since the bottom of the recession, the Houston metro area has added 480,200 net new jobs, or more than three times the 153,800 jobs lost during the recession. With the November employment report, Houston reached a milestone, surpassing 2.95 million jobs.

Houston's November unemployment rate was 4.5 percent, down from 4.7 percent in Octo-ber and 5.7 percent in November ’13. Texas’ unemployment rate was 4.6 percent in No-vember, down from 4.8 percent in October and 5.8 percent in November ’13. The U.S. rate was 5.5 percent in November, unchanged from October and down from 6.6 percent in November ’13. The rates are not seasonally adjusted.


2,200

2,300

2,400

2,500

2,600

2,700

2,800

2,900

3,000

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15

Jobs (Thousands)


Total Nonfarm Payroll Employment Houston Metro Area


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Building Permits — Construction permitting in the City of Houston totaled $8.7 billion for the 12 months ending November ’14, a 47.7 percent increase from the $5.9 billion is-sued during the same period in ’13. For the 12 months ending November, residential permit values rose 42.9 percent―from $2.1 billion to $3.1 billion. Nonresidential permits grew from $3.7 billion to $5.6 billion, a 50.4 percent increase. Inflation — The cost of consumer goods and services, as measured by the Consumer Price Index for All Urban Consumers, increased 1.3 percent nationwide from November ’13 to November ’14, according to the U.S. Bureau of Labor Statistics. Core inflation (all items less the volatile food and energy categories) rose 1.7 percent over the 12 months. Home Sales — Houston-area realtors remained busy through the fall, selling 6,639 sin-gle-family homes in October, a 12.3 percent increase from the 5,912 sold October ’13. The Houston Association of REALTORS® (HAR) reports that home prices reached rec-ord highs for an October. The average price of a single family home rose 9.8 percent year over year to $262,013, and the median price of a single family home increased 8.3 per-cent to $192,000. Purchasing Managers Index — The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production, registered 51.5 in December, down from 54.3 in November, according to the latest report from the Institute for Supply Man-agement-Houston. The December PMI is the lowest reading for Houston production since November ’09. Vehicle Sales — Houston-area auto dealers sold 27,693 vehicles in November, down 3.1 percent from November ’13, according to TexAuto Facts, published by InfoNation, Inc. of Sugar Land. Vehicle sales fell for the second straight month, but produced the second highest November in the past 15 years. In the 12 months ending November ’14, 371,331 vehicles were sold in the Houston region, up 6.0 percent from the 350,454 sold during the prior 12 months.









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Nov '14 Oct '14 Nov '13 Oct '14 Nov '13 Oct '14 Nov '13

Total Nonfarm Payroll Jobs 2,955.9 2,939.7 2,830.6 16.2 125.3 0.6 4.4Total Private 2,565.6 2,551.8 2,449.6 13.8 116.0 0.5 4.7Goods Producing 584.3 586.5 550.4 -2.2 33.9 -0.4 6.2Service Providing 2,371.6 2,353.2 2,280.2 18.4 91.4 0.8 4.0 Private Service Providing 1,981.3 1,965.3 1,899.2 16.0 82.1 0.8 4.3

Mining and Logging 117.0 117.7 106.9 -0.7 10.1 -0.6 9.4 Oil & Gas Extraction 63.4 63.2 59.2 0.2 4.2 0.3 7.1 Support Activities for Mining 53.5 53.9 47.0 -0.4 6.5 -0.7 13.8

Construction 205.4 206.1 189.2 -0.7 16.2 -0.3 8.6

Manufacturing 261.9 262.7 254.3 -0.8 7.6 -0.3 3.0 Durable Goods Manufacturing 173.2 174.6 171.9 -1.4 1.3 -0.8 0.8 Nondurable Goods Manufacturing 88.7 88.1 82.4 0.6 6.3 0.7 7.6

Wholesale Trade 155.7 156.6 154.4 -0.9 1.3 -0.6 0.8

Retail Trade 300.2 292.3 293.7 7.9 6.5 2.7 2.2

Transportation, Warehousing and Utilities 142.5 139.3 132.8 3.2 9.7 2.3 7.3 Utilities 16.6 16.4 16.0 0.2 0.6 1.2 3.8 Air Transportation 23.3 23.3 23.3 0.0 0.0 0.0 0.0 Truck Transportation 25.1 25.1 24.0 0.0 1.1 0.0 4.6 Pipeline Transportation 9.9 9.8 9.5 0.1 0.4 1.0 4.2

Information 33.8 33.3 32.6 0.5 1.2 1.5 3.7 Telecommunications 15.2 15.1 14.9 0.1 0.3 0.7 2.0


Real Estate & Rental and Leasing 54.0 54.9 52.3 -0.9 1.7 -1.6 3.3

Professional & Business Services 449.0 447.7 431.8 1.3 17.2 0.3 4.0 Professional, Scientific & Technical Services 222.8 221.8 205.0 1.0 17.8 0.5 8.7 Legal Services 24.2 24.2 23.9 0.0 0.3 0.0 1.3 Accounting, Tax Preparation, Bookkeeping 21.0 20.9 20.5 0.1 0.5 0.5 2.4 Architectural, Engineering & Related Services 80.7 79.7 70.1 1.0 10.6 1.3 15.1 Computer Systems Design & Related Services 32.8 32.4 30.3 0.4 2.5 1.2 8.3 Admin & Support/Waste Mgt & Remediation 201.0 200.9 202.5 0.1 -1.5 0.0 -0.7 Administrative & Support Services 189.5 188.9 191.8 0.6 -2.3 0.3 -1.2 Employment Services 80.7 80.7 74.6 0.0 6.1 0.0 8.2





Other Services 103.0 102.9 100.0 0.1 3.0 0.1 3.0

Government 390.3 387.9 381.0 2.4 9.3 0.6 2.4 Federal Government 27.7 27.3 27.3 0.4 0.4 1.5 1.5 State Government 73.7 73.6 73.4 0.1 0.3 0.1 0.4 State Government Educational Services 40.0 39.8 39.8 0.2 0.2 0.5 0.5 Local Government 288.9 287.0 280.3 1.9 8.6 0.7 3.1 Local Government Educational Services 203.8 201.8 196.9 2.0 6.9 1.0 3.5




Houston Economic IndicatorsA Service of the Greater Houston Partnership


ENERGYU.S. Active Rotary Rigs Dec '14 1,882 1,756 7.2 1,862 * 1,762 * 5.7Spot Crude Oil Price ($/bbl, West Texas Intermediate) Dec '14 60.23 97.07 -38.0 93.38 * 98.00 * -4.7Spot Natural Gas ($/MMBtu, Henry Hub) Dec '14 3.45 4.23 -18.4 4.31 * 3.71 * 16.2

UTILITIES AND PRODUCTIONHouston Purchasing Managers Index Dec '14 51.5 55.4 -7.0 56.5 * 58.4 * -3.3Nonresidential Electric Current Sales (Mwh, CNP Service Area) Nov '14 4,639,848 4,392,870 5.6 49,829,340 48,034,538 3.7

CONSTRUCTIONTotal Building Contracts ($, Houston MSA) Nov '14 1,562,009,000 965,565,000 61.8 28,675,379,000 11,546,460,000 148.3Nonresidential Nov '14 928,509,000 339,864,000 173.2 19,615,557,000 3,573,055,000 449.0Residential Nov '14 633,500,000 625,701,000 1.2 9,059,822,000 7,973,405,000 13.6Building Permits ($, City of Houston) Nov '14 557,555,813 376,587,045 48.1 8,045,099,536 5,517,636,311 45.8Nonresidential Nov '14 339,118,105 216,736,377 56.5 5,226,119,177 3,459,875,050 51.0New Nonresidential Nov '14 222,121,104 90,666,974 145.0 3,020,860,894 1,774,008,338 70.3Nonresidential Additions/Alterations/Conversions Nov '14 116,997,001 126,069,403 -7.2 2,205,258,283 1,685,866,712 30.8Residential Nov '14 218,437,708 159,850,668 36.7 2,818,980,359 2,057,761,261 37.0New Residential Nov '14 203,537,825 145,848,450 39.6 2,518,213,975 1,850,993,759 36.0Residential Additions/Alterations/Conversions Nov '14 14,899,883 14,002,218 6.4 300,766,384 206,767,502 45.5Multiple Listing Service (MLS) ActivityProperty Sales Oct '14 8,106 7,182 12.9 69,635 67,920 2.5Median Sales Price - SF Detached Oct '14 196,000 182,000 7.7 196,544 * 178,723 * 10.0Active Listings Oct '14 28,946 32,457 -10.8 28,759 * 32,787 * -12.3

EMPLOYMENT (Houston-Sugar Land-Baytown MSA)Nonfarm Payroll Employment Nov '14 2,955,900 2,830,600 4.4 2,884,836 * 2,783,700 * 3.6Goods Producing (Natural Resources/Mining/Const/Mfg) Nov '14 584,300 550,400 6.2 571,491 0 546,773 * 4.5Service Providing Nov '14 2,371,600 2,280,200 4.0 2,313,345 0 2,236,927 * 3.4Unemployment Rate (%) - Not Seasonally AdjustedHouston-Sugar Land-Baytown MSA Nov '14 4.5 5.7 5.1 * 6.2 *Texas Nov '14 4.6 5.8 5.3 * 6.4 *U.S. Nov '14 5.5 6.6 6.2 * 7.5 *

TRANSPORTATIONPort of Houston Authority Shipments (Short Tons) Oct '14 3,937,011 3,726,758 5.6 39,197,949 37,552,953 4.4Air Passengers (Houston Airport System) Oct '14 4,464,317 4,206,141 6.1 44,255,514 42,273,901 4.7Domestic Passengers Oct '14 3,764,899 3,542,097 6.3 36,035,518 34,791,694 3.6International Passengers Oct '14 699,418 664,044 5.3 8,219,996 7,482,207 9.9Landings and Takeoffs Oct '14 71,482 68,236 4.8 682,547 671,626 1.6Air Freight (metric tons) Oct '14 42,810 36,842 16.2 365,823 344,350 6.2Enplaned Oct '14 23,424 19,347 21.1 193,329 183,285 5.5Deplaned Oct '14 19,386 17,495 10.8 172,494 161,065 7.1

CONSUMERSNew Car and Truck Sales (Units, Houston MSA) Nov '14 27,693 28,569 -3.1 348,470 324,998 7.2Cars Nov '14 10,916 12,239 -10.8 149,891 144,041 4.1Trucks, SUVs and Commercials Nov '14 16,777 16,330 2.7 198,579 180,957 9.7Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 2Q14 29,665 29,545 0.4 57,177 55,326 3.3Consumer Price Index for All Urban Consumers ('82-'84=100)Houston-Galveston-Brazoria CMSA Nov '14 214.8 207.8 3.4 213.500 * 207.200 * 3.0United States Nov '14 236.151 233.069 1.3 236.911 * 232.949 * 1.7Hotel Performance (Houston MSA)Occupancy (%) 2Q14 74.7 71.9 74.0 * 71.2 *Average Room Rate ($) 2Q14 111.81 104.65 6.8 109.49 * 102.55 * 6.8Revenue Per Available Room ($) 2Q14 83.52 75.25 11.0 81.05 * 73.00 * 11.0




Sources Rig Count Baker Hughes Incorporated Spot WTI, Spot Natural Gas U.S. Energy Information Admin. Houston Purchasing Managers National Association of Index Purchasing Management – Houston, Inc. Electricity CenterPoint Energy Building Construction Contracts McGraw-Hill Construction City of Houston Building Permits Building Permit Department, City of Houston MLS Data Houston Association of Realtors Employment, Unemployment Texas Workforce Commission





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A publication of the Greater Houston Partnership Volume 23, Number 10 October 2014

Half a Trillion Dollars — Houston’s economy grew 5.2 percent (net of inflation) in ’13,

according to the U.S. Bureau of Economic Analysis (BEA). That was the fastest growth

among the nation’s 50 largest metro areas. BEA estimates Houston’s gross domestic

product (GDP) at $517.4 billion, making it the nation’s fourth largest metro economy. To

put Houston’s GDP in a global perspective, if the nine-county region were a sovereign

nation, it would rank as the world’s 25th

largest economy, behind Nigeria ($521.8 bil-

lion) and Poland ($517.5 billion) and ahead

of Norway ($512.6 billion) and Belgium

($508.1 billion).1

Since ’08, Houston’s GDP has grown by

$83.6 billion (net of inflation), exceeding the

combined growth of the Texas’ next six larg-

est metro economies—Dallas-Fort Worth

($47.3 billion), Austin ($14.6 billion), San

Antonio ($11.2 billion), El Paso ($1.3 bil-

lion), Corpus Christi ($3.6 billion) and

Beaumont ($3.5 billion)—over the same pe-

riod. To put Houston’s growth in a Gulf

Coast perspective, since ’08 Houston has

added the equivalent of New Orleans’ current

GDP ($81.8 billion).

Texas’ economy grew 3.7 percent (net of in-

flation) in ’13. BEA estimates state GDP at

$1.532 trillion, of which Houston accounts

for 33.8 percent, up from 26.3 percent in ’10.

That Houston now represents a larger share

of Texas’ economy is not surprising, given that:

1 BEA’s estimates are for the Houston-The Woodlands-Sugar Land Metropolitan Statistical Area, which includes Austin, Bra-

zoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller counties. The comparison of Houston’s econo-

my to global economies is based on International Monetary Fund reports of national GDP.

GROSS DOMESTIC PRODUCT 20 Largest Metro Economies

Rank Metro ’13 GDP

($ Billions) % Change ’12 - ’13*

1 New York 1,471.170 1.0

2 Los Angeles 826.826 1.2

3 Chicago 590.248 1.3

4 Houston 517.367 5.2

5 Washington 463.925 -0.8

6 Dallas-Fort Worth 447.574 2.1

7 Philadelphia 388.272 0.4

8 San Francisco 383.401 2.0

9 Boston 370.769 1.6

10 Atlanta 307.233 2.0

11 Seattle 284.967 2.4

12 Miami 281.076 2.4

13 Minneapolis 227.793 2.5

14 Detroit 224.726 1.3

15 Phoenix 209.523 1.2

16 San Jose 197.886 4.4

17 San Diego 196.829 1.7

18 Denver 178.860 4.3

19 Portland 168.845 2.7

20 Baltimore 163.692 0.9

* Net of inflation Source: U.S. Bureau of Economic Analysis


Houston’s exports have grown by $34.4 billion since ’10 and account for nearly half of

Texas’ export growth over that period.

Many of the 375,000 jobs Houston added between December ’09 and December ’13

were in sectors such as oil exploration, oil field services and oil field equipment manu-

facturing, where value added per worker is high.

The boom in the Texas shale plays has led a boom in chemical plant construction in the

region, with some estimates placing the aggregate value as high as $70 billion.

That Nagging Question — BEA’s recent GDP estimates provide some insight into the

question, “How large is the energy industry in Houston?” In previous years, BEA did not

provide estimates for the mining (i.e., oil and gas) sector in Houston, but it did so this year.

The Bureau estimates that mining accounted for $102.7 billion, or 19.8 percent of the re-

gion’s GDP, in ’13. This figure doesn’t include sectors that many Houstonians consider

part of the industry—chemicals, refining, oil field equipment manufacturing, fabricated

metal products, pipeline transportation and engineering services. Unfortunately, BEA

didn’t provide data for these industries, but a rough estimate of their size can be calculated

using other sources.

According to the 2002 U.S. Cen-

sus of Manufactures, chemicals,

petroleum refining, and oil field

equipment manufacturing ac-

counted for 58.9 percent of value

added by manufacture in Houston

in ’02.2 Given the recent surge in

activity in these sectors, it’s rea-

sonable to assume their share of

value added to local manufactur-

ing output may now exceed 65

percent. Based on that assumption,

GHP estimates chemicals, refining

and oil field equipment manufac-

turing accounts for $62.9 billion

of Houston’s GDP.3 Combined

with mining, that would suggest

energy accounts for $165.6 bil-

lion, or 32.0 percent of Houston

2 BEA did not disclose data for these sectors in the 2007 U.S. Census of Manufacturers and data from the 2012 Census of Manu-

factures won’t be released until next spring. 3 Calculations assume 65 percent of Houston’s $96.8 billion manufacturing industry.

INDUSTRY SHARES OF HOUSTON GDP – ’13

Sector $ Billions % GDP

Agriculture, Forestry, Fishing 0.490 0.1

Mining 102.685 19.8

Construction 25.656 5.0

Manufacturing 96.754 18.7

Wholesale Trade 37.260 7.2

Retail Trade 19.957 3.9

Utilities D D

Transportation, Warehousing 20.325 3.9

Information D D

Finance, Insurance, Real Estate 57.987 11.2

Professional, Business Services 59.045 11.4

Educational Services, Health Care 23.012 4.4

Arts, Entertainment, Recreation 11.259 2.2

Other Services 8.278 1.6

Government 29.653 5.7

Total All Sectors $517.367 100.0

D = Not reported to avoid the disclosure of confidential information.

Source: U.S. Bureau of Economic Analysis


GDP. If one assumes that fabricated metal products (e.g., pipes, valves, flanges) accounts

for another $7.0 billion,4 pipeline transportation for $4.0 billion5 and engineering services

for $10.0 billion,6 the share of Houston’s economy directly tied to energy exceeds $186.6

billion, or 38.1 percent of regional GDP. Bear in mind that this estimate is only as good as

its assumptions. Energy’s share of Houston GDP could be higher or lower. The estimates

do underscore energy’s dominance in Houston’s economy.

Ready for Your Close-Up, Houston? — Each September, the U.S. Census Bureau re-

leases the American Community Survey (ACS), an annual snapshot of the population’s

economic, demographic, housing and social characteristics.7 Comparing responses from

the ACS over time can provide insights into changes in the population. The Greater Hou-

ston Partnership has compared data from the ’09 and ’13 ACS for the nine-county Houston

metro area and noted the following:

Houston continues to diversify. Anglos now

represent a smaller share of Houston’s popula-

tion than they did in ’09, while Blacks, Asians

and Hispanics represent larger shares.

Labor force participation in Houston has fallen,

but not to the same extent as nationally. In ’09,

68.4 percent of Houstonians 16 and older were

in the labor force, i.e., employed or actively

looking for work. In ’13, Houston’s labor force

participation rate slipped to 67.3 percent. Given

the region’s robust job growth, the local decline

is more likely due to an aging population than disillusioned workers, who account for

much of the nationwide decline. In Houston, the population 62 and older rose by

132,000 over the four years.

Houstonians love their cars. In ’09, 78.8 percent of all workers drove to work alone

each day. In ’13, single-passenger commuters accounted for 79.7 percent of all work

trips. That figure equates to 211,000 more vehicles on the road last year than four years

earlier. Only 2.4 percent of Houstonians use public transit to get to work.

4 BEA estimated fabricated metal products’ contribution to Houston’s GDP at $6.6 billion in ’12 but did not provide an estimate

for ’13. 5 This is a conservative estimate based on fact that nationwide pipeline transportation is a $19.5 billion industry and Houston-

based firms control 44 percent of the nation’s oil pipeline capacity and 52 percent of the nation’s gas pipeline capacity. And

while certain firms in Houston may report revenues which greatly exceed GHP’s estimates, regional GDP is based on value add-

ed locally and thus pipelines’ share of GDP is a fraction of total reported revenues. 6 A very rough estimate based on architectural and engineering services accounting for 17.7 percent of business and professional

services employment and BEA estimating the sector contributed $59.0 billion to Houston’s GDP in ’13. 7 Information from the survey helps determine how more than $400 billion in federal and state funds are distributed each year.

RACIAL/ETHNIC PROFILE % of Metro Houston Population*

’09 ‘13

American Indian 0.2 0.2

Asian 6.0 6.9

Black 16.5 16.8

Hispanic 34.4 36.1

White 41.7 38.3

Other 1.2 1.7

Total % 100.0 100.0

’09 based on an estimated 5,865,086 residents. ’13 based on an estimated 6,313,158 area residents.

Source: American Community Survey


More Houstonians draw paychecks than toil for themselves. Of the 2,995,300 Houston-

ians 16 and older who work, 188,200 are self-employed. That’s a drop from 193,000 in

’09, and a decline from 7.0 to 6.3 percent of the working population. During the reces-

sion, many Houstonians became entrepreneurs by necessity and not by choice.

Houston has grown smarter. The population 25 and older holding a bachelor’s degree or

higher rose from 27.9 percent in ’09 to 30.9 percent in ’13.

Houstonians have become older. In ’09, the median age of all residents was 32.9 years.

In ’13, the median age was 33.6 years.

For many Houstonians, incomes have not kept pace with inflation. The median house-

hold income for Houston was $54,146 in ’09. The median in ’13 was $57,366. If the

median had kept pace with inflation, it would have been $60,030 in ’13.

Houston has more affluent households than before. The ACS recorded 591,000 house-

holds in Houston with incomes of $100,000 or more in ’13, up from 409,700 in ’09.

But not everyone has benefited from Houston’s booming economy. In ’09, 12.2 percent

of all families lived in poverty. In ’13, 13.2 percent did.

However, there are fewer uninsured. In ’09, 75.4 percent of Houstonians had health in-

surance. In ’13, 77.2 percent had coverage.

Houston continues to attract residents from overseas. The ’13 ACS found that

1,423,700 Houston residents were born outside the U.S. compared to 1,278,400 in ’09.

That means 22.5 percent of Houston’s population was foreign-born in ’13 versus 21.8

percent in ’09. About two-

thirds of all foreign-born

residents, 844,300 accord-

ing to the ’13 ACS, are not

U.S. citizens.

Finally, one in every 17

adults served in the mili-

tary, one in every 10 Hous-

tonians has been diagnosed

with some form of disabil-

ity, one in three over the

age of five speaks a lan-

guage other than English at

home, and nine out of every 10 households own a computer.

For additional information in the ACS, click here.

Europe, 4.7%

Asia, 24.1%

Africa, 4.5%Oceania, 0.2%

Latin America, 65.2%

North America, 1.3%

Houston's Foreign Population By Place of Birth


http://www.census.gov/acs/www/


From Scarcity to Abundance — At GHP’s inaugural State of Energy event8 held on Oc-

tober 2, Rex Tillerson, chairman, president and CEO of ExxonMobil Corporation, noted

that the level of exploration and production activity in North America has created a new

era of energy abundance. The U.S. produces 3.0 million more barrels of crude and liquids

per day than just three years ago, a 57.4 percent increase, from 5.4 million barrels per day

in early ’11 to the current daily production rate of 8.5 million barrels per day.

After decades of operating under a mindset of scarcity, North America now benefits from

several game-changing innovations the oil and gas industry has pioneered. The develop-

ment of the Canadian tar sands has expanded proven oil reserves by approximately 170 bil-

lion barrels. Offshore operations in the Gulf of Mexico now reach ultra-deep-water depths

of more than 10,000 feet. ExxonMobil projects deep-water production will increase 150

percent worldwide over the next three decades. Finally, the most discussed breakthrough of

hydraulic fracturing coupled with horizontal drilling has opened up previously inaccessible

and uneconomic energy supplies.

This new era of energy abundance offers new challenges as prices decline. The spot price

of West Texas Intermediate (WTI), the U.S. benchmark for light, sweet crude, fell from the

monthly average of $101.07 a barrel in October ’13 to $88.86 a barrel on October 7, 2014.

Many operators cite $70 a barrel as the threshold below which drilling in shale plays such

as the Eagle Ford would no longer be economically feasible.

8 Click here to read Rex Tillerson’s State of Energy speech.

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U.S. Crude Oil Production

U.S. Crude Oil Production


http://corporate.exxonmobil.com/en/company/news-and-updates/speeches/the-state-of-energy-strong-and-transformative

http://corporate.exxonmobil.com/en/company/news-and-updates/speeches/the-state-of-energy-strong-and-transformative


In its October Short-Term En-

ergy Outlook, the U.S. Energy

Information Administration

(EIA) projected WTI to aver-

age $98.28 this year, down

from the previously projected

$100.45. The EIA also lowered

its ’15 forecast from an aver-

age of $96.08 a barrel to

$94.58 per barrel. Despite the

downward revisions, the fore-

casted prices remain at a level

that should sustain exploration

activity at or above current

levels through the end of ’15.

Commercial Real Estate Update — The Houston office market continues to show signs

of leveling off, reports CBRE. The market saw seven buildings break ground in Q3/14,

only one of which was spec, compared to three spec groundbreakings in Q2/14. Current

office construction totals 17.3 million square feet, up from 16.3 million in Q2. Sixty-

seven percent of the space under construction is pre-leased or owner-occupied space.

The market absorbed 1.0 million square feet of office space in Q3/14, bringing the year-

to-date absorption to 3.8 million square feet. That compares with 3.6 million square feet

absorbed in the first three quarters of ’13. Overall asking rates were $26.10 per square

foot in Q3/14 compared to $24.40 in Q3/13.

The Houston industrial market absorbed 5.9 million square feet of space through Q3/14,

reports CBRE, and has already surpassed the ’13 full-year total of 5.8 million square feet.

Even though 10.3 million square feet of industrial space has been delivered so far this

year, the vacancy rate is holding steady at 5.3 percent. The average asking rental rate

was $0.67 per square foot in Q3/14, up from the $0.54 in Q3/13. Only 6.1 million square

feet of industrial space is under construction, compared to 7.8 million in Q2.

CBRE reports that available retail space is becoming increasingly difficult to find. The

vacancy rate dropped to 6.6 percent in Q3/14 compared to 7.4 percent in Q3/13. Only 2.1

million square feet of retail space is under construction in a market with 209.8 million

square feet of total space. Annual asking rates averaged $22.06 per square foot in Q3/14

compared to $21.81 in Q3/13.

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Jobs Machine Continues to Hum — The Houston metro area led the state in employment

growth, creating 107,400 jobs in the 12 months ending August ’14, according to the Texas

Workforce Commission. The Dallas-Fort Worth-Arlington metro ranked second, adding

101,500 jobs, followed by Austin-Round Rock-San Marcos with 31,700 jobs.

The three fastest growing sectors in Houston were building construction (14.3 percent an-

nual growth, 7,100 jobs), engineering (13.3 percent annual growth, 9,300 jobs) and oil field

services (11.2 percent, 5,400 jobs). These sectors are being driven by the current office

construction boom, the massive investment in new chemical plants along the Houston Ship

Channel, and the current ongoing activity in the Eagle Ford and Permian Basin.

Since the bottom of the recession, the metro area has added 420,700 jobs, or nearly triple

the 153,800 jobs lost during the recession. Houston remains 3,600 jobs shy of the 2.9 mil-

lion job mark, a milestone the region should reach when the Texas Workforce Commission

issues the next employment report later this month.

Partnership to Host Economic Outlook Event — Plan to attend GHP’s 2015 Econom-

ic Outlook, scheduled for Thursday, December 11. The event features a panel of busi-

ness leaders discussing Houston econom-

ic trends, the Partnership’s 2015 em-

ployment forecast, and a luncheon key-

note presentation by David Crowe, Chief

Economist for the National Associaton

of Homebuilders. Additional details will

be posted at the Partnership’s website,

www.houston.org, starting mid-October.

http://www.uschamber.com/about/board/thomas-j-donohue






Building Permits — City of Houston construction permits set a record in August, the

sixth consecutive month to do so. The 12-month total topped $7.8 billion, a 39.2 percent

increase from $5.6 billion in permits issued over the 12-months ending August ’13.

Inflation —The cost of consumer goods and services as measured by the Consumer Price

Index for All Urban Consumers increased 1.7 percent nationwide from August ’13 to

August ’14, according to data released by the U.S. Bureau of Labor Statistics. Core infla-

tion (all items less the volatile food and energy categories) rose 1.7 percent over the past

12 months

Home Sales —Houston-area realtors sold 89,711 homes in the 12 months ending August

’14, a 5.7 percent increase over the 84,900 homes sold in the comparable period in ’13,

according to data released by the Houston Association of REALTORS® (HAR). Dollar

volume topped $22.5 billion in the 12 months ending August ’14, a 14.8 percent increase

over the $19.6 billion recorded in the same period in ’13. The running total for dollar

volume has now set a record for 17 consecutive months.


short-term leading indicator for regional production, registered 55.6 in August, down

from 56.4 in July, according to the latest report from the Institute for Supply Manage-

ment-Houston (ISM-Houston). With the August reading, the PMI has held at or above 50

for 60 consecutive months.

Vehicle Sales — Houston-area auto dealers sold 371,488 vehicles in the 12 months end-

ing August ’14, up 11.3 percent from the 333,648 sold during the same period ending

’13. According to TexAuto Facts, published by InfoNation, Inc. of Sugar Land, Houston

area auto dealers sold 30,677 vehicles in August ’14, up 0.3 percent from 30,595 in Au-

gust ’13. Growth was attributed to the 3.3 percent increase in truck/SUV sales, from

17,359 sold in August ’13 to 17,935 in August ’14. The uptick in truck sales offset the

3.7 percent decrease in car sales, the second consecutive month of year-over-year de-

clines in car sales.

Foreign Trade — In the first eight months of this year, more than $173.7 billion in for-

eign trade passed through the Houston-Galveston Customs District, up 5.2 percent from

the $165.1 billion in trade handled in the first eight months of ’13. Exports totaled $89.9

billion, up 9.5 percent from the $82.1 billion handled during the same period in ’13. Im-

ports totaled $83.7 billion, up 0.9 percent from the $83.0 billion handled over the same

period in ’13.


contributed to this issue of









STAY UP TO DATE!



request for Economy at a Glance to [email protected]. Include your name, tit le and phone

number and your company’s name and address. For information about joining the Greater Houston

Partnership, call Member Services at 713-844-3683.

The Key Economic Indicators table is updated whenever any data

change — typically, 11 or so times per month. If you would like to

receive these updates by e-mail, usually accompanied by commentary,

please email your request for Key Economic Indicators to

[email protected] w ith the same identifying information. You

may request Glance and Indicators in the same email.

















Aug '14 July '14 Aug '13 July '14 Aug '13 July '14 Aug '13


Total Private 2,538.6 2,528.2 2,443.0 10.4 95.6 0.4 3.9

Goods Producing 581.4 573.6 552.2 7.8 29.2 1.4 5.3






Construction 201.4 195.7 190.5 5.7 10.9 2.9 5.7

Manufacturing 262.2 261.5 252.8 0.7 9.4 0.3 3.7



Wholesale Trade 155.9 157.3 152.2 -1.4 3.7 -0.9 2.4

Retail Trade 291.1 288.9 286.7 2.2 4.4 0.8 1.5

Transportation, Warehousing and Utilities 137.8 139.2 131.9 -1.4 5.9 -1.0 4.5

Utilities 16.7 16.7 16.2 0.0 0.5 0.0 3.1




Information 33.3 33.3 32.8 0.0 0.5 0.0 1.5

Telecommunications 15.1 15.2 14.9 -0.1 0.2 -0.7 1.3





Legal Services 24.4 24.6 23.9 -0.2 0.5 -0.8 2.1











Other Services 102.4 103.5 98.9 -1.1 3.5 -1.1 3.5

Government 357.8 364.5 346.0 -6.7 11.8 -1.8 3.4

Federal Government 27.2 27.5 27.4 -0.3 -0.2 -1.1 -0.7












ENERGY

U.S. Active Rotary Rigs Sept '14 1,930 1,763 9.5 1,845 * 1,763 * 4.7

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Sept '14 93.37 106.09 -12.0 100.23 * 98.14 * 2.1

Spot Natural Gas ($/MMBtu, Henry Hub) Sept '14 3.89 3.58 8.7 4.48 * 3.66 * 22.4


Houston Purchasing Managers Index Aug '14 55.6 58.0 -4.1 57.0 * 58.6 * -2.7

Nonresidential Electric Current Sales (Mwh, CNP Service Area) July '14 4,808,711 4,660,412 3.2 30,226,473 29,221,239 3.4

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Aug '14 1,458,201,000 933,592,000 56.2 23,262,418,000 8,230,291,000 182.6

Nonresidential Aug '14 738,751,000 197,370,000 274.3 16,887,462,000 2,345,566,000 620.0

Residential Aug '14 719,450,000 736,222,000 -2.3 6,374,956,000 5,884,725,000 8.3

Building Permits ($, City of Houston) Aug '14 695,960,968 422,778,418 64.6 5,634,859,690 3,933,521,700 43.3

Nonresidential Aug '14 370,587,621 250,043,895 48.2 3,692,023,223 2,526,813,746 46.1

New Nonresidential Aug '14 88,272,884 98,006,548 -9.9 2,044,636,168 1,250,054,134 63.6

Nonresidential Additions/Alterations/Conversions Aug '14 282,314,737 152,037,347 85.7 1,647,387,055 1,276,759,612 29.0

Residential Aug '14 325,373,347 172,734,523 88.4 1,942,836,467 1,406,707,954 38.1

New Residential Aug '14 302,815,828 142,699,944 112.2 1,740,783,387 1,249,870,075 39.3

Residential Additions/Alterations/Conversions Aug '14 22,557,519 30,034,579 -24.9 202,053,080 156,837,879 28.8


Property Sales Aug '14 8,953 8,806 1.7 61,756 60,558 2.0

Median Sales Price - SF Detached Aug '14 206,000 186,510 10.4 196,613 * 178,314 * 10.3

Active Listings Aug '14 29,574 32,834 -9.9 28,736 * 32,828 * -12.5


Nonfarm Payroll Employment Aug '14 2,896,400 2,789,000 3.9 2,864,438 * 2,771,113 * 3.4

Goods Producing (Natural Resources/Mining/Const/Mfg) Aug '14 581,400 552,200 5.3 566,663 0 544,663 * 4.0

Service Providing Aug '14 2,315,000 2,236,800 3.5 2,297,775 0 2,226,450 * 3.2


Houston-Sugar Land-Baytown MSA Aug '14 5.4 6.3 5.3 * 6.3 *

Texas Aug '14 5.5 6.4 5.4 * 6.5 *

U.S. Aug '14 6.3 7.3 6.5 * 7.7 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) July '14 4,282,705 3,962,804 8.1 27,198,013 26,058,126 4.4

Air Passengers (Houston Airport System) July '14 4,990,070 4,746,868 5.1 31,019,874 29,770,752 4.2

Domestic Passengers July '14 3,975,402 3,807,525 4.4 25,076,991 24,386,975 2.8

International Passengers July '14 1,014,668 939,343 8.0 5,942,883 5,383,777 10.4

Landings and Takeoffs July '14 71,490 69,529 2.8 475,933 471,552 0.9

Air Freight (metric tons) July '14 39,032 34,404 13.5 249,493 240,376 3.8

Enplaned July '14 20,176 18,721 7.8 131,736 127,489 3.3

Deplaned July '14 18,856 15,683 20.2 117,757 112,887 4.3

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Aug '14 30,677 30,595 0.3 256,368 232,739 10.2

Cars Aug '14 12,742 13,236 -3.7 111,896 103,820 7.8

Trucks, SUVs and Commercials Aug '14 17,935 17,359 3.3 144,472 128,919 12.1



Houston-Galveston-Brazoria CMSA Aug '14 214.1 208.6 2.6 213.200 * 207.000 * 3.0

United States Aug '14 237.8 233.9 1.7 236.800 * 232.700 * 1.8


Occupancy (%) 1Q14 73.3 70.4 73.3 * 70.4 *







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A publication of the Greater Houston Partnership Volume 23, Number 9 September 2014

Growth Accelerates — The Houston metro area created 112,200 jobs in the 12 months

ending July ’14, a 4.0 percent annual growth rate.1 That performance is the seventh larg-

est 12-month gain in 25 years. The 4.0 percent also represents acceleration in job growth,

which had slowed considerably last December before picking up again this spring.

As strong as 4.0 percent is, that doesn’t represent a record. Over the past quarter-century,

Houston has experienced faster growth spurts in ’97 –’98, ’06–’07, and ’12–’13. The mod-

ern record was set in late ’97 through mid-’98, when employment grew at an annual rate of

5.0 percent or better, an exceptional pace at a time when oil traded for less than $20 a bar-

rel and natural gas for less than $2.50 per million Btu.

Houston once again leads the nation’s major metros in job growth, ahead of Dallas-Ft.

Worth (3.9 percent) and Miami (3.3 percent). Twenty-three metros reported higher per-

centage growth, but those are much smaller economies.

1 Metro Houston includes Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller

counties.

4.0 3.9

3.33.0 2.8 2.8 2.8 2.7 2.7 2.6 2.6

2.22.1

1.8 1.8 1.7

1.21.1 0.9

0.6

% Change in Employment, 20 Most Populous Metros,July '13 - July '14


Since the bottom of the recession (January ’10),

the region has created 420,000 jobs. One met-

ro―New York―has created more jobs, but no

major metro area has added larger share of jobs

to its employment base.

Houston has enjoyed month-to-month job

growth in 50 of the past 60 months. The hand-

ful of months with job losses were either Janu-

ary or July, the losses in those months due to

predictable seasonal factors. Houston always

reports job losses in January, as retailers lay off

workers hired temporarily for the holiday

shopping season, and almost always in July, as

educators with 10-month contracts are tempo-

rarily removed from the employment estimates.

The Texas Workforce Commission (TWC) fac-

tors these predictable events into a “seasonally

adjusted” employment number that provides a

more accurate picture of employment condi-

tions.2 According to TWC, on a seasonally ad-

justed basis Houston has added jobs in 53 of

the past 60 months, with February ’11 being

the most recent month in which the region lost

jobs. On a seasonally adjusted basis, the re-

gion has created 106,700 jobs in the past 12 months.

July’s employment gains helped Houston pass a milestone. The region has created more

than 700,000 jobs since January ’00. Only the New York metro area has created more. To

put that in perspective, Houston’s job creation this century exceeds the total employment

of all but 38 U.S. metro areas. That’s the equivalent of taking every current job in Salt

Lake City and dropping them into Houston.

Unlike a year ago, when several sectors still struggled to create jobs, every sector in Hou-

ston grew over the past 12 months.

Sectors creating the most jobs: professional, scientific, and technical services (18,900

jobs), health care and social assistance (15,100 jobs) and accommodation and food

services (12,400 jobs).

2 TWC reports seasonally adjusted data only for total employment. Seasonally adjusted data for individual industries are not available,

so to evaluate industry trends, economists must examine the unadjusted data.

JOB GROWTH―MOST POPULOUS METROS January ’10 – July ’14

Metro Jobs

Added %

Change

New York 758,100 9.3

Houston 420,000 17.0

Los Angeles 419,800 8.1

Dallas-Fort Worth 403,500 14.4

Chicago 362,100 8.7

San Francisco 267,800 14.1

Atlanta 230,800 10.

Boston 215,900 9.0

Seattle 209,200 12.8

Washington 205,000 7.1

Miami 199,100 9.1

Minneapolis 180,100 10.9

Detroit 168,900 10.0

Phoenix 132,700 7.9

San Diego 131,200 10.8

Baltimore 119,300 9.6

Philadelphia 114,600 4.3

Riverside 106,100 9.3

Tampa 95,600 8.8

St. Louis 66,000 5.2

Source: U.S. Bureau of Labor Statistics


Subsectors with the fastest annual growth rates: building construction (13.6 percent),

engineering services (13.2 percent), and oil field services (9.2 percent).

High oil prices are supporting employment growth in exploration, oil field services, and

oil field equipment manufacturing. Expansion of chemical plants along the Texas Gulf

Coast now drives growth in construction, metal fabrication and energy services. Popula-

tion growth (fed by employment growth) is creating more retail, health care, restaurant,

building construction and local education jobs. Expansion of international trade is push-

ing growth in transportation and, to a lesser extent, wholesale trade.

July’s unemployment rate stood at 5.5 percent, a rate that might be the natural rate of un-

employment at the national level, and is probably close to the natural rate for Houston.3

Local unemployment rates are not seasonally adjusted, but the 5.5 percent is in the neigh-

borhood of July unemployment rates for ’05 through ’08, periods when Houston had a

healthy economy. Now that school has resumed and educators and students are back in

the classroom (and the educators no longer defined as unemployed), Houston may see

even lower unemployment rates. If the unemployment rate continues to fall, local em-

ployers will find it harder to fill open positions, putting additional upward pressure on lo-

cal wages.

At the current rate of growth, Houston should sur-

pass 2.9 million jobs in September, and if the econ-

omy continues along its current expansion path,

Houston should hit a milestone this time next year

and surpass 3.0 million jobs.

Another First Place Finish — In ’13, Houston led

the nation in exports for the second consecutive

year, according to data recently released by the

U.S. International Trade Administration. The re-

gion shipped nearly $115.0 billion in goods over-

seas, up 4.2 percent from $110.3 billion in ’12,

slightly ahead of New York and well ahead of Los

Angeles.

Over the past 10 years, Houston’s exports have

grown by more than $73 billion, the largest gain of

any U.S. metro area. Over that period, Houston has

risen from third to first place among the nation’s

exporting metros.

3 Economists define the natural rate of unemployment as the lowest level of unemployment at which inflation remains stable. This is

also sometimes referred to as the nonaccelerating inflation rate of unemployment, or NAIRU.

METRO EXPORTS – ’13

Metro Area $ Billions %

’13–’12 Houston 114.963 4.2 New York 106.923 4.5 Los Angeles 76.306 1.7 Seattle 56.686 12.7 Detroit 53.906 -2.7 Chicago 44.911 10.7 Miami 41.772 -12.7 New Orleans 30.031 23.3 Dallas-Ft. Worth 27.596 -0.8 San Francisco 25.305 9.9 Philadelphia 24.929 8.4 Minneapolis 23.747 -5.6 San Jose 23.413 -12.3 Boston 22.213 4.6 Cincinnati 20.976 5.1 San Antonio 19.288 37.7 Atlanta 18.828 3.6 San Diego 17.886 4.1 Portland 17.607 -13.4 Washington 16.225 11.1

Source: U.S. International Trade Administration


ITA’s export data differ somewhat from the Houston-Galveston Customs District data of-

ten cited in local publications. Customs district data reflect cargo that passes through the

region’s ports. ITA data are an “origin of movement” series and reflect the metro from

which cargo began its overseas journey. This includes goods manufactured locally

shipped out of Houston, goods manufactured locally that leave the U.S. from a port out-

side the Houston metro area, and goods produced elsewhere and consolidated in Houston

for export.

The ITA reports the primary goods exported from Houston include petroleum and coal

products, chemicals, nonelectrical machinery, computers and a category ITA defines as

“oil and gas extraction.” The primary destinations for Houston’s exports: Brazil, Canada,

China, Colombia, Japan, Mexico, Netherlands, Singapore, South Korea and Venezuela.

Where’s Everyone Coming From? —Given the number of out-of-state license plates on

the freeways these days, one would assume all the newcomers are from outside the Lone

Star State. But that’s not the case. According to GHP’s analysis of recently released Census

Bureau data, Texas accounts for the largest share of new residents to the region, followed

by California, Louisiana, Florida and New York. Most of the Texas residents come from

counties associated with large urban areas or college towns.

The data come from the Ameri-

can Community Survey (ACS),

the bureau’s on-going census of

the U.S. population. The bureau

analyzed responses the ACS from

’08 to ’12 to measure domestic

migration patterns, including

those who migrate out of as well

as into each county. Two points to

be aware of: (1) the data represent

an estimate, not an actual count,

and (2) since the Bureau included

responses gathered during the re-

cession, it may underrepresent in-

migration from some states. Given those caveats, the patterns in the most recent data don’t

vary significantly from GHP’s analysis of previous data sets.

Top Ten Sources of New Houston-Area Residents - 2013 By U.S. State Residents

By Texas County Residents

Texas 73,221 Travis 5,862

California 14,046 Dallas 5,604

Louisiana 11,213 Bexar 4,781

Florida 8,699 Jefferson 4,178

New York 4,457 Brazos 3,978

Illinois 4,403 Tarrant 3,446

North Carolina 4,121 Walker 2,403

Oklahoma 3,687 Hidalgo 2,211

Georgia 3,569 Bell 1,939

Virginia 3,187 Cameron 1,782

Source: 2008-12 American Community Survey Estimates



Building Permits — Construction permitting in the City of Houston hit another record in

July. The running 12-month total reached nearly $7.6 billion, the fifth consecutive rec-

ord-setting month. The $7.6 billion represents a 30.5 percent increase from $5.8 billion

in permits issued over the 12-months ending July ’13.

Inflation — The Consumer Price Index for All Urban Consumers (CPI-U) grew 2.0 per-

cent nationwide from July ’13 to July ’14. Core inflation rose 1.9 percent over that peri-

od. The energy index increased 2.6 percent, food prices grew 2.5 percent, and the cost of

housing rose 2.7 percent.

Home Sales — Houston-area realtors sold 89,666 homes in the 12 months ending July

’14, a 7.1 percent increase over the 83,746 homes sold in the comparable period in ’13,

according to data released today by the Houston Association of REALTORS® (HAR).

The running total for units sold has hovered around 89,600 units for the past five months,

suggesting sales may be reaching a plateau.


short-term leading indicator for regional production, registered 56.4 in July, up from 52.4

in June, according to the latest report from the Institute for Supply Management-Houston

(ISM-Houston). The PMI is based on eight components: Sales/New Orders, Production,

Employment, Purchases, Prices Paid, Lead Times, Purchased Inventory and Finished

Goods Inventory.

Vehicle Sales — Houston-area auto dealers sold 371,406 vehicles in the 12 months end-

ing July ’14, according to TexAuto Facts, published by InfoNation, Inc. of Sugar Land.

This is the first month-to-month decline in the 12-month total of vehicle sales after five

consecutive months of increases. July was a slower month for Houston area auto dealers,

selling 30,527 vehicles in July ’14, down 13.1 percent from 35,133 in July ’13.

Foreign Trade — In the first seven months of this year, more than $150.9 billion in for-

eign trade passed through the Houston-Galveston Customs District, up 5.1 percent from

the $143.5 billion in trade handled in the first seven months of ’13. Exports totaled $77.7

billion, up 9.4 percent from the $71.0 billion handled during the same period in ’13. Im-

ports totaled $73.2 billion, up 1.0 percent from the $72.5 billion handled over the same

period in ’13.


contributed to this issue of









STAY UP TO DATE!



request for Economy at a Glance to [email protected]. Include your name, tit le and phone

number and your company’s name and address. For information about joining the Greater Houston

Partnership, call Member Services at 713-844-3683.

The Key Economic Indicators table is updated whenever any data

change — typically, 11 or so times per month. If you would like to

receive these updates by e-mail, usually accompanied by commentary,

please email your request for Key Economic Indicators to

[email protected] w ith the same identifying information. You

may request Glance and Indicators in the same email.

















July '14 June '14 July '13 June '14 July '13 June '14 July '13


Total Private 2,533.5 2,516.8 2,430.9 16.7 102.6 0.7 4.2

Goods Producing 575.3 571.7 550.0 3.6 25.3 0.6 4.6






Construction 197.9 196.6 189.0 1.3 8.9 0.7 4.7

Manufacturing 261.0 260.5 252.5 0.5 8.5 0.2 3.4



Wholesale Trade 157.1 157.8 151.3 -0.7 5.8 -0.4 3.8

Retail Trade 288.7 287.8 284.1 0.9 4.6 0.3 1.6


Utilities 16.8 16.5 16.2 0.3 0.6 1.8 3.7

Air Transportation 23.3 23.4 23.1 -0.1 0.2 -0.4 0.9

Truck Transportation 24.8 24.9 24.1 -0.1 0.7 -0.4 2.9


Information 33.3 33.2 32.8 0.1 0.5 0.3 1.5






Legal Services 24.6 24.5 24.2 0.1 0.4 0.4 1.7





Administrative & Support Services 190.2 190.3 192.2 -0.1 -2.0 -0.1 -1.0






Other Services 103.9 102.6 100.3 1.3 3.6 1.3 3.6

Government 362.2 378.5 352.6 -16.3 9.6 -4.3 2.7

Federal Government 27.3 27.2 27.7 0.1 -0.4 0.4 -1.4












ENERGY

U.S. Active Rotary Rigs Aug '14 1,904 1,781 6.9 1,835 * 1,763 * 4.1

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Aug '14 96.60 106.76 -9.5 100.57 * 94.66 * 6.2

Spot Natural Gas ($/MMBtu, Henry Hub) Aug '14 4.54 3.39 33.9 4.64 * 3.67 * 26.4


Houston Purchasing Managers Index July '14 56.4 57.1 -1.2 57.2 * 58.7 * -2.6

Nonresidential Electric Current Sales (Mwh, CNP Service Area) July '14 4,808,711 4,660,412 3.2 30,226,473 29,221,239 3.4

CONSTRUCTION

Total Building Contracts ($, Houston MSA) July '14 5,853,774,000 1,285,612,000 355.3 21,580,591,000 7,296,699,000 195.8

Nonresidential July '14 5,095,015,000 398,728,000 1177.8 15,989,213,000 2,148,196,000 644.3

Residential July '14 758,759,000 886,884,000 -14.4 5,591,378,000 5,148,503,000 8.6

Building Permits ($, City of Houston) July '14 733,370,015 715,175,322 2.5 4,938,898,722 3,510,743,282 40.7

Nonresidential July '14 493,204,753 486,441,733 1.4 3,321,435,602 2,276,769,851 45.9

New Nonresidential July '14 201,438,031 316,886,234 -36.4 1,956,363,284 1,152,047,586 69.8

Nonresidential Additions/Alterations/Conversions July '14 291,766,722 169,555,499 72.1 1,365,072,318 1,124,722,265 21.4

Residential July '14 240,165,262 228,733,589 5.0 1,617,463,120 1,233,973,431 31.1

New Residential July '14 213,973,631 210,105,547 1.8 1,437,967,559 1,107,170,131 29.9

Residential Additions/Alterations/Conversions July '14 26,191,631 18,628,042 40.6 179,495,561 126,803,300 41.6


Property Sales July '14 9,250 9,189 0.7 52,803 51,752 2.0

Median Sales Price - SF Detached July '14 202,000 189,180 6.8 194,114 * 177,143 * 9.6

Active Listings July '14 29,880 32,966 -9.4 28,616 * 32,828 * -12.8


Nonfarm Payroll Employment July '14 2,895,700 2,783,500 4.0 2,860,300 * 2,768,557 * 3.3

Goods Producing (Natural Resources/Mining/Const/Mfg) July '14 575,300 550,000 4.6 564,800 0 543,586 * 3.9

Service Providing July '14 2,320,400 2,233,500 3.9 2,295,500 0 2,224,971 * 3.2


Houston-Sugar Land-Baytown MSA July '14 5.5 6.5 5.3 * 6.4 *

Texas July '14 5.6 6.7 5.4 * 6.6 *

U.S. July '14 6.5 7.7 6.5 * 7.7 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) July '14 4,282,705 3,962,804 8.1 27,198,013 26,058,126 4.4

Air Passengers (Houston Airport System) July '14 4,990,070 4,746,868 5.1 31,019,874 29,770,752 4.2

Domestic Passengers July '14 3,975,402 3,807,525 4.4 25,076,991 24,386,975 2.8

International Passengers July '14 1,014,668 939,343 8.0 5,942,883 5,383,777 10.4

Landings and Takeoffs July '14 71,490 69,529 2.8 475,933 471,552 0.9

Air Freight (metric tons) July '14 39,032 34,404 13.5 249,493 240,376 3.8

Enplaned July '14 20,176 18,721 7.8 131,736 127,489 3.3

Deplaned July '14 18,856 15,683 20.2 117,757 112,887 4.3

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) July '14 30,527 35,133 -13.1 225,691 202,144 11.6

Cars July '14 12,304 15,402 -20.1 99,154 90,584 9.5

Trucks, SUVs and Commercials July '14 18,223 19,731 -7.6 126,537 111,560 13.4



Houston-Galveston-Brazoria CMSA July '14 214.668 207.882 3.3 212.836 * 206.584 * 3.0

United States July '14 238.25 233.596 2.0 236.651 * 232.542 * 1.8


Occupancy (%) 1Q14 73.3 70.4 73.3 * 70.4 *







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A publication of the Greater Houston Partnership Volume 23, Number 6 June 2014

Measuring Four Years of Growth — The Houston-Sugar Land-Baytown Metro Area

added nearly 10,000 firms, and wages paid to workers grew by more than $33.5 billion, since

the end of ’09. That’s the conclusion of GHP’s analysis of recently published data from the

Quarterly Census of

Employment and

Wages (QCEW). The

QCEW differs in sev-

eral ways from the

Current Employment

Statistics (CES) pro-

gram, which receives

broader coverage in

the media.

The Texas Workforce Commission (TWC) releases CES data monthly while the QCEW,

as its names implies, is released four times a year.

The CES counts only jobs. 1 The QCEW counts jobs, firms, and establishments, and re-

ports total wages and average weekly wages in each industry in a region.

CES data come from a national survey of more than 440,000 establishments. Houston is

a subset of that survey, and as such, it’s subject to sampling errors and frequently revised.

The QCEW comes from reports filed with state employment agencies, covers 99.7 per-

cent of all U.S. civilian employment, and is seldom revised.

In Houston, the CES covers about 75 industries, the QCEW covers more than 300.

GHP’s analysis of QCEW data for Q4/13, the most recent available, found the following:

More Houstonians (202,565) are employed in restaurants and eating places than in any

other industry in the region. That’s followed by elementary and secondary schools

1 The one exception is that the CES provides some detail for the broad durables and nondurables goods manufacturing sectors.

ECONOMIC SNAPSHOT – HOUSTON METRO AREA

Change, ’09 – ’13

Q4/09 Q4/13 # %

Total Employment 2,478,567 2,797,317 318,750 12.9

# Firms 105,895 115,726 9,831 9.3

# Establishments1 129,911 141,888 11,977 9.2

Total Salaries & Wages2 $136.211 $169.761 $33.550 19.8

Average Weekly Wage $1,133 $1,247 $114 9.1

1 A firm may have multiple establishments, e.g., branches of a bank, outlets for a store. 2 Billions Source: Quarterly Census of Employment & Wages, Texas Workforce Commission


(184,963), general medical and surgical hospitals (83,880), employment services

(73,170) and architectural and engineering services (70,764).

Oil and gas exploration paid more in total wages ($37.5 billion in ’13) than any other

industry. Oil and gas was followed by architectural and engineering services ($25.9 bil-

lion), elementary and secondary schools ($22.5 billion), oil field services ($18.5 billion)

and general medical and surgical hospitals ($15.5 billion).

In ’13, the average annual compensation for industries with 2,800 or more employees

(around 0.1 percent of the region’s workforce) was highest in securities and commodities

investments ($228,696), oil and gas extraction ($223,652), pipeline transportation of nat-

ural gas ($172,068), miscellaneous financial activities ($159,484) and management of

companies and enterprises ($157,456).

In ’13, the average annual compensation in industries with 2,800 or more employees is

lowest in home health care services ($19,084), bars ($18,876), shoe stores ($18,536), res-

taurants and eating places ($17,680) and civic and social organizations ($17,056).

GHP compared QCEW data for December ’09 and December ’13. The results:

Industries that added the most jobs since December ’09 are food services and drinking

places (36,042), employment services (22,190), agricultural, construction and mining

machinery manufacturing (16,304), oil field services (13,930), architectural and engi-

neering services (11,539) and management and technical consulting (10,615). Oil and gas

extraction ranked sixth with 10,254 additional employees.

Industries that lost the most jobs since year-end ’09 are department stores (1,766), busi-

ness support services (1,843), investment funds (1,844), scientific research and develop-

ment services (2,585) and elementary and secondary schools (5,229).

Industries that have seen significant growth in the number of firms operating in Houston

are management and technical consulting (881), computer systems design (483), dentist

offices (300), miscellaneous health practitioner offices (278) and general freight trucking

firms (265). Of note, there are 150 more oil field service firms, 75 additional oil and gas

companies, and 72 more engineering firms in Houston at the end of ’13 than at the end

of ’09.

The Outlook for Exports — In May, the Greater Houston Partnership released Houston’s

Next Boom: Exporting Innovation, a study of the potential for export growth driven by chem-

ical plant expansions underway along the Gulf Coast, the export of liquefied natural gas

(LNG) from the terminals under construction at Sabine Pass and in Brazoria County, and


Mexico opening its oil and gas industry to foreign direct investment. Key findings of the

study, which was underwritten by HSBC:

The impact of the massive investment in chemical

plants and liquid natural gas (LNG) export terminals

underway on the Texas Gulf Coast and the opening

up of Mexico’s oil production to Houston businesses

could add 55,185 jobs to the region’s economy, just

with a 15 percent increase in exports. If that proves

to be the case, then the export expansion about to

occur is worth at least 10 months of job growth to

the region’s economy.

While the expansion of the Panama Canal is often

touted as a “game changer” for container traffic, ex-

ports of LNG and petrochemicals are more likely to

drive export growth in the near future. Driving this

growth are innovations in horizontal drilling and hydraulic fracturing that will lead to

increased natural gas exports out of Houston.

The opening of Mexico’s oil and gas industry to foreign investment will allow Houston

to export two innovations pioneered here – deepwater drilling and hydraulic fracturing.

Many already attribute Houston’s survival in the 1990s and quick economic recovery

from the Great Recession to these innovations, but the opening of Mexico to foreign in-

vestment will likely further spur investment and jobs.

Trading patterns have shifted: Mexico is now Houston’s largest trading partner. Driving

this change are policy and demographic shifts that have better enabled Houston busi-

nesses to conduct business with its

closest trading partner.

Over the past 10 years, 19,000 jobs

have been supported by foreign direct

investment totaling $7.4 billion. Most

FDI comes from the UK and Europe;

however, almost 20 percent comes

from Asia, Africa, and South Amer-

ica.

To see the full study, click here. Hard

copies are available in the reception area of GHP’s offices.

Houston’s Top Trading Partners – 2013

Combined Exports and Imports

Country Value - $B

Mexico $28.357

Venezuela 15.167

Brazil 13.892

Saudi Arabia 13.712

China 13.491

Colombia 11.874

Netherlands 9.627

Germany 8.870

Russia 8.285

Republic of Korea 6.314

Source: WISERTrade

Top Commodities – Imports & Exports Houston-Galveston Customs District - 2013

Commodity $ Billions % of Total

Crude & Refined Products $118.4 47.0%

Industrial Machinery 28.4 11.3

Chemicals 30.9 12.3

Iron and Steel Products 13.1 5.2

Electrical Machinery 10.4 4.1

All Others 50.7 20.1

Total $251.9 100.0%

Source: WISERTrade

http://bit.ly/1kZL9Ri


Employment Update — The Houston-Sugar Land-Baytown Metro Area created 85,800

jobs in the 12 months ending April ’14, according to the Texas Workforce Commission.

Employment growth trended down in the latter half of ’13, slowing to a 2.8 percent annual

rate in December, but has since picked up. From April ’13 to April ’14, employment grew

at a 3.1 percent annual rate.

Several factors fueled the surge in job growth. The harsh winter in much of the country

caused spot natural gas prices to jump from less than $4 per mcf in late November to more

than $6 per mcf in late February. That sharp rise provided a windfall for gas producers which

they reinvested in oil directed drilling; hence, the growth in oilfield services employment.

CBRE reports that 17.5 million square feet of office space, 7.0 million square feet of indus-

trial space, 2.5 million square feet of retail space, and 22,000 apartment units are currently

under construction, spurring growth in construction jobs. The income growth noted earlier

continues to support expansion of Houston’s retail and restaurant industries. Population and

employment growth continues to support growth in education and health.

Sectors leading job growth in the past 12 months include trade, transportation, and utilities,

14,800 jobs, primarily in retail trade; professional and business services, 12,200 jobs, mainly

in architectural and engineering services; leisure and hospitality, 12,200 jobs, the bulk in

restaurants and bars; government, 10,500 jobs, mostly in local school districts; and educa-

tional and health services, 10,100 jobs, weighted toward hospitals and outpatient centers.

Within those sectors, indus-

tries with the fastest rate of

job growth in the past 12

months are architectural and

engineering services (9.0

percent), specialty trade

contractors (6.8 percent),

construction of buildings

(6.6 percent), private educa-

tional services (6.2 percent),

computer systems design

(6.1 percent), oil field ser-

vices (5.8 percent), and oil

and gas extraction (5.7 per-

cent).

The April ’14 unemployment rate fell to 4.6 percent, the lowest rate for Houston since May

’08, when the rate dipped to 4.4 percent. In only 42 of the past 360 months has Houston

experienced a lower unemployment rate. The rate is not seasonally adjusted.

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Aviation Update — The Houston Airport System (HAS) handled 52,455,760 passengers for

the 12 months ending April ’14, the highest 12-month total since GHP began tracking HAS

data in ’81. The previous peak occurred in the 12 months ending July ’08 with 52,327,414

passengers. For the 12 months ending April ’14, domestic passengers totaled 43.18 million

and international passengers totaled 9.27 million. The year-over-year change in the 12-month

total has remained above 2.0 percent for the past five months, the longest sustained period at

this level since before the recession.

For the month of April, HAS handled 5.0 million passengers, a 5.3 percent increase from the

4.8 million passengers in April ’13. Domestic travel increased 4.1 percent from 4.07 million

in April ’13 to 4.24 million in April ’14. International passenger traffic rose 12.1 percent from

719,443 in April ’13 to 806,285 in April ’14. Large year-over-year increases are expected

throughout ’14 as the data reflect last year’s launch of nonstop routes to Istanbul in April and

Beijing in July and this year’s additional service to South Korea, Munich and Tokyo.

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Year-over-year % change in 12-month total

Passengers (12-month total)Source: Houston Airport System

52,455,760(April ’14)

52,327,414(July ’08)



Building Permits — Construction permitting in the City of Houston continued to set rec-

ords in April. The running 12-month total topped $6.8 billion, the highest value in GHP

records dating back to January ’02. The $6.8 billion represents a 28.2 percent increase from

$5.3 billion in permits issued over the prior 12-month period.

Inflation — The Consumer Price Index for All Urban Consumers (CPI-U) grew 2.0 per-

cent nationwide from April ’13 to April ’14. Core inflation rose 1.8 percent over that

period. The energy index increased 3.3 percent, food prices grew 1.9 percent, and the shel-

ter index rose 2.8 percent.

Home Sales — Houston-area realtors sold 6,438 single-family homes in April, only a slight

increase of 0.3 percent from the 6,419 sold in April ’13. The Houston Association of

REALTORS® (HAR) notes that the increase is statistically flat, bringing an end to Hou-

ston’s record run of 34 consecutive months of over-the-year sales increases. A low supply

of homes finally constrained sales in the market with inventory at 2.6 months for the fifth

consecutive month.


term leading indicator for regional production, registered 59.2 in April, up from 57.1 in

February, according to the Institute for Supply Management-Houston. The PMI has a pos-

sible range from zero to 100. Readings above the neutral point of 50 indicate likely growth

in production over the next three to four months; readings below 50 suggest contraction.

With the April reading, the PMI has held at or above 50 for 56 consecutive months.

Vehicle Sales —New vehicle sales reached 361,838 for the 12 months ending April ’14,

the highest 12-month total since 363,236 autos were sold in July ’02 and slightly higher

than the 360,252 sold in 12-month period ending July ’07. According to TexAuto Facts,

published by InfoNation, Inc. of Sugar Land, Houston-area dealers sold 31,328 vehicles in

April ’14, up 10.5 percent from 28,351 in April ’13.

Foreign Trade — In the first four months of this year, more than $83.5 billion in foreign

trade passed through the Houston-Galveston Customs District, up 4.7 percent from the

$79.8 billion in trade handled in the first four months of ’13. Exports totaled $43.6 billion,

up 9.6 percent from the $39.8 billion handled during the same period in ’13. Imports totaled

$39.89 billion, down 0.1 percent from the $39.93 billion handled over the same period in

’13.










STAY UP TO DATE!

If you are a nonmember and would like to receive this electronic publication on the first working day of each month, please email your request for Economy at a Glance to [email protected]. Include your name, title and phone number and your company’s name and address. For information about joining the Greater Houston Partnership and gaining access to this powerful resource, call Member Services at 713-844-3683. The Key Economic Indicators table is updated whenever any data change — typically, 11 or so times per month. If you would like to receive these updates by e-mail, usually accompanied by commentary, please email your request for Key Economic Indicators to [email protected] with the same identifying information. You may request Glance and Indicators in the same email.



also posted at www.hou-ston.org/economy
















Total Private 2,478.8 2,463.6 2,403.8 15.2 75.0 0.6 3.1

Goods Producing 564.9 561.1 544.5 3.8 20.4 0.7 3.7






Construction 196.3 195.3 189.1 1.0 7.2 0.5 3.8

Manufacturing 257.5 256.5 250.0 1.0 7.5 0.4 3.0



Wholesale Trade 152.5 154.1 148.6 -1.6 3.9 -1.0 2.6

Retail Trade 287.5 287.7 280.1 -0.2 7.4 -0.1 2.6


Utilities 16.2 16.2 16.2 0.0 0.0 0.0 0.0




Information 32.7 32.6 32.0 0.1 0.7 0.3 2.2


Finance & Insurance 89.5 89.3 90.1 0.2 -0.6 0.2 -0.7




Legal Services 23.9 23.8 23.9 0.1 0.0 0.4 0.0





Administrative & Support Services 186.6 187.9 188.3 -1.3 -1.7 -0.7 -0.9






Other Services 101.8 100.8 97.9 1.0 3.9 1.0 4.0

Government 384.0 383.6 373.2 0.4 10.8 0.1 2.9

Federal Government 27.3 27.4 27.5 -0.1 -0.2 -0.4 -0.7












ENERGY

U.S. Active Rotary Rigs May '14 1,859 1,767 5.2 1,807 * 1,759 * 2.7

Spot Crude Oil Price ($/bbl, West Texas Intermediate) May '14 102.23 94.51 8.2 100.39 * 93.80 * 7.0

Spot Natural Gas ($/MMBtu, Henry Hub) May '14 4.53 3.99 13.5 4.95 * 3.71 * 33.4


Houston Purchasing Managers Index Apr '14 59.2 58.4 1.4 58.0 * 59.9 * -3.2

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Apr '14 4,038,056 4,086,503 -1.2 16,504,075 15,651,778 5.4

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Apr '14 4,667,911,000 1,208,583,000 286.2 9,736,621,000 3,946,032,000 146.7

Nonresidential Apr '14 3,789,817,000 343,728,000 1002.6 6,728,287,000 1,168,787,000 475.7

Residential Apr '14 878,094,000 864,855,000 1.5 3,008,334,000 2,777,245,000 8.3

Building Permits ($, City of Houston) Apr '14 976,947,825 431,902,143 126.2 2,672,303,150 1,964,983,997 36.0

Nonresidential Apr '14 674,846,994 261,606,266 158.0 1,820,948,436 1,341,635,037 35.7

New Nonresidential Apr '14 533,986,412 81,865,214 552.3 1,134,176,430 699,702,742 62.1

Nonresidential Additions/Alterations/Conversions Apr '14 140,860,582 179,741,052 -21.6 686,772,006 641,932,295 7.0

Residential Apr '14 302,100,831 170,295,877 77.4 851,354,714 623,348,960 36.6

New Residential Apr '14 254,679,379 150,355,422 69.4 745,548,458 553,398,825 34.7



Property Sales Apr '14 7,857 7,806 0.7 25,766 24,781 4.0

Median Sales Price - SF Detached Apr '14 195,000 185,000 5.4 185,700 * 167,625 * 10.8

Active Listings Apr '14 28,114 32,498 -13.5 28,052 * 33,024 * -15.1


Nonfarm Payroll Employment Apr '14 2,862,800 2,777,000 3.1 2,772,325 * 2,751,925 * 0.7

Goods Producing (Natural Resources/Mining/Const/Mfg) Apr '14 564,900 544,500 3.7 560,000 * 539,600 * 3.8

Service Providing Apr '14 2,297,900 2,232,500 2.9 2,212,325 * 2,212,325 * 0.0


Houston-Sugar Land-Baytown MSA Apr '14 4.6 5.9 5.3 * 6.0 *

Texas Apr '14 4.7 6.0 5.4 * 6.1 *

U.S. Apr '14 5.9 7.1 6.7 * 7.1 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Apr '14 3,937,494 3,541,821 11.2 14,742,516 14,352,458 2.7

Air Passengers (Houston Airport System) Apr '14 5,046,321 4,792,617 5.3 17,491,858 16,794,141 4.2

Domestic Passengers Apr '14 4,240,036 4,073,174 4.1 14,347,757 13,928,083 3.0

International Passengers Apr '14 806,285 719,443 12.1 3,144,101 2,866,058 9.7

Landings and Takeoffs Apr '14 66,724 67,148 -0.6 266,983 263,872 1.2

Air Freight (metric tons) Apr '14 35,608 34,315 3.8 139,524 136,454 2.2

Enplaned Apr '14 18,680 18,144 3.0 74,036 70,813 4.6

Deplaned Apr '14 16,928 16,171 4.7 65,488 65,641 -0.2

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Apr '14 31,328 28,351 10.5 127,037 113,058 12.4

Cars Apr '14 13,261 12,491 6.2 54,459 49,405 10.2

Trucks, SUVs and Commercials Apr '14 18,067 15,860 13.9 72,578 63,653 14.0

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 3Q13 23,730 26,922 -11.9 79,027 76,697 3.0





Occupancy (%) 4Q13 65.9 62.4 69.0 * 65.4 *



POSTINGS AND FORECLOSURES

Postings (Harris County) Mar '14 993 1,652 -39.9 1,151 1,804 -36.2

Foreclosures (Harris County) Mar '14 337 469 -28.1 380 499 -23.8





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A publication of the Greater Houston Partnership Volume 27 ...Houston’s growth, it could delay...

Documents

Transcript of A publication of the Greater Houston Partnership Volume 27 ...Houston’s growth, it could delay...