Houston Economic Update October 2011

8/4/2019 Houston Economic Update October 2011

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October 2011 ©2011, Greater Houston Partnership Page 1

A publication of the Greater Houston Partnership Volume 20, Number 10 October 2011

When will Houston’s economy return to normal? — To answer that question, one must first definewhat‘s ―normal‖ for Houston1. That poses a chal-lenge considering that over the past 30 years Hou-ston has slogged through four recessions, sprintedthrough three employment booms, endured threeemployment busts, and watched a host of indus-

tries — housing, construction, manufacturing, real es-tate, energy and trade — soar, plummet, rebound andsoar again. Watching Houston‘s economy makesone dizzy.

In spite of the vertigo, the region has compiled animpressive record over the past 30 years. Since1981, Houston has:

Added 2.8 million residents,

Created more than one million jobs Built 760,000 single-family homes Sold more than 7.6 million vehicles Erected 75 million square feet of office space Handled 4.7 billion tons of cargo Served more than 1 billion air passengers.

Rather than asking what‘s ―normal‖ for Houston, abetter question might be ―What‘s sustainable forHouston?‖ Or given the current economic uncertain-

ty, perhaps we should ask, ―What should Houstonreasonably hope for?‖ This newsletter attempts toanswer those questions for housing, construction,energy and employment.

1 Unless otherwise noted, ―Houston‖ refers to the Houston-Sugar Land-Baytown Statistical Area, which consists of Austin,Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, San Jacinto and Waller Counties.

Houston RecessionsMar ’81 – Jan ’87

Oil price crash, local savings & loan de-bacle

Jun ’91 – Jan ’ 92 First Gulf War, consumer pessimism

Jun ’01 – Jun ’ 03 Dot.com bubble, Y2K, 911 and Enron

Dec’08 – Jan ’ 10 Global financial crisis

Houston Employment BoomsJan ’80 – Mar ’ 82

235,000 net new jobsJuly ’96 – Dec ’ 98

250,600 net new jobsJan ’05 – Oct ’ 08

324,000 net new jobs

Houston Employment Busts Apr ’82 – Aug ’83

163,800 jobs lostJun ’85 – Jan ’87

133,800 jobs lost

Dec ’08 – Jan ’10 156,800 jobs lost

Houston Housing Starts’87: 7,720 single-family homes’06: 55,080 single-family homes

Houston Home Sales (12-month total)Jan ’8 4: 12,878Feb ’07: 88,504

Oil Prices $/barrel, monthly average, WTI Dec ’98: $11.35Jun ’08: $136.95

N. American Rig Count, monthly average Apr ’99: 499Dec ’8 1: 4,520

Sources: Texas Workforce Commission, CDS Market Research, Houston Association of Real- tors, U.S. Energy Information Administration and GHP internal databases



HOUSTON—THE ECONOMY AT A GLANCE


Home Construction — Household formation and the need to replace obsolete unitsdrives home construction. Three factor — in-migration, young adults leaving the nestand couples splitting up — drive household formation. If one can gauge the pace of household formation, one can gauge the demand for new homes and apartments. Alook at the data for the past decade shows how badly we misread the meter.

According to the U.S. Census Bureau, Houston added 414,373 households during the‘00s, or about 41,400 per year. Census data also show that 63 percent of all Houston-area housing units are owner-occupied and 37 percent are renter-occupied. That sug-gests Houston needed net additions (new construction less losses due to destructionand conversion to nonresidential uses) of about 26,100 single-family and 15,300 mul-ti-family housing units each year during the ‘00s.

In reality, Houston overbuilt houses and under-built apartments. The region added488,600 housing units — 37,400 single-family homes and 11,400 multi-family units

each year —from ‘01 to ‘10, according to the Census Bureau2

. Subprime financingdistorted market signals, tipping the balance toward single-family construction andaway from multi-family.Two years into the recov-ery, the market continuesto correct itself. As of lateAugust, the region was onpace to build about 18,000single-family homes and9,000 apartment units thisyear.

Over the long run, howev-er, home constructionshould keep pace withhousehold formation, andhousehold formationshould mirror the past decade. Woods & Poole Economics, a Washington-based fore-casting firm, expects the region to add about 42,000 new households per year though

‘20. The University of Houston‘s Institute for Regional Forecasting (IRF) expectsHouston to add about 44,000 households per year over the same period3. That impliesan annual need to add 25,000 to 28,000 single-family units and 15,500 to 16,500 mul-ti-family units per year — when the market returns to normal.

2 Annual averages may not equal the 10-year total due to rounding.3 The Woods & Poole forecast is for the 10-county metro area. The IRF forecast is the Houston Primary Metropolitan Statis-tical Area which includes Chambers, Fort Bend, Harris, Liberty, Montgomery and Waller counties but excludes Austin, Bra-zoria, Galveston and San Jacinto counties.

37.6

47.1

53.356.0

62.1

71.7

63.3

42.7

27.3 27.5

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10

U n i t s ,

0 0 0 s

Source: U.S. Cenus Bureau

Construction Permits, Single- and Multi-Family Homes

Houston Metro Area





Home Sales — The subprime fiasco disrupted the resale market as well. In the 12months ending February ‘03, local realtors sold about 58,900 homes. By February ‘07,the 12-month totaled had jumped to 88,500 units, a 50 percent increase in four years.While ‘03 may have been an underperforming market — Houston had just come off ashallow recession — the sales pace of early ‘07 was clearly untenable.

So what is sustainable? That depends on a host of factors — the number of first-timehomebuyers entering the market, existing home owners seeking to upgrade, empty-nesters wanting to downsize, the supply of homes under construction, mortgage ratesand household formation. The volume of single-family construction is closely tied tothe number of existing homes resold, and visa versa. In fact, the two sectors comple-ment and compete with each other, so much so that over the past 20 years resale activ-ity has moved in tandem with new home construction. From ‘92 to ‘07, the ratio of housing starts to resales has been fairly consistent — 1.5 to 2.1 resales for every newhome built. The 20-year average is 1.8 to 1. Only in the past three years has the ratio

diverged, with 2.7 resales for every single-family home built.

The shift in the ratiosuggests that the re-sale market is faringbetter than the con-struction market.HAR reported thatHouston area realtorssold 61,640 properties

between August ‘10and August ‘11. Whilethat is a far cry fromthe pace of ‘06-‘08,one must rememberthose weren‘t normalyears. Those sales were fueled by subprime financing. If growth in the resale markethad kept the pace set from ‘00 to ‘03, in which the market grew by 1,500 to 3,000closings per year, MLS sales in ‘07 would have topped out around between 70,000

and 75,000 units, rather than the nearly 84,000 that were tallied. Given that the marketis in recovery mode, the 61,640 homes sold in the 12 months ending August ‘11 iswhat should be expected, with growth of 2,000-4,000 units per year — a sustainablepace in the near term.

Construction — Through the first four years of the past decade, Houston averaged$7.8 to $8.9 billion a year in construction contracts. When subprime financing kickedin, residential construction skyrocketed. When oil prices spiked, nonresidential con-

0

10

20

30

40

50

60

70

80

90

100

’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10

U n i t s ,

0 0 0

Sources: CDS Market Research and Houston Association of Realtors

Houston Area Single-Family Starts & MLS Home Sales

Single-Famiy Starts MLS Sales





struction took off. But as subprime financing dried up and oil prices fell, all construc-tion plummeted. If thepre-recession average isconsidered normal,Houston should log

about $3.1 billion incommercial and $5.1 inresidential constructionin a typical year. Theregion is on pace to log$2.7 billion in commer-cial and $4.1 billion inresidential constructionthis year. The projected

total of about $6.8 bil-lion is well below whatwould be considerednormal.

Energy – Supply and demand determines oil prices, and a host of factors influencessupply and demand. Spot prices, expectations of future prices, exchange rates, capaci-ty in the Organization of Petroleum Exporting Countries (OPEC), non-OPEC capaci-ty, geopolitics, weather, exploration costs, production costs, planned investments inexploration and production and industry innovations (like hydraulic fracturing) deter-

mine supply. Economic growth, industrial production, business and personal transpor-tation trends, weather and innovations (like hybrid vehicles) determine demand. Thechallenge is for oil prices to remain high enough to stimulate exploration (and Hou-ston‘s economy) but not so high that they stifle U.S. economic growth (which wouldslowdown Houston‘s economy.) The University of Houston‘s IRF estimates that half of all jobs in the economic base — those sectors that export goods and services outsidethe region — are tied to the energy industry. According to the Wall Street Journal,every $10 increase in the cost of a barrel of oil translates into a 25 cent per gallon in-crease at the pump and reduces Gross Domestic Product growth by 0.2 percent.

Most forecasts for next year call for oil prices to fall, but not dramatically. The U.S.Energy Information Administration forecasts West Texas Intermediate (WTI), theU.S. benchmark crude, to average $94.50 in ‘12. As recently as July, EIA forecastWTI to average $108 per barrel. What‘s most important is for oil prices to remain suf-ficiently high to support the current healthy level of drilling activity. Much of Hou-ston‘s recent job growth is due to strong demand for oil-field services.

0

2

4

6

8

10

12

14

16

'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 11*

$ B i l l i o n s

Source: McGraw Hill Construction * projected

Houston Area Construction Activty

Nonresidential Residential





According to the EIA, the three-year (‘07-‘09) average cost for finding and producingoil in the United States was $31.38 onshore and $51.60 offshore. Remember, this wasthe average. Exploration in the deep water offshore and the use of hydraulic fracturingonshore significantly raises the cost of exploration and production. So what level of oil prices should Houstonians hope for? As a rule of thumb, oil priced at $70 - $80

should help to maintain the current level of drilling activity. Oil prices above $100 abarrel, while good for Houston, would be bad for the U.S. as a whole.

Employment — Job growth is the most important of all economic indicators. Mostadults know what it means to have a job, and unfortunately too many know what itmeans to lose one. Job growth influences everything — home construction, retail sales,airport traffic, energy prices and tax revenues, to name a few. The lack of job growthplaguing the nation is both a sign and a symptom of a weak economy.

But not in Houston. The Texas Workforce Commission (TWC) reports that Houston

added 65,600 jobs between August ‘10 and August ‘11. That compares well with his-toric patterns. Over the past 30 years, nonfarm payroll employment4 in Houston grewat a compound annual growth rate (CAGR) of 1.89 percent. Houston‘s job growth wasstable during most of the ‘90s. The region experienced a moderate recession duringthe first part of the decade but logged consistent job gains thereafter. Nonfarm payrollemployment grew at a 2.65 percent CAGR from Jan ‘90 to Jan ‘01. The two CAGRssuggest normal growth for Houstonfalls between 47,800 and 67,100 jobsper year. The recent jobs numbers fromTWC place Houston at the high end of that range.

Current job growth also fits with thelong-term forecasts of two outside (i.e., not from Houston, thus presumably un-biased) consulting firms. Washington,D.C.-based Woods & Poole forecasts a 2.11 percent CAGR for Houston over the next10 years. The Perryman Group, a Waco-based firm, forecasts a 2.35 percent CAGR.Based on their projections, job growth for Houston over the coming decade should av-

erage 53,300 to 66,000 per year. Again, recent jobs numbers reported by TWC placeHouston near the high-end of that range. Clearly, job growth has returned to normal inHouston. □

Manufacturing Activity Remains Strong — The Houston Purchasing Managers In-dex (PMI), a short-term indicator for regional production, rose to 61.3 in August, up

4 ―Nonfarm payroll employment‖ is a technical term used by economists to describe the jobs of those employed outside of agriculture and not self-employed.

Metro Houston Employment Outlook

Based on Historic Growth Rates

1.89 percent CAGR = 47,800 jobs2.65 percent CAGR = 67,100 jobs

Based on Third-Party Forecasts2.35 percent (Perryman) = 66,000 jobs2.11 percent (Woods & Poole) 53,300 jobs

Most Recent Performance

2.6 percent (Texas Workforce Commission)65,600 jobs since Aug ‘10





from 58.3 in July. This is also higher than the August '10 reading of 52.5, according tothe latest report from the Institute for Supply Management-Houston. The PMI has apossible range from zero to 100. Readings above the neutral point of 50 indicate likelygrowth in production over the next three to four months; readings below 50 suggestcontraction. For the last 12 months, the Houston PMI has ranged from 53.6 in No-

vember '10 to 61.4 in May and June. Houston has averaged a PMI of 58.5 over the last12 months.

The Houston PMI is based on eight components: sales, production, employment, pur-chases, prices paid, lead times, purchased inventory, and finished goods inventory.From July to August, seven categories reported improvement, while finished goodsinventory remained unchanged. □

Air Traffic Continues to Grow — The Houston Airport System (HAS) handled 4.47million passengers in August, up 1.4 percent from the 4.40 million handled in August

last year. Domestic passenger traffic rose 2.0 percent, from 3.62 million in August ‘10to 3.69 million this August. International passenger traffic slipped 1.0 percent, from778,506 in August ‘10 to 770,716 passengers last month.

Month-to-month changes signaled the end of the peak summer travel season. From Ju-ly to August, domestic passenger volume decreased 6.5 percent and international fell16 percent. However, year-to-date aviation travel is up 1.4 percent, from 33.29 milliontravelers in ‘10 YTD to 33.76 million in ‘11 YTD.

Freight traffic remains strong at the HAS, which moved 78.3 million short tons in Au-

gust ‘11, up 3.7 percent from 75.5 million pounds in August ‘10. Such growth is pre-dicted to continue as HAS reports ongoing interest from air cargo carriers for intro-ducing or expanding air service in Houston. □

Region’s Ports Remain Busy — The Houston-Galveston Customs District handledcargo valued at $152.2 billion through the first seven months of ‘11, up 28.2 percentfrom the $118.7 billion handled during the same period last year.

Exports5 totaled $67.0 billion through the first seven months of ‘11, up 28.5 percentfrom $52.1 billion over the same period last year. Twenty-five commodities accountedfor 96.2 percent of all exports through the district. Trade through the first sevenmonths of ‘11 is up in 23 of them. Exports of fuel, organic chemicals and grains ac-counted for two-thirds of the increase.

5 The top 25 exports include fuel, industrial machinery, organic chemicals, plastics, cereals, electric machinery, vehicles andparts, miscellaneous chemicals, scientific equipment, cotton, articles of iron or steel, rubber, aircraft and parts, inorganicchemicals, beverages, oil seeds, animal and vegetable fats, iron and steel, tools, meat, soap and waxes, pharmaceuticals, per-fumes and cosmetics, paper products, and ores.





Imports6 totaled $85.2 billion, up 28.0 percent from $66.6 billion over the same periodlast year. Twenty-five commodities accounted for 96.6 percent of all imports throughthe district. Trade through the first seven months of ‘11 is up in 22 of them. Shipmentsof fuel accounted for a little over half the increase.

Houston‘s top 20 trade partners

7

are responsible for 70.8 percent of total trade valuethrough the customs district. Trade through the first seven months of ‗11 has grown

with all 20 countries. □

Patrick Jankowski andJenny Hsu contributed to this issue of

The Economy at a Glance .

STAY UP TO DATE!

Are you a Partnership Member? If so, log-in to your account here and accessarchived issues of Glance available only to members. You can also sign-up forRSS feeds to receive Houston’s latest economic data throughout the month.

If you are a non-member and would like to receive this electronic publication on the first workingday of each month, please email your request for Economy at a Glance [email protected] . Include your name, title and phone number and your company’s nameand address. For information about joining the Greater Houston Partnership and gaining accessto this powerful resource, call Member Services at 713-844-3683.

The foregoing table is updated whenever any data change — typically, 11 or so times permonth. If you would like to receive those updates by e-mail, usually accompanied bycommentary, please e-mail your request for Key Economic Indicators [email protected] with the same identifying information.

You may request Glance and Indicators in the same e-mail.

6 The top 25 imports include fuel, industrial machinery, articles of iron or steel, electric machinery, organic chemi-cals, vehicles and parts, iron and steel, plastics, miscellaneous chemicals, beverages, scientific equipment, inorganicchemicals, rubber, furniture, aluminum products, copper products, gums and resins, ceramic products, textiles, cof-fee, tea and spices, fruit and nuts, perfumes and cosmetics, toys, games and sport equipment, wood, and specialitems not classified elsewhere.

7 Mexico, Venezuela, Brazil, Nigeria, Russia, China, Saudi Arabia, Netherlands, Colombia, Germany, United Kingdom,South Korea, Algeria, Iraq, Costa Rica, Chile, Belgium, France, India, and Japan.

http://www.houston.org/GHP_Secure/LogIn/index.asp?edit=0&act=mbrs



mailto:[email protected]











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

Aug '11 July '11 Aug '10 July '11 Aug '10 July '11 Aug '10

Total Nonfarm Payroll Jobs 2,595.6 2,592.4 2,530.0 3.2 65.6 0.1 2.6

Total Private 2,235.1 2,229.5 2,167.4 5.6 67.7 0.3 3.1

Goods Producing 504.3 501.7 473.6 2.6 30.7 0.5 6.5

Service Providing 2,091.3 2,090.7 2,056.4 0.6 34.9 0.0 1.7 Private Service Providing 1,730.8 1,727.8 1,693.8 3.0 37.0 0.2 2.2

Mining and Logging 90.7 91.0 82.0 -0.3 8.7 -0.3 10.6Oil & Gas Extraction 48.9 48.9 46.2 0.0 2.7 0.0 5.8

Support Activities for Mining 38.8 39.0 34.7 -0.2 4.1 -0.5 11.8

Construction 183.3 181.1 172.9 2.2 10.4 1.2 6.0

Manufacturing 230.3 229.6 218.7 0.7 11.6 0.3 5.3

Durable Goods Manufacturing 150.5 150.0 141.2 0.5 9.3 0.3 6.6

Nondurable Goods Manufacturing 79.8 79.6 77.5 0.2 2.3 0.3 3.0

Wholesale Trade 137.8 137.9 132.3 -0.1 5.5 -0.1 4.2

Retail Trade 266.9 266.5 263.2 0.4 3.7 0.2 1.4

Transportation, Warehousing and Utilities 121.9 123.1 123.4 -1.2 -1.5 -1.0 -1.2

Utilities 16.5 16.6 16.2 -0.1 0.3 -0.6 1.9Air Transportation 24.0 24.1 23.8 -0.1 0.2 -0.4 0.8

Truck Transportation 21.4 21.3 20.7 0.1 0.7 0.5 3.4Pipeline Transportation 10.3 10.4 10.3 -0.1 0.0 -1.0 0.0

Balance, incl Warehousing, Water & Rail Transport 49.7 50.7 52.4 -1.0 -2.7 -2.0 -5.2

Information 29.7 29.9 31.8 -0.2 -2.1 -0.7 -6.6

Telecommunications 15.2 15.1 16.3 0.1 -1.1 0.7 -6.7

Finance & Insurance 88.3 86.6 87.1 1.7 1.2 2.0 1.4

Real Estate & Rental and Leasing 48.4 47.8 48.8 0.6 -0.4 1.3 -0.8

Professional & Business Services 380.4 377.6 366.0 2.8 14.4 0.7 3.9

Professional, Scientific & Technical Services 178.8 178.6 176.6 0.2 2.2 0.1 1.2Legal Services 23.1 23.1 23.2 0.0 -0.1 0.0 -0.4

Accounting, Tax Preparation, Bookkeeping 16.9 17.0 16.8 -0.1 0.1 -0.6 0.6

Architectural, Engineering & Related Services 58.6 58.3 59.9 0.3 -1.3 0.5 -2.2

Computer Systems Design & Related Services 25.8 25.7 24.6 0.1 1.2 0.4 4.9 Admin & Support/Waste Mgt & Remediation 183.1 180.3 169.8 2.8 13.3 1.6 7.8Administrative & Support Services 170.8 169.4 161.6 1.4 9.2 0.8 5.7

Employment Services 62.0 61.6 59.7 0.4 2.3 0.6 3.9

Educational Services 42.6 41.9 42.2 0.7 0.4 1.7 0.9

Health Care & Social Assistance 274.6 270.7 267.7 3.9 6.9 1.4 2.6

Arts, Entertainment & Recreation 28.2 29.8 29.4 -1.6 -1.2 -5.4 -4.1

Accommodation & Food Services 216.0 218.4 209.7 -2.4 6.3 -1.1 3.0

Other Services 96.0 97.6 92.2 -1.6 3.8 -1.6 4.1

Government 360.5 362.9 362.6 -2.4 -2.1 -0.7 -0.6

Federal Government 27.5 27.8 29.7 -0.3 -2.2 -1.1 -7.4

State Government 67.8 67.8 69.5 0.0 -1.7 0.0 -2.4

State Government Educational Services 34.8 34.7 35.8 0.1 -1.0 0.3 -2.8 Local Government 265.2 267.3 263.4 -2.1 1.8 -0.8 0.7

Local Government Educational Services 175.3 178.2 177.9 -2.9 -2.6 -1.6 -1.5

SOURCE: Texas Workforce Commission





Source: Institute for Supply Management-Houston

Source: Texas Workforce Commission

30

35

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45

50

55

60

65

70

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

PURCHASING MANAGERS INDEXHOUSTON & U.S. 2002-2012

HOUSTON U.S.

-120

-100

-80

-60

-40

-20

0

20

40

60

80

100

120

140

160

1.95

2.00

2.05

2.10

2.15

2.20

2.25

2.30

2.35

2.40

2.45

2.50

2.55

2.60

2.65


1

2 - M O N T H C H A N G E ( 0 0 0 )

N O N F A R M

P A Y R O L L E M P L O Y M E N T ( 0 0 0 , 0 0 0 )

HOUSTON MSA EMPLOYMENT2002-2012

12-MONTH CHANGE JOBS







1.60

1.65

1.70

1.75

1.80

1.85

1.90

1.95

2.00

2.05

2.10

2.15

2.20

2.25

430

440

450

460

470

480

490

500

510

520

530

540

550


S E R V I C E - P R O V I D I N G

( 0 0 0 , 0 0 0 )

G O O D S - P R O D U C I N G

( 0 0 0 )

GOODS-PRODUCING AND SERVICE-PROVIDING EMPLOYMENTHOUSTON MSA 2002-2012

GOODS-PRODUCING JOBS SERVICE-PROVIDING JOBS

0

1

2

3

4

5

6

7

8

9

10

11


P E

R C E N T O F L A B O R F O R C E

UNEMPLOYMENT RATEHOUSTON & U.S. 2002-2012

HOUSTON U.S.





Source: U.S. Energy Information Administration

Source: U.S. Bureau of Labor Statistics

0

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8

12

16

20

24

28

0

20

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60

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100

120

140


H

E N R Y H U B N A T U R A L G A S ( $ / M M B T U )

W E S T T E X A S I N T E R M E D I A T E ( $ / B B L )

SPOT MARKET ENERGY PRICES2002 - 2012

WTI MONTHLY WTI 12-MO AVG GAS MONTHLY GAS 12-MO AVG

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%


INFLATION: 12-MONTH CHANGE

2002-2012

HOUSTON CPI-U U.S. CPI-U





Houston Economic Indicators

A Service of the Greater Houston Partnership

Most Year % Most Year %

Month Recent Earlier Change Recent Earlier Chang

ENERGY

U.S. Active Rotary Rigs Aug '11 1,957 1,656 18.2 1,812 * 1,477 * 22.

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Aug '11 84.95 76.32 11.3 95.95 * 77.29 * 24.

Spot Natural Gas ($/MMBtu, Henry Hub) Aug '11 4.03 4.24 -5.0 4.22 * 4.63 * -8.

UTILITIES AND PRODUCTION

Houston Purchasing Managers Index Aug '11 61.3 52.5 16.8 60.0 * 54.9 * 9.

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Aug '11 4,623,682 4,656,313 -0.7 33,894,368 33,199,596 2.

CONSTRUCTION

Total Building Contracts ($, Houston MSA) July '11 685,059,000 594,242,000 15.3 4,806,258,000 5,241,013,000 -8.

Nonresidential July '11 308,171,000 247,134,000 24.7 2,031,021,000 2,077,892,000 -2.

Residential July '11 376,888,000 347,108,000 8.6 2,775,237,000 3,163,121,000 -12.

Building Permits ($, City of Houston) Aug '11 314,010,703 313,152,847 0.3 2,287,656,579 2,227,155,348 2.

Nonresidential Aug '11 188,772,818 221,465,417 -14.8 1,525,225,777 1,497,033,255 1.

New Nonresidential Aug '11 97,018,488 84,789,340 14.4 585,221,742 512,792,542 14.

Nonresidential Additions/Alterations/Conversions Aug '11 91,754,330 136,676,077 -32.9 940,004,035 984,240,713 -4.5

Residential Aug '11 125,237,885 91,687,430 36.6 762,430,802 730,122,093 4.

New Residential Aug '11 106,928,320 75,503,814 41.6 625,897,712 563,804,717 11.0

Residential Additions/Alterations/Conversions Aug '11 18,309,565 16,183,616 13.1 136,533,090 166,317,376 -17.9

Multiple Listing Service (MLS) ActivityClosings Aug '11 6,524 5,058 29.0 43,246 42,513 1.

Median Sales Price - SF Detached Aug '11 159,000 158,500 0.3 153,231 * 152,876 * 0.

Active Listings Aug '11 48,752 55,079 -11.5 50,489 * 50,652 * -0.

EMPLOYMENT (Houston-Sugar Land-Baytown MSA)

Nonfarm Payroll Employment Aug '11 2,595,600 2,530,000 2.6 2,578,500 * 2,517,025 * 2.

Goods Producing (Natural Resources/Mining/Const/Mfg) Aug '11 504,300 473,600 6.5 487,200 * 467,900 * 4.

Service Providing Aug '11 2,091,300 2,056,400 1.7 2,091,300 * 2,049,125 * 2.

Unemployment Rate (%) - Not Seasonally Adjusted

Houston-Sugar Land-Baytown MSA Aug '11 8.6 8.6 8.5 * 8.6 *

Texas Aug '11 8.5 8.3 8.3 * 8.3 *

U.S. Aug '11 9.1 9.5 9.2 * 9.9 *

Unemployment Insurance Claims (Gulf Coast WDA)

Initial Claims Aug '11 20,853 23,007 -9.4 20,374 * 22,642 * -10.

Continuing Claims Aug '11 93,377 106,578 -12.4 81,794 * 108,493 * -24.

TRANSPORTATION Port of Houston Authority Shipments (Short Tons) Aug '11 3,418,884 3,620,028 -5.6 28,218,346 26,357,655 7.

Air Passengers (Houston Airport System) Aug '11 4,465,576 4,402,074 1.4 33,761,827 33,285,354 1.

Domestic Passengers Aug '11 3,694,860 3,623,568 2.0 27,755,257 27,470,983 1.

International Passengers Aug '11 770,716 778,506 -1.0 6,006,570 5,814,371 3.

Landings and Takeoffs Aug '11 72,158 73,693 -2.1 577,543 569,725 1.

Air Freight (000 lb) Aug '11 78,325 75,538 3.7 618,258 583,465 6.

Enplaned Aug '11 41,259 38,841 6.2 317,504 305,820 3.

Deplaned Aug '11 37,066 36,697 1.0 300,754 277,645 8.

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Aug '11 22,421 23,399 -4.2 171,726 163,218 5.

Cars Aug '11 12,246 10,050 21.9 77,823 73,689 5.

Trucks, SUVs and Commercials Aug '11 10,175 13,349 -23.8 93,903 89,529 4.

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 4Q10 27,634 26,953 2.5 94,866 88,070 7.

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

Houston-Galveston-Brazoria CMSA Aug '11 202.445 195.165 3.7 200.153 * 193.822 * 3.

United States Aug '11 226.545 218.312 3.8 224.079 * 217.692 * 2.Hotel Performance (Harris County)

Occupancy (%) 4Q10 53.8 51.6 51.5 * 56.2 *

Average Room Rate ($) 4Q10 90.51 91.29 -0.9 92.04 * 95.80 * -3.

Revenue Per Available Room ($) 4Q10 48.67 47.14 3.2 51.46 * 54.05 * -4.

POSTINGS AND FORECLOSURES

Postings (Harris County) Sept '11 3,480 4,691 -25.8 32,901 35,037 -6.

Foreclosures (Harris County) Sept '11 1,091 1,604 -32.0 7,968 10,502 -24.

YEAR-TO-DATE

TOTAL OR YTD AVERAGE*MONTHLY DATA





SourcesRig Count Baker Hughes IncorporatedSpot WTI, Spot Natural Gas U.S. Energy Information AgencyHouston Purchasing Managers National Association ofIndex Purchasing Management –

Houston, Inc.Electricity CenterPoint EnergyBuilding Construction Contracts McGraw-Hill ConstructionCity of Houston Building Permits Building Permit Department, City

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

Port Shipments Port of Houston AuthorityAviation Aviation Department, City of

HoustonCar and Truck Sales TexAuto Facts Report , InfoNation,

Inc., Sugar Land TXRetail Sales Texas Comptroller’s Office Consumer Price Index U.S. Bureau of Labor StatisticsHotels PKF Consulting/Hospitality Asset

Advisors InternationalPostings, Foreclosures Foreclosure Information & Listing

Service

Documents

Houston Economic Update October 2011