Houston’s Still Setting Records...JLL, and Transwestern track the market.3 Any positive absorption this year will likely come from preleased deliveries, not new leas-ing activity

April 2016 ©2016, Greater Houston Partnership Page 1

Houston’s Still Setting Records — Metro Houston led the nation in population growth

last year, adding more than 159,000 residents, according to recent estimates by the U.S.

Census Bureau.1 The Dallas-Fort Worth metro, with a net gain of 144,000 residents,

ranked second. Atlanta, with a gain of 95,000 residents, ranked third. Since the April ’10

census, Houston has added more than 736,000 residents, the largest gain of any metro area

over that period. That’s the equivalent to adding the metro Charleston, SC population

(744,526) to the nine-county Houston region.

CURRENT POPULATION ESTIMATES – 20 LARGEST U.S. METRO AREAS

U.S Rank

Metro Area Population As of 7/1/15

Since 4/1/10 U.S. Rank

Metro Area Population As of 7/1/15

Since 4/1/10

# % # %

1 New York 20,182,305 614,895 3.1 11 San Francisco 4,656,132 320,741 7.4

2 Los Angeles 13,340,068 511,231 4.0 12 Phoenix 4,574,531 381,644 9.1

3 Chicago 9,551,031 89,926 1.0 13 Riverside 4,489,159 264,308 6.3

4 Dallas-Fort Worth 7,102,796 676,582 10.5 14 Detroit 4,302,043 5,793 0.1

5 Houston 6,656,947 736,531 12.4 15 Seattle 3,733,580 293,771 8.5

6 Washington 6,097,684 461,452 8.2 16 Minneapolis-St. Paul 3,524,583 175,724 5.2

7 Philadelphia 6,069,875 104,532 1.8 17 San Diego 3,299,521 204,208 6.6

8 Miami 6,012,331 447,696 8.0 18 Tampa 2,975,225 191,982 6.9

9 Atlanta 5,710,795 424,067 8.0 19 Denver 2,814,330 270,848 10.6

10 Boston 4,774,321 221,919 4.9 20 St. Louis 2,811,588 23,887 0.9

Source: U.S. Bureau of the Census

Last year’s population gains help to explain how Houston managed to eke out modest job

growth despite the drop in oil prices, the collapse in the rig count, and the wave of oil

industry layoffs. The influx of new residents supported demand for consumer-oriented

services such as health care, retail, restaurants, bars, and education. These sectors created

enough jobs in ’15 to offset losses elsewhere in the economy. The influx also helped sup-

port demand for housing, both single- and multi-family, though that demand has begun to

taper in recent months.

The region’s unlikely to experience such robust growth in ’16. Corporations that a few

years ago lured workers to Houston with relocation bonuses and job offers are now laying

off those same individuals. The national media continue to document the woes of the oil

patch and that barrage of negative information will deter job seekers elsewhere from hitch-

ing up the U-Haul and heading for the Bayou City. And according to the Bureau of Labor

1 The population change is from July 1, 2014 to July 1, 2015. Metro Houston includes Austin, Brazoria, Chambers, Fort Bend, Galves-

ton, Harris, Liberty, Montgomery and Waller Counties. Population estimates for U.S. cities will be released in May.

A publication of the Greater Houston Partnership Volume 25 Number 4 — April 2016

HOUSTON—THE ECONOMY AT A GLANCE


Statistics, metro Houston ranked last among the nation’s 20 largest metro areas in job

growth for the 12 months ending February ’16. Given fewer employment opportunities,

the migration of jobs seekers to Houston will slow, eventually impacting the region’s con-

sumer-oriented sectors.

That’s not to suggest Houston’s population won’t grow at all. The region will add another

60,000 residents this year through the “natural increase.” The natural increase is the num-

ber of resident births in the region minus the number of resident deaths. In a typical year,

Houston experiences about 95,000 births and 35,000 deaths, hence a natural increase of

60,000. Houston will still draw families and individuals seeking a better life here, just not

as many as before. Even if the number of residents moving here falls by 50 percent, the

region would still welcome 30,000 newcomers each year. Combined with the natural in-

crease, Houston’s annual population growth would dip to roughly 90,000. That growth

rate would put the metro population near 7.1 million by the end of the decade.

A View from the Suburbs — Every Houston-area county experienced population growth

in ’15. Three counties—Harris, Fort Bend, and Montgomery—accounted for nine out of

every 10 new residents.

A few items of note from the recent estimates:

Among all U.S. counties, Harris County led the nation in population growth, adding

90,451 residents.

Among U.S. counties with populations of 250,000 or more, Fort Bend grew the fastest,

its population climbing 4.3 percent in one year.

The slow shift of population to the suburbs continued, with Harris County dropping to

68.2 percent of the region’s population, down from 69.1 in ’10.

Foreign-born residents accounted for two of every five newcomers in the past five years.

COMPONENTS OF POPULATION CHANGE, 4/1/10 to 7/1/15, HOUSTON METRO AREA

Natural Increase Net Migration

County Net

Change % Change Net

Natural Births Deaths

Net Migration

Interna-tional

Domestic

Austin 1,146 4.0 362 1,769 1,407 829 173 656

Brazoria 33,146 10.6 13,552 24,643 11,091 19,030 2,781 16,249

Chambers 3,767 10.7 1,128 2,463 1,335 2,618 150 2,468

Fort Bend 130,712 22.3 29,922 43,942 14,020 99,425 22,527 76,898

Galveston 30,916 10.6 8,259 20,864 12,605 22,097 3,814 18,283

Harris 445,569 10.9 232,433 357,198 124,765 216,236 134,746 81,490

Liberty 4,011 5.3 1,785 5,577 3,792 2,152 270 1,882

Montgomery 81,813 18.0 17,811 34,609 16,798 62,072 8,317 53,755

Waller 5,451 12.6 1,621 3,099 1,478 3,701 177 3,524

Totals 736,531 12.4 306,873 494,164 187,291 428,160 172,955 255,205

Source: U.S. Bureau of the Census



Where’s Everyone Coming From? — The Census Bureau provides annual estimates of

population, change in population, and the components of change, i.e., births, deaths, and

migration. However, the estimates don’t include data on the origins of migrants to a re-

gion. For that information, one has to draw on the American Community Survey (ACS)

released last fall. A review of ACS data for Houston provides the following insights.2

In a typical year, more than 230,000 people move to Hou-

ston from a different metro area, from rural parts of the U.S.,

or from overseas.

Five of the top 10 metros supplying the most new residents

to Houston are in Texas: Dallas-Fort Worth, Austin, San

Antonio, College Station and Beaumont.

The non-Texas metros supplying the most new residents are

either large population centers or have close ties to the en-

ergy industry: Los Angeles, Chicago, New York, Washing-

ton, D.C., New Orleans, Atlanta, Riverside, Phoenix, Lafa-

yette, and Denver.

Asia supplies more international migrants to Houston than

any other region. Central America ranks second, Europe

third, Africa fourth.

Nearly 130,000 residents

leave the region each

year; hence Houston’s

population gain due to

“net” inmigration has av-

eraged around 100,000

residents in recent years.

When Houstonians

leave, most depart for an-

other Texas metro. Seven

of the top 10 destinations

are in the Lone Star state. Those metros, in order, are

Dallas-Fort Worth, Austin, San Antonio, College Sta-

tion, Beaumont, McAllen, and Corpus Christi.

2 The insights are based on responses to the American Community Survey from ’09 through ’13 and reflect the average for those five

years.

TOP METROS SUPPLYING NEW RESIDENTS TO HOUSTON

Metro

Avg Annual Reloca-tions*

Dallas-Fort Worth, TX 13,359 Austin, TX 8,364 San Antonio, TX 6,694 Los Angeles, CA 5,727 Chicago, IL 5,252 New York, NY 4,861 College Station, TX 4,731 Beaumont. TX 4,374 Washington, DC 2,808 New Orleans, LA 2,723 Miami, FL 2,622 Atlanta, GA 2,445 Killeen, TX 2,284 Riverside, CA 2,238 McAllen, TX 2,132 Phoenix, AZ 2,056 Lafayette, LA 1,969 Denver, CO 1,915 Corpus Christi, TX 1,887 Baton Rouge, LA 1,650 * For the years ’09 through ’13 Source: U.S. Census Bureau, Ameri-can Community Survey

REGIONS SUPPLYING NEW RESIDENTS TO HOUSTON

Region Avg Annual

Relocations*

Asia 18,758

Central America 16,109

Europe 6,444

Africa 3,250

South America 3,101

Northern America 1,304

Caribbean 1,007

Oceania 992

* For the years ’09 through ’13

Source: U.S. Census Bureau, Ameri-can Community Survey



Even if they don’t leave the region, Houstonians tend to move around. According to the

ACS, in ’09 through ’13, more than 730,000 Houstonians moved to another residence

inside the Houston metro area each year.

Absorption, Absorption, Absorption — Houston absorbed between 3.9 and 4.8 million

square feet of office space last year and another 200,000 to 1.0 million the first quarter of

’16. The variation in the numbers reflects variation in the ways in which CBRE, Colliers,

JLL, and Transwestern track the market.3

Any positive absorption this year will likely come from preleased deliveries, not new leas-

ing activity. Eight of the 18 submarkets JLL monitors have experienced negative absorp-

tion year-to-date. CBRE notes that if not for Millennium Tower II, a 450,000 square foot

build-to-suit for National Oilwell Varco that came online in the first quarter, Houston

would have experienced negative absorption in the first quarter. Only 11 deals of 20,000

or more square feet were signed in the first quarter, the largest involving United Airlines,

which agreed to lease 225,000 square feet in Hines’ 609 Main building. The airline will

leave behind 360,000 square feet in other downtown buildings when it eventually occupies

its new space.

Another 1.1 million square feet of sublease space came on the market in the first quarter,

bringing total sublease space to between 8.7 and 9.4 million square feet. Eighty-three per-

cent of the space is considered Class A space. Blocks as small as 50,000 square feet and

as large as 390,000 square feet are available. The bulk of the sublease space can be found

in the CBD, Energy Corridor, Galleria, Greenspoint and Westchase submarkets. In mar-

kets such as the CBD, Westchase and the Energy Corridor, a substantial amount of sub-

lease space is available with terms of 10 or more years, suggesting the tenants have long-

term need for the space.

Workforce reductions, mergers and acquisitions, cost cutting measures and downsizing

will continue to dump sublease space on the market. The sublease market will likely ex-

ceed 10 million square feet by the end of the year. The 10-year historical average is 3.8

million square feet, according to Transwestern.

The direct vacancy rate now stands in the

mid-teens. Factor in sublease space and the

effective vacancy rate is in the upper teens

and will likely exceed 20 percent by the end

of the year. Not surprisingly, Houston has

become a tenants’ market, with landlords

now offering as much as six to 18 months

free rent and $50-$75 per square foot in ten-

ant improvement allowances.

3 The differences were discussed in detail in the February ’16 issue of Houston: The Economy at a Glance.

OFFICE MARKET VACANCY RATE, ALL CLASSES, %

Source Direct Sublease Total

Transwestern 12.5 1.3 13.8

JLL 15.7 1.9 17.6

Colliers 13.8 1.4 15.2

CBRE 14,3 4.0 18.3

Source: Quarterly market reports of the firms

http://www.houston.org/pdf/research/glance_archives/Glance_Feb16.pdf



Office construction has begun to taper off. At the end of the first quarter, only 5.7 million

square feet of office space was under construction. That figure is a huge drop from 15.9

million square feet the same quarter last year. Most of the space under construction (4.8

million square feet) will be delivered this year.

While sales of Class B buildings have held up, fewer Class A buildings are on the market.

Investors appear to have little appetite for Houston office buildings, and owners of trophy

assets with solid tenant bases are waiting until market conditions improve. They recognize

the current situation is not permanent. The office market has been through this before, and

like oil prices and employment growth, demand for office space will eventually recover.

Murky Employment Picture — The Houston-The Woodlands-Sugar Land metro created

10,100 jobs in February, according to the Texas Workforce Commission (TWC). The 25-

year February average is 17,100 jobs, so this year’s performance reflects the overall weak-

ness in Houston’s economy. On a seasonally adjusted basis, TWC reported the region lost

5,500 jobs in February, resulting in a 0.2 percent dip. Total nonfarm payroll employment

stands about where it was last fall, just shy of 3.0 million jobs.

Almost all of February’s growth occurred in the government sector, primarily in school

districts and state-funded universities. Several subsectors—building materials, accounting

and tax preparation, private education, health care, arts and recreation, hotels, restaurants

and bars—added a handful of jobs as well.

Job losses continue to

mount in sectors tied to the

oil and gas industry. Col-

lectively, mining and log-

ging, durables goods man-

ufacturing, durables

wholesaling, and architec-

ture and engineering have

lost 64,100 jobs since De-

cember ’14, the peak for

the aforementioned sec-

tors.

Total nonfarm payroll employment remains only 37,700 below its December ’15 peak,

which falls in line with the normal seasonal pattern of January layoffs. The economy typ-

ically recoups those losses in February and March, reaching a new employment peak in

April or May. Given the current economic weakness, Houston may not return to its previ-

ous employment peak until fall. Last year, Houston didn’t recoup its early-year job losses

until November.

METRO HOUSTON EMPLOYMENT GAINS AND LOSSES SELECTED SECTORS, DEC ’14 - FEB ‘16

Winners Gains Losers Losses Hotels, Restaurants, Bars 19,500 Manufacturing -28,200

Health Care 14,700 Mining and Logging -22,700

Government 10,000 Retail Trade -7,100

Construction 9,700 Transport, Warehousing, Utilities -4,500

Educational Services 2,800 Prof, Sci, Tech Services -3,700

Arts, Entertainment, Rec 2,200 Wholesale Trade -2,800

Finance, Insurance 600 Mgmt of Enterprises -1,300

Real Estate 100 Information -400

Source: Texas Workforce Commission



Not Our First Rodeo — One of the most frequently asked questions by Houstonians in

the past 18 months has been, “Is the region going to experience a repeat of the ’80s?” A

less prevalent question, but also worth mentioning is, “Will the region see a repeat of the

’90s?”

During the ’90s, Houston’s employment grew by a third, adding 559,400 jobs from Janu-

ary ’90 to December ’99. Meanwhile, the price of West Texas Intermediate (WTI) aver-

aged $20 per barrel and fluctuated between $11 and $36. Even in a prolonged period of

low oil prices, Houston found avenues of economic growth separate from energy. Approx-

imately two-thirds of Houston’s job gains since ’90 resulted from growth in the national

economy, according to the University of Houston’s Institute for Regional Forecasting.

Every industry sector added jobs in the ’90s except for, predictably, oil and gas extraction

(-3,700 jobs), refining (-1,100 jobs), and chemicals manufacturing (-100 jobs). The pro-

fessional and business services sector experienced the strongest growth, adding 124,200

jobs, an increase of 63.8 percent. More than half of the new jobs came from administrative

and support services, and about 40 percent came from legal services, accounting, engi-

neering, and computer systems design.

Sectors dependent on population growth also performed well in the ’90s. Public education,

retail trade, leisure and hospitality, and health care all benefited from the 763,000 new

residents, a 20.4 percent increase, in the metro from ’90 to ’99.

0

20

40

60

80

100

120

140

160

1.5

1.7

1.9

2.1

2.3

2.5

2.7

2.9

3.1

'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

WTI

($

/bb

l)

Job

s, M

illio

ns

Oil Prices and Houston Employment Growth

Total Houston Employment Monthly WTI Price

Source: U.S. Bureau of Labor Statistics, U.S. Energy Information Administration



Just as “past performance does

not guarantee future results,”

the region may not see trends

from the ’90s recur. For exam-

ple, the information sector

added 10,900 jobs (30.7 per-

cent increase) in the ’90s, but

changes in technology and dig-

ital media preclude that same

pace of growth today. In con-

trast, chemicals manufacturing

lost 100 jobs in the ’90s, but

with $50 billion in expansion

projects underway, the sector

will experience employment

growth this time around.

Houston Metro Export Plan

Released — The Partnership an-

nounced the release of the Hou-

ston Metro Export Plan on April

6. The plan’s goal is to grow

Houston’s economy and create

jobs by expanding exports and

trade through connecting exist-

ing and potential exporters to re-

sources which assist them in ac-

cessing global markets. The plan

was produced for the Global Cit-

ies Initiative (GCI), a joint pro-

ject of the Brookings Institution

and JPMorgan Chase. Several

organizations formed the GCI Steering Committee which produced the Export Plan, in-

cluding the City of Houston, the Port of Houston Authority, U.S. Department of Com-

merce, U.S. Small Business Association, Omega Protein Corporation, ExxonMobil, and

many others. Please click here to read the plan and here for trade profiles of Houston’s top

twenty trade partners.

Houston MSA Employment Change by Select Industries, ’90-’99 (ranked from least to most jobs gained)

Industry Change in Jobs

# % Oil and Gas Extraction (3,700) (10.0%) Petroleum Products Manufacturing (1,100) (8.5) Chemical Manufacturing (100) (0.2) Real Estate 9,000 23.9 Information 10,900 30.7 Finance and Insurance 11,900 16.1 Wholesale Trade 20,300 19.8 Transportation, Warehousing, Utilities 26,700 28.3 Other Services 31,100 52.7 Durables Manufacturing 32,000 31.4 Construction 45,100 36.5 Health Care 46,000 33.4 Leisure and Hospitality 54,400 43.8 Retail Trade 59,700 29.5 Government (incl. public education) 71,200 29.8 Professional and Business Services 124,200 63.8 Source: U.S. Bureau of Labor Statistics

http://www.houston.org/assets/pdf/economy/Greater%20Houston%20Export%20Plan_web.pdf

http://www.houston.org/assets/pdf/economy/Global%20Houston_web.pdf



SNAPSHOT — HOUSTON’S KEY ECONOMIC INDICATORS

Building Permits — City of Houston building permits totaled $465.4 million in February

’16, down 30.7 percent from $672.0 million in February ’15, according to the City’s De-

partment of Public Works & Engineering Planning & Development Services. For the 12

months ending February ’16, city building permits totaled $7.8 billion, down 11.5 percent

from $8.9 billion in the 12 months ending February ’15, which was also the historic peak

for city of Houston permit activity.

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

Index for All Urban Consumers (CPI-U) rose 1.0 percent nationwide from February ’15 to

February ’16, 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 February ’15. From

February ’15 to February ’16, consumer prices in the Houston-Galveston-Brazoria metro

area grew 2.0 percent, the largest 12-month increase since rising 2.2 percent in November

’14. Core inflation jumped 3.9 percent, the fastest 12-month increase since rising 4.3 per-

cent in December ’13.

Home Sales — Residential real estate in Houston performed well in February. Brokers

sold 4,602 single-family homes, up 2.2 percent from the 4,505 sold in February last year.

Over the same period, the average sales price of single-family homes rose 0.5 percent from

$259,676 in February ’15 to $260,872 February ‘16, the highest average sales price ever

for the month. Sales of all types totaled $1.380 billion in February, up from $1.364 billion

the same month last year.

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

term leading indicator for regional production, registered 44.5 in February, down from 45.6

in January, according to the Institute for Supply Management-Houston (ISM-Houston).

With the February reading, the PMI has signaled economic contraction here for 14 consec-

utive months.

Vehicle Sales — Houston-area auto dealers sold 26,839 vehicles in February ’16, a 3.7

percent decrease from February ’15, according to TexAuto Facts, published by InfoNation,

Inc. of Sugar Land. Sales in February ’16 were down 2.1 percent from January ’16. For the

12 months ending February ’16, Houston sold 375,262 vehicles, a 1.0 percent increase

from the 371,490 sold in the 12 months ending February ’15.

Patrick Jankowski and Jenny Philip

contributed to this issue of Houston: The Economy at a Glance

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

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

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

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

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



STAY UP TO DATE!

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

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

mailto:[email protected]




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

Feb '16 Jan '16 Feb '15 Jan '16 Feb '15 Jan '16 Feb '15

Total Nonfarm Payroll Jobs 2,983.6 2,973.5 2,974.6 10.1 9.0 0.3 0.3

Total Private 2,589.4 2,591.4 2,590.5 -2.0 -1.1 -0.1 0.0

Goods Producing 545.1 550.8 578.8 -5.7 -33.7 -1.0 -5.8

Service Providing 2,438.5 2,422.7 2,395.8 15.8 42.7 0.7 1.8

Private Service Providing 2,044.3 2,040.6 2,011.7 3.7 32.6 0.2 1.6

Mining and Logging 89.3 92.5 107.0 -3.2 -17.7 -3.5 -16.5

Oil & Gas Extraction 51.1 51.3 52.9 -0.2 -1.8 -0.4 -3.4

Support Activities for Mining 39.1 40.5 52.7 -1.4 -13.6 -3.5 -25.8

Construction 221.5 220.9 214.4 0.6 7.1 0.3 3.3

Manufacturing 234.3 237.4 257.4 -3.1 -23.1 -1.3 -9.0

Durable Goods Manufacturing 150.1 153.2 177.1 -3.1 -27.0 -2.0 -15.2

Nondurable Goods Manufacturing 84.2 84.2 80.3 0.0 3.9 0.0 4.9

Wholesale Trade 171.2 171.6 173.9 -0.4 -2.7 -0.2 -1.6

Retail Trade 300.2 301.5 292.1 -1.3 8.1 -0.4 2.8

Transportation, Warehousing and Utilities 138.5 139.5 138.6 -1.0 -0.1 -0.7 -0.1

Utilities 16.2 16.1 15.8 0.1 0.4 0.6 2.5

Air Transportation 21.8 21.8 21.9 0.0 -0.1 0.0 -0.5

Truck Transportation 24.9 24.9 25.6 0.0 -0.7 0.0 -2.7

Pipeline Transportation 10.6 10.6 10.4 0.0 0.2 0.0 1.9

Information 31.8 31.6 32.0 0.2 -0.2 0.6 -0.6

Telecommunications 14.2 14.2 14.1 0.0 0.1 0.0 0.7

Finance & Insurance 95.8 96.3 94.8 -0.5 1.0 -0.5 1.1

Real Estate & Rental and Leasing 55.6 55.5 54.9 0.1 0.7 0.2 1.3

Professional & Business Services 459.0 458.4 470.3 0.6 -11.3 0.1 -2.4

Professional, Scientific & Technical Services 219.0 216.8 222.6 2.2 -3.6 1.0 -1.6

Legal Services 24.1 23.9 24.0 0.2 0.1 0.8 0.4

Accounting, Tax Preparation, Bookkeeping 26.4 25.5 25.4 0.9 1.0 3.5 3.9

Architectural, Engineering & Related Services 69.0 69.2 74.9 -0.2 -5.9 -0.3 -7.9

Computer Systems Design & Related Services 33.1 33.2 33.3 -0.1 -0.2 -0.3 -0.6

Admin & Support/Waste Mgt & Remediation 204.5 205.2 210.8 -0.7 -6.3 -0.3 -3.0

Administrative & Support Services 193.0 193.7 199.6 -0.7 -6.6 -0.4 -3.3

Employment Services 75.9 76.3 79.1 -0.4 -3.2 -0.5 -4.0

Educational Services 58.0 56.8 55.6 1.2 2.4 2.1 4.3

Health Care & Social Assistance 319.8 318.5 306.0 1.3 13.8 0.4 4.5

Arts, Entertainment & Recreation 30.9 29.9 29.1 1.0 1.8 3.3 6.2

Accommodation & Food Services 278.1 275.4 259.2 2.7 18.9 1.0 7.3

Other Services 105.4 105.6 105.2 -0.2 0.2 -0.2 0.2

Government 394.2 382.1 384.1 12.1 10.1 3.2 2.6

Federal Government 28.1 27.7 27.7 0.4 0.4 1.4 1.4

State Government 74.1 73.2 73.4 0.9 0.7 1.2 1.0

State Government Educational Services 40.7 39.5 40.2 1.2 0.5 3.0 1.2

Local Government 292.0 281.2 283.0 10.8 9.0 3.8 3.2

Local Government Educational Services 205.2 196.4 198.8 8.8 6.4 4.5 3.2

SOURCE: Texas Workforce Commission



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 Mar '16 477 1,109 -57.0 562 * 1,403 * -59.9

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Feb '16 31.02 50.38 -38.4 31.88 * 49.64 * -35.8

Spot Natural Gas ($/MMBtu, Henry Hub) Feb '16 2.01 2.82 -28.7 2.13 * 2.90 * -26.6

UTILITIES AND PRODUCTION

Houston Purchasing Managers Index Feb '16 44.5 49.3 -9.7 45.1 * 49.1 * -8.1

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Feb '16 4,123,159 4,000,935 3.1 8,539,884 8,310,426 2.8

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Feb '16 1,052,353,000 2,245,535,000 -53.1 2,296,646,000 3,529,621,000 -34.9

Nonresidential Feb '16 300,900,000 1,096,029,000 -72.5 900,837,000 1,634,686,000 -44.9

Residential Feb '16 751,453,000 1,149,506,000 -34.6 1,395,809,000 1,894,935,000 -26.3

Building Permits ($, City of Houston) Feb '16 465,446,846 672,054,548 -30.7 865,539,475 1,252,233,898 -30.9

Nonresidential Feb '16 283,438,995 298,880,161 -5.2 542,864,034 688,023,785 -21.1

New Nonresidential Feb '16 124,831,063 104,518,645 19.4 225,474,754 325,320,846 -30.7

Nonresidential Additions/Alterations/Conversions Feb '16 158,607,932 194,361,516 -18.4 317,389,280 362,702,939 -12.5

Residential Feb '16 182,007,851 373,174,387 -51.2 322,675,441 564,210,113 -42.8

New Residential Feb '16 149,739,952 353,578,325 -57.7 261,972,297 525,088,796 -50.1

Residential Additions/Alterations/Conversions Feb '16 32,267,899 19,596,062 64.7 60,703,144 39,121,317 55.2

Multiple Listing Service (MLS) Activity

Property Sales Feb '16 5,548 5,538 0.2 10,513 10,502 0.1

Median Sales Price - SF Detached Feb '16 200,000 200,000 0.0 200,000 * 195,000 * 2.6

Active Listings Feb '16 32,914 27,990 17.6 32,587 * 27,928 * 16.7

EMPLOYMENT (Houston-Sugar Land-Baytown MSA)

Nonfarm Payroll Employment Feb '16 2,983,600 2,974,600 0.3 2,978,550 * 2,964,350 * 0.5

Goods Producing (Natural Resources/Mining/Const/Mfg) Feb '16 545,100 578,800 -5.8 547,950 0 578,750 * -5.3

Service Providing Feb '16 2,438,500 2,395,800 1.8 2,430,600 0 2,385,600 * 1.9

Unemployment Rate (%) - Not Seasonally Adjusted

Houston-Sugar Land-Baytown MSA Feb '16 4.7 4.4 4.7 * 4.5 *

Texas Feb '16 4.3 4.4 4.4 * 4.5 *

U.S. Feb '16 5.2 5.8 5.3 * 6.0 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Feb '16 3,573,290 3,941,807 -9.3 7,077,333 7,635,976 -7.3

Air Passengers (Houston Airport System) Jan '16 4,438,322 4,149,911 6.9 4,438,322 4,149,911 6.9

Domestic Passengers Jan '16 3,435,503 3,306,618 3.9 3,435,503 3,306,618 3.9

International Passengers Jan '16 1,002,819 843,293 18.9 1,002,819 843,293 18.9

Landings and Takeoffs Jan '16 63,889 65,244 -2.1 63,889 65,244 -2.1

Air Freight (metric tons) Jan '16 31,065 35,801 -13.2 31,065 35,801 -13.2

Enplaned Jan '16 15,935 19,176 -16.9 15,935 19,176 -16.9

Deplaned Jan '16 15,129 16,625 -9.0 15,129 16,625 -9.0

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Feb '16 26,839 27,877 -3.7 54,249 55,468 -2.2

Cars Feb '16 10,200 11,737 -13.1 20,087 22,953 -12.5

Trucks, SUVs and Commercials Feb '16 16,639 16,140 3.1 34,162 32,515 5.1

Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 2Q15 28,790 30,726 -6.3 52,439 58,260 -10.0

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

Houston-Galveston-Brazoria CMSA Feb '16 214.505 210.283 2.0 214.113 * 210.755 * 1.6

United States Feb '16 237.111 234.722 1.0 237.014 * 234.215 * 1.2

Hotel Performance (Houston MSA)

Occupancy (%) 2Q15 71.2 74.9 71.5 * 74.3 *

Average Room Rate ($) 2Q15 112.15 111.71 0.4 111.80 * 109.39 * 2.2

Revenue Per Available Room ($) 2Q15 79.84 83.65 -4.6 79.85 * 81.20 * -1.7

YEAR-TO-DATE TOTAL or

YTD AVERAGE*MONTHLY DATA



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)


Goods-Producing and Service-Providing EmploymentHouston MSA

Goods-Producing Jobs Service-Providing Jobs



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


Unemployment Rate - Houston, Texas and U.S.

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

February 2016 ©2016, Greater Houston Partnership Page 1

Looking Back — Economic data for ’15 continue to trickle in. Oil prices, the rig count

and drilling permits finished the year well below where they started. Home sales continued

at a brisk pace until the early fall, then began to trail off. Construction followed a similar

path. By October, the metro area managed to generate modest job growth. And the region

set an annual record for vehicle sales. Given the challenges the region faced all year, ’15

turned out better than many expected.

This issue of Glance focuses on how seven economic measures—employment, energy,

manufacturing, commercial real estate, home sales, construction and consumer prices—

fared in ’15. The details follow.

Tepid Job Growth — The Houston-The Woodlands-Sugar Land Metro Area1 created

23,200 jobs in ’15, a 0.8 percent increase, according to the Texas Workforce Commission.

That’s in line with the Partnership’s July forecast of 20,000 to 30,000 jobs by year’s end.

Job growth fell well below the pace of recent years: Houston added 491,500 the previous

five years. Given the flood of layoff announcements throughout the year, weaker job

growth was to be expected. The Partnership anticipates the metro area will create approx-

imately 21,900 jobs in ’16.2

Houston finished the year

with 3,015,800 payroll

jobs, a record for the re-

gion. That record won’t

hold, though. Payroll em-

ployment always plunges

in January: the region typ-

ically loses 45,000-60,000

jobs in the month, the

losses stemming from

layoffs of temporary work-

ers hired for the holiday

season and management

1 The Houston metro area includes Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller

Counties. 2 Details of the forecast can be found at www.houston.org/economy.

A publication of the Greater Houston Partnership Volume 25 Number 2 — February 2016

49.7

82.9

118.5

89.9

104.7

23.2 21.9

'10 '11 '12 '13 '14 '15 '16*

Metro Houston Job Growth (000s)

Source: Texas Workforce Commission * Partnership forecast



acting on decisions postponed until after the first of the year. This year’s January dip may

be deeper than normal due to ongoing layoffs in the energy industry.

Eight sectors reported losses in ’15—mining and logging (i.e., upstream energy); manu-

facturing; wholesale trade; transportation, warehousing and utilities; finance and insur-

ance; real estate; professional and technical services; and management of companies. Col-

lectively, these sectors cut 40,800 jobs. The decline in oil prices, sharp reductions in cash

flow, the cutback in drilling activity, and dozens of project cancellations forced the job

cuts.

Nine sectors reported growth—construction; retail trade; administrative support; educa-

tional services; health care; arts, entertainment and recreation; accommodations and food

services; and government. Collectively, they added 64,000 jobs. Ongoing population

gains, the need to catch up with the residential growth of recent years, and a lagged re-

sponse to the energy downturn contributed to job growth in these sectors.

In March, the Texas Workforce Commission will issue its annual benchmark revisions to

employment data for the state and its 25 metro areas. Jobs data will be adjusted for all of

’15 and the last nine months of ’14. The Partnership will provide a detailed analysis of last

year’s employment trends once the revised data become available.

Underreporting Unemployment — The Houston metro area finished the year with a 4.6

percent unemployment rate, slightly above the state’s 4.2 percent but below the nation’s

5.6 percent.3 As recently as March ’15, Houston’s unemployment rate stood at 4.0 percent,

the lowest point in the business cycle. During the Great Recession, Houston’s unemploy-

ment rate peaked at 8.8 percent. During the oil bust of the ’80s, unemployment hit 12.9

percent.

The current rate, how-

ever, might not reflect

Houston’s true unem-

ployment picture. The

region’s labor force has

lost more than 43,000

workers since it peaked

at 3,289,820 in Novem-

ber ’14. Some of the

lost workers may have

become discouraged

and stopped looking for

employment, others

3 The rates reported here are not seasonally adjusted.

2

3

4

5

6

7

8

9

10

11

12

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

Unemployment Rate*

Houston Texas U.S.

Source: Texas Workforce Commission * Not seasonally adjusted



may have retired, still others may have returned to school for additional training. If all the

lost individuals were still in the labor force and without work, Houston’s true unemploy-

ment rate would likely be above 5.5 percent.

Energy Continues to Struggle — The story of the energy industry in ’15 can be summed

up in four points:

West Texas Intermediate, the U.S. benchmark for light sweet crude, opened the year at

$52.72 and closed the year at $37.13. In the current cycle, WTI has fallen nearly 80

percent from its June ’14 peak of $107.95 per barrel.

The North American rig count traced a similar path, opening the year at 1,811 and

ending the year at 698. In the current slump, the North American drilling fleet has

fallen more than two-thirds from its September ’14 peak of 1,931 working rigs.

The industry drilled only 19,503 oil and gas wells in Texas last year, 10,000 fewer than

it drilled in ’14, the peak for the recent boom.

Energy industry consultant Wood Mackenzie estimates the oil price collapse has can-

celled or delayed more than $380 billion in upstream energy projects.

The near-term outlook for the industry isn’t much better. Barclays expects North Ameri-

can exploration budgets to fall another 27 percent this year. The U.S. Energy Information

Administration doesn’t expect crude to breach $40 per barrel until sometime next year.

0

20

40

60

80

100

120

Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16

$/B

arre

l, W

est

Texa

s In

term

edia

te


Spot Oil Price, Monthly Average



Output Continues to Decline — The Houston Purchasing Managers Index (PMI), a

short-term leading indicator for regional production, signaled economic contraction for

the region throughout ’15. After 64 consecutive months of readings above 50, the PMI fell

below the neutral point of 50 in January ’15, reaching its lowest point of the year in April

at 42.7. The PMI saw small increases in May, June and July, but began to trend downward

again in August. The index closed the year at 43.3 in December.

The PMI has a possible range from zero to 100. Readings above 50 indicate likely growth

in production over the next three to four months; readings below 50 suggest contraction.

When month-to-month changes in the index remain above or below the threshold of 50,

the readings indicate the pace of growth or contraction. For example, the change in the

PMI from 42.7 in April ’15 to 46.1 in May ’15 suggested that regional production would

continue to contract, but at a slower pace.

The PMI typically projects regional production three to four months down the line. When

compared to the Baker Hughes North American rig count, a proxy for upstream production

activity, changes in the Houston PMI led large swings in the rig count by one to four

months. In June ’08, the PMI peaked at 60.6. Three months later, the rig count peaked at

2,014. In February ’09, the PMI bottomed out at 39.6. Four months later, the rig count hit

its low of 895 rigs. Then in October ’14, the PMI hit a high of 54.3. One month later, the

rig count reached its high of 1,925.

20

30

40

50

60

70

80

600

800

1000

1200

1400

1600

1800

2000

2200

2400

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

PM

I

Rig

Co

un

t

Sources: Baker Hughes and the Institute for Supply Management-Houston

Houston Purchasing Managers Index and the North American Rig Count50 PMI = Neutral

N. Amer Active Rig Count PMI

Co

ntr

acti

on

Exp

ansi

on



The strong relationship between the index and rig count is understandable. Approximately

25 percent of the Houston PMI survey respondents work in companies operating in oil and

gas exploration, oil field services, and related durable goods manufacturing. To be clear,

the PMI does not cause the change in rig count. Rather, the PMI is a leading indicator of

the change in rig count as purchasing managers react to the change in the demand for their

goods and services.

The Houston PMI is derived from monthly surveys of local purchasing managers repre-

senting various industries such as manufacturing, health care, electronics, finance and en-

ergy. The index is based on eight components: sales/new orders, production, employment,

purchases, prices paid, lead times, purchased inventory and finished goods inventory.

Throughout ’15, survey respondents in energy, durable goods manufacturing, and whole-

sale trade reported weakness while construction and nondurable goods performed near

neutral. Health care was the only industry that showed significant strength.

Commercial Real Estate Mixed — Houston either absorbed five million square feet of

office space or threw a million back on the street in ’15. The discrepancy depends on how

one measures Houston’s office market. One school of thought holds that owner-occupied

and single-tenant buildings don’t compete with multi-tenant properties and shouldn’t be

included in the office inventory. The other school contends that capturing all office space

better correlates with changes in employment, that single-tenant buildings do compete

with multi-tenant buildings, and that the broader definition offers a more comprehensive

view of the market. Using the broad definition, Houston has more than 242 million square

feet of office space and recorded the positive absorption mentioned above. Using the nar-

row definition, Houston has more than 210 million square feet of space and recorded neg-

ative absorption last year. In either case, the office market ended Q4/15 with a vacancy

rate higher than it started, and if one factors in the approximately eight million square feet

of sublease space now on the market, the effective vacancy is in the mid- to upper-teens.

The rate is likely to creep up as energy firms continue to downsize and place unneeded

space on the sublease market. An-

other eight million square feet is

under construction, of which 60

percent is preleased, potentially

tossing three million more square

feet of vacant space on the market.

The effective vacancy rate will

likely breach 20 percent before it

peaks.

The office market will continue to

soften in ’16. Colliers reports

OFFICE MARKET VACANCY RATE, ALL CLASSES, %

Direct Space Only With Sublease

Source Q4/14 Q4/15 Q4/15

Transwestern 9.5 11.1 13.0

JLL 10.8 14.5 16.5

Colliers 11.1 13.8 15.4

CBRE 11.6 14.2 17.6

Source: Quarterly market reports of the firms



Class A leasing activity in Q4/15 was less than half that of Q4/14. CBRE reports some

landlords already offer six to 18 months free rent on new leases. And Transwestern notes

that even though job growth is projected for ’16 and ’17, the sectors adding jobs typically

do not drive office demand. The bright spot, JLL points out, is that after ’16 less than 2.0

million square feet is scheduled for delivery.

The industrial market faces fewer challenges. Houston absorbed 6.3 million square feet of

industrial space in ’15, according to CBRE, and ended the year with a 4.9 percent vacancy

rate, down slightly from 5.0 percent in Q4/14.

Just over 8.6 million square feet was under construction at year’s end. That figure repre-

sents just 1.6 percent of the current 494 million square feet of industrial inventory. Outside

the southeast market, the focal point of the petrochemical expansion, and the northwest,

the nexus of Houston’s logistics hub, no new starts were recorded in the second half of the

year.

Second Best Year on Record for Home Sales — Houston-area realtors sold 73,724 sin-

gle-family homes in ’15, down 2.4 percent from 75,535 sold the prior year, according to

the Houston Association of REALTORS®. After a record-breaking ’14, Houston recorded

its second-highest sales volume in ’15.

Houston home sales in the first three quarters of ’15 outpaced the first three quarters of

’14 by 0.6 percent. The highest one-month sales volume for ’15 occurred in July, with

7,895 homes sold, while the lowest one-month sales volume was in January, with 4,109

-800

200

1,200

2,200

3,200

4,200

5,200

6,200

7,200

8,200

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Houston-Area Single Family Home Sales

2013 2014 2015Source: Houston Assocation of REALTORS®



home sold. But single-family home sales began to slow in the fourth quarter of ’15, with

a 10 percent decrease from 18,183 in Q4/14 to 16,361 in Q4/15.

The slowdown in sales allowed for inventory to grow from 2.5 months, the lowest level

on record, to 3.2 months in December ’15. The national housing supply is at 5.1 months

of inventory.

Houston Housing Market Summary

2015 2014 % Change

Single-family home sales 73,724 75,535 -2.4%

Total property sales 88,764 91,439 -2.9%

Total dollar volume $23,559,111,514 $23,553,542,859 1.0%

Single-family average sales price $280,290 $270,182 3.7%

Single-family median sales price $212,000 $199,000 6.5%

* The number of months it will take to deplete current active inventory based on the prior 12 months of sales activ-ity. The market is considered evenly balanced between supply and demand when it has a six-month inventory.

Source: Houston Association of REALTORS®

In new home construction, MetroStudy reports a 9.7 percent decrease in starts, from

30,565 in ’14 to 27,590 in ’15. Houston housing starts for ’15 were the second-highest on

record after ’14. Despite the slowdown, Houston remained the top U.S. metro for housing

starts. Closings dropped 2.8 percent from 28,475 in ’14 to 27,670 in ’15. MetroStudy fore-

casts 25,000 starts in ’16 for the Houston area and a 10 percent decrease in closings from

’15 to ’16. Houston home builders entered ’15 with a strong backlog, but work has dwin-

dled entering ’16, particularly in homes priced at $300,000 and above.

Building Permits Slipped — City of Houston building permits totaled $8.2 billion in ’15,

down 5.2 percent from $8.7 billion in ’14, according to the city’s Department of Public

Works & Engineering Planning & Development Services. The annual permit value for ’15

was the second highest on record after ’14. Both commercial and residential sectors expe-

rienced declines in permit activity when compared to ’14. Nonresidential permits dropped

4.7 percent, from $5.6 billion in ’14 to $5.4 billion in ’15. Residential permits declined

6.0 percent from $3.0 billion to $2.8 billion.

Local Inflation Almost Nonexistent — From December ’14 to December ’15, consumer

prices in the Houston-Galveston-Brazoria metro area (Brazoria, Chambers, Fort Bend, Gal-

veston, Harris, Liberty, Montgomery and Waller Counties) increased 0.4 percent. Core in-

flation, as measured by the index for all items less food and energy, rose 2.7 percent over

the year.

In the 12 months ending December ’15, the energy index fell 23.4 percent as all compo-

nents registered declines. Motor fuels experienced the largest drop, falling 25.2 percent.



Electricity decreased 23.0 percent and natural gas 11.9 percent. All three components reg-

istered over-the-year declines in every month of ’15.

Food prices rose 1.5 percent during the 12 months. The cost of dining out increased 2.1

percent, while grocery prices increased 1.1 percent. The cost of shelter rose 6.1 percent,

the largest contributor to the rise in core inflation. Renters’ costs advanced 6.5 percent and

owners’ equivalent rent rose 5.9 percent.

Patrick Jankowski and Jenny Philip contributed to this issue of

Houston: The Economy at a Glance

-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



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.







Dec '15 Nov '15 Dec '14 Nov '15 Dec '14 Nov '15 Dec '14


Total Private 2,621.9 2,612.9 2,608.9 9.0 13.0 0.3 0.5

Goods Producing 561.4 561.7 583.0 -0.3 -21.6 -0.1 -3.7




Oil & Gas Extraction 54.3 54.2 55.6 0.1 -1.3 0.2 -2.3


Construction 211.7 212.7 208.8 -1.0 2.9 -0.5 1.4

Manufacturing 242.7 240.5 258.7 2.2 -16.0 0.9 -6.2

Durable Goods Manufacturing 158.6 157.8 177.5 0.8 -18.9 0.5 -10.6


Wholesale Trade 168.6 167.8 172.4 0.8 -3.8 0.5 -2.2

Retail Trade 315.8 311.4 308.7 4.4 7.1 1.4 2.3

Transportation, Warehousing and Utilities 136.5 133.4 139.0 3.1 -2.5 2.3 -1.8

Utilities 16.4 16.3 16.0 0.1 0.4 0.6 2.5

Air Transportation 20.6 20.5 20.5 0.1 0.1 0.5 0.5

Truck Transportation 25.5 25.7 25.5 -0.2 0.0 -0.8 0.0


Information 34.0 34.0 32.6 0.0 1.4 0.0 4.3


Finance & Insurance 93.0 93.5 94.6 -0.5 -1.6 -0.5 -1.7

Real Estate & Rental and Leasing 51.1 51.4 54.7 -0.3 -3.6 -0.6 -6.6

Professional & Business Services 470.8 471.5 470.4 -0.7 0.4 -0.1 0.1

Professional, Scientific & Technical Services 221.0 221.5 223.1 -0.5 -2.1 -0.2 -0.9

Legal Services 24.4 24.8 25.1 -0.4 -0.7 -1.6 -2.8




Admin & Support/Waste Mgt & Remediation 217.1 217.2 213.4 -0.1 3.7 0.0 1.7

Administrative & Support Services 204.8 205.1 203.6 -0.3 1.2 -0.1 0.6

Employment Services 81.2 81.3 80.5 -0.1 0.7 -0.1 0.9

Educational Services 56.6 56.8 54.2 -0.2 2.4 -0.4 4.4


Arts, Entertainment & Recreation 29.8 30.1 28.8 -0.3 1.0 -1.0 3.5


Other Services 102.8 103.7 104.3 -0.9 -1.5 -0.9 -1.4

Government 393.9 394.4 383.7 -0.5 10.2 -0.1 2.7


State Government 72.6 73.2 72.4 -0.6 0.2 -0.8 0.3

State Government Educational Services 39.7 40.3 39.5 -0.6 0.2 -1.5 0.5

Local Government 292.9 293.3 283.2 -0.4 9.7 -0.1 3.4

Local Government Educational Services 203.0 203.3 197.9 -0.3 5.1 -0.1 2.6








ENERGY

U.S. Active Rotary Rigs Jan '16 654 1,683 -61.1 654 * 1,683 * -61.1

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Dec '15 37.19 59.29 -37.3 48.66 * 93.17 * -47.8

Spot Natural Gas ($/MMBtu, Henry Hub) Dec '15 1.93 3.48 -44.5 2.62 * 4.37 * -40.0


Houston Purchasing Managers Index Dec '15 43.3 51.5 -15.9 46.5 * 56.5 * -17.7

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Dec '15 4,144,888 4,336,479 -4.4 55,195,646 54,165,819 1.9

CONSTRUCTION

Total Building Contracts ($, Houston MSA) Dec '15 1,077,581,000 1,410,482,000 -23.6 16,673,797,000 32,943,743,000 -49.4

Nonresidential Dec '15 467,133,000 666,611,000 -29.9 6,729,026,000 22,914,687,000 -70.6

Residential Dec '15 610,448,000 743,871,000 -17.9 9,944,771,000 10,029,056,000 -0.8

Building Permits ($, City of Houston) Dec '15 605,037,340 627,438,484 -3.6 8,223,462,052 8,672,538,020 -5.2

Nonresidential Dec '15 348,695,383 413,290,761 -15.6 5,373,796,749 5,639,409,938 -4.7

New Nonresidential Dec '15 138,401,264 235,770,612 -41.3 2,683,536,701 3,256,631,506 -17.6

Nonresidential Additions/Alterations/Conversions Dec '15 210,294,119 177,520,149 18.5 2,690,260,048 2,382,778,432 12.9

Residential Dec '15 256,341,957 214,147,723 19.7 2,849,665,303 3,033,128,082 -6.0

New Residential Dec '15 231,186,792 192,250,414 20.3 2,542,129,639 2,710,464,389 -6.2

Residential Additions/Alterations/Conversions Dec '15 25,155,165 21,897,309 14.9 307,535,664 322,663,693 -4.7


Property Sales Dec '15 6,988 7,753 -9.9 88,764 91,439 -2.9

Median Sales Price - SF Detached Dec '15 216,000 210,000 2.9 212,000 * 199,000 * 6.5

Active Listings Dec '15 30,661 25,821 18.7 374,486 * 340,361 * 10.0


Nonfarm Payroll Employment Dec '15 3,015,800 2,992,600 0.8 2,982,791 * 2,924,983 * 2.0

Goods Producing (Natural Resources/Mining/Const/Mfg) Dec '15 561,400 583,000 -3.7 565,908 0 568,750 * -0.5

Service Providing Dec '15 2,454,400 2,409,600 1.9 2,416,883 0 2,356,233 * 2.6


Houston-Sugar Land-Baytown MSA Dec '15 4.6 4.0 4.5 * 5.0 *

Texas Dec '15 4.2 4.1 4.4 * 5.1 *

U.S. Dec '15 4.8 5.4 5.3 * 6.2 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Nov '15 3,130,068 3,527,846 -11.3 41,529,685 42,725,795 -2.8

Air Passengers (Houston Airport System) Nov '15 4,652,141 4,269,157 9.0 50,264,313 48,555,394 3.5

Domestic Passengers Nov '15 3,774,637 3,548,577 6.4 40,552,059 39,612,886 2.4

International Passengers Nov '15 877,504 720,580 21.8 9,712,254 8,942,508 8.6

Landings and Takeoffs Nov '15 64,331 66,962 -3.9 730,237 749,509 -2.6

Air Freight (metric tons) Nov '15 31,374 36,488 -14.0 373,644 402,395 -7.1

Enplaned Nov '15 14,798 18,553 -20.2 191,275 211,970 -9.8

Deplaned Nov '15 16,576 17,936 -7.6 182,369 190,425 -4.2

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Dec '15 27,478 25,528 7.6 376,481 373,998 0.7

Cars Dec '15 9,793 10,008 -2.1 150,622 159,899 -5.8

Trucks, SUVs and Commercials Dec '15 17,685 15,520 13.9 225,859 214,099 5.5



Houston-Galveston-Brazoria CMSA Dec '15 212.936 212.169 0.4 213.097 * 213.366 * -0.1

United States Dec '15 236.525 234.812 0.7 237.017 * 236.736 * 0.1


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






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January 2016 ©2016, Greater Houston Partnership Page 1

An Inauspicious Start — ’15 proved to be difficult for the oil and gas industry. Over the

course of the year, drilling permits fell 41.6 percent, the North American rig count fell

61.4 percent, and the price of crude fell 29.6 percent. That’s on top of the declines the

industry already suffered in ’14.

The new year hasn’t started any better. West Texas Intermediate lost $4.93/bbl the first

week of trading, a drop of 13.0 percent. Crude prices will likely fall further before hitting

bottom. And the North American fleet lost 34 drilling rigs the first week of January. At

664, the rig count stands at a level not seen since August of ’99.

The causes of the downturn have

been widely reported—concerns

over slower growth in China, all-

out production by OPEC, stub-

bornly resilient U.S. production,

and record high crude invento-

ries, both in the U.S. and abroad.

Even the ongoing unrest in Libya,

Yemen, Iraq and Syria hasn’t impacted the market. Perhaps the greatest indicator of how

abnormal the current situation is—in early January, Saudi Arabia broke diplomatic ties

with Iran and crude prices fell. Adjusted for inflation, crude is trading at the same level it

traded in late ’02.

’16 will be even tougher for the industry. The Texas Railroad Commission issued only

727 drilling permits in December, the fewest for the month in records dating back to ’03.

The commission typically issues 1,400 or more in the month. Iranian crude will likely hit

the global market this spring, adding to an already glutted market. And the recent drop in

prices has further eroded cash flow, impacting the industry’s ability to drill wells, service

debt and meet payroll. The long-expected shakeout in the energy industry may finally

happen this year.

The impact outside energy has been uneven so far. Office leasing is down, but retail con-

struction is up. City of Houston sales tax collections have slipped, but vehicle sales set a

new record. Home closings have fallen. Airport and port traffic continues to grow. And

employers continue to add jobs, just enough to offset losses in energy. What follows is a

summary of how these sectors are responding to the downturn in oil prices.

Indicator Peak Recent

When Value When Value

West Texas Intermediate1 Jun ’14 $107.95 Jan ’16 $32.49

North American Rig Count2 Sep ’14 1,931 Jan ’16 664

Drilling Permits Issued3 Aug ’14 7,746 Nov ’15 3,276

Monthly TX Crude Output4 Mar ’15 91.6 Sep ’15 77.3

1 Spot price, $ per barrel; 2 weekly average; 3 Onshore U.S. 4 Million barrels

Sources: Energy Information Administration, Bloomberg, Baker Hughes, RigData

A publication of the Greater Houston Partnership Volume 25 Number 1 — January 2016



Office: JLL reports the office market finished the year with 89,000 square feet of negative

absorption, the first net loss since ’10. The overall vacancy rate rose from 12.8 percent in

Q4/14 to 16.5 percent in Q4/15. Average asking rents slipped from $30.62 per square foot

to $29.80 over the same period. Only 6.3 million square feet of office space is under con-

struction, most for delivery in ’16. No new office buildings broke ground in Q4/15. Less

than 1.6 million square feet of space will be delivered in ’17 and ’18, the smallest amount

since the end of the Great Recession.

Retail: Wulfe & Co. projects 4.5 million square feet of new retail

space will be completed and opened in Houston this year, a 33.4

percent increase over last year. Kroger, H-E-B, Walmart, Whole

Foods and Aldi will dominate new construction, with 28 new

stores opening among them. On-going population growth, the in-

fluence of a strong national economy, the need to catch up with

the recent single- and multi-family housing boom, and the evolu-

tion of the Grand Parkway is driving retail demand.

Sales Tax Collections: City of Houston sales tax collections for

September, October and November slipped $6.1 million compared

to the same three months in ’14. The decline reflects a drop in

general business activity. While the magnitude is not large, the di-

rection is a concern. Tax data for December, typically the strongest month for retail sales,

won’t be available until February.

Vehicle Purchases: TexAuto Facts reports that Houston-area auto dealers sold 376,481

vehicles in ’15, up 0.7 percent from ’14 and a record for the industry. The average retail

sales price per vehicle, $36,112, reflects a record for the month of December. TexAuto

Facts expects sales to slip only slightly in ’16.

Home Sales: The Houston Association of Realtors reports home sales fell 10.1 percent to

5,623 units in November ’15, compared to 6,255 units in November the year before. Sales

remain strong in the middle segment of the market, those homes priced between $150,000

and $250,000, but weak in the high-end market, those homes priced above $250,000.

Exports: Exports via the Houston-Galveston Customs District totaled $101.9 billion in

the first 11 months of ’15, down 15.2 percent from $120.2 billion in the same period in

’14. Though down in value, shipments are up in weight, a reflection of low commodity

prices. District exports totaled 55.2 million metric tons the first 11 months of the year, up

from 48.7 million metric tons over the same period in ’14.

Airport Traffic: The Houston Airport System handled more than 50 million passengers

January through November in ’15, up 3.5 percent from the same period in ’14. With De-

cember being the busiest travel month of the year, HAS will set a record for passenger

Houston-Area Retail Construction

Year Million Sq Ft

’16 4.5

’15 3.4

’14 2.4

’13 2.0

’12 1.9

’11 1.2

’10 0.9

’09 3.1

’08 6.3

’07 3.9

Source: Wulfe & Co.



traffic when final numbers for ’15 are released. However, cargo traffic slipped 7.1 percent

the first 11 months of the year and will likely finish down for the year.

Employment: The Texas Workforce Commission reports that the Houston metro area

added 4,800 jobs in November, which was the third weakest November in the past 25

years. The region typically adds 10,000 to 12,000 jobs in the month.

Since December ’14, the goods producing sectors have lost 20,000 jobs while the service-

providing sectors added 33,800 jobs. Employment in mining and logging (i.e., energy)

declined by 7,600 and manufacturing by 16,700. Construction is the only goods-producing

sector to have added jobs during this period, with a gain of 4,300 workers. The strongest

job gains in the service-providing sectors occurred in accommodation and food services

(+17,200), health care and social assistance (+13,100), and government (+10,400).

How important is energy to Houston? — Three measures of economic activity (gross

domestic product, payroll employment, and aggregate income) help answer that question.

Gross Domestic Product: The U.S. Bureau of Economic Analysis reports Houston’s gross

domestic product totaled $525.4 billion in ’14, of which mining (i.e., oil and gas explora-

tion and oil field services) accounted for $101.1 billion, or 19.2 percent. This doesn’t in-

clude the sizable contributions from other sectors that most Houstonians consider part of

the energy industry.

Petrochemicals and refining contributed $59.4 billion, or 11.5 percent and pipelines $3.9

billion or 0.8 percent in ’13. This is the only year for which BEA provides data for these

two sectors. Assuming they contribute comparable amounts to the region’s economy to-

day, exploration, transportation and chemicals/refining account for more than 30 percent

of Houston’s economic output. Assume even modest contributions from equipment man-

ufacturing, energy-related

wholesale, engineering and

related services and the en-

ergy industry accounts for

at least one-third of the re-

gion’s GDP.

Employment: The Texas

Workforce Commission re-

ports oil and gas extraction,

well drilling, and field ser-

vices employed 107,400

Houstonians in December

’14, or 3.7 percent of all

Houston-Area Energy Employment as of December ’141

Sector Employment Share of Total

Employment (%)

Oil and gas extraction, oilfield services 107,400 3.7%

Chemical manufacturing 37,000 1.3

Petroleum products manufacturing 9,500 0.3

Pipeline transportation 10,400 0.4

Oilfield equipment manufacturing 43,500 1.5

Misc. parts and components manufacturing 41,500 1.4

Engineering (energy-related) 39,000 1.3

TOTAL 288,300 9.9

1December ’14 marked the peak for energy employment in Houston. Source: Texas Workforce Commission, Quarterly Census of Employment and Wages



payroll jobs in the region. 1 The chemical sector employed just over 37,000, refining an-

other 9,500, and pipelines 10,400, or 2.0 percent of total employment.

Oil field equipment manufacturing employed another 43,500, or 1.5 percent of the total.

Include pipe, valve and pump manufacturing, plus allow for firms supplying parts and

components2 to energy manufacturing and the number of jobs tied to the sector approaches

85,000, or 2.9 percent of the total.

Engineering firms employed 52,300 in the region. The Bureau of Labor Statistics esti-

mates that one-fourth of all Houston engineers hold degrees outside of energy (i.e., aero-

space, biomedical and civil), which suggests that perhaps three-fourths of jobs at local

engineering firms, about 39,000, are tied to energy.

Combine the above sectors and the energy industry accounted for approximately 290,000

jobs or one in ten in the region at the end of ’14. Admittedly, this doesn’t include employ-

ment at accounting, finance, information technology, law, and real estate firms that serve

the sector as well. These jobs, perhaps numbering in the tens of thousands, are directly

impacted when oil prices fall.

Income: The energy industry tends to offer gener-

ous salaries and benefits packages to its employees.

In ’14, average compensation in the industry ex-

ceeded $170,000. The average for all occupations

in Houston was $62,700. That helps explain why

the industry paid out $18.4 billion in wages and sal-

aries in ’14, 10.1 percent of all earned income in

’14 though the sector accounted for only 3.9 per-

cent of all payroll jobs. Workers in equipment manufacturing, chemicals, refining and

engineering earned another $20.9 billion. As a result, the broadly defined energy sector

paid out $39.3 billion in salary and wages in ’14, or 21.5 percent of the total.

Houston’s consumer-oriented industries, (e.g., retail, restaurants, housing, arts, entertain-

ment, etc.) depend on the energy workers spending their salaries in the community. When

the price of oil falls and those workers lose their jobs, they eventually reduce their spend-

ing and the impact is felt in the broader community.

1 This part of the analysis focuses on energy’s contributions in December ’14 which marked the peak for energy employment in

Houston. The data come from the Quarterly Census of Employment & Wages (QCEW) rather than the more widely reported Cur-

rent Employment Statistics (CES) because the QCEW provides a greater level of detail than the CES.

2 This includes sectors such as the manufacture of turbines and compressors; the heat treating, coating and electroplating of met-

als; the production of fracking chemicals and drilling muds; iron and steel forging; the manufacture of instruments, controls, and

switches, and so forth.

In summary, energy accounts for about one-third of the region’s GDP, 10 percent of the region’s employment, and over one-fifth of the region’s wage and salary income.



“I wasn’t born in Texas, but I got here as fast as I could”—Texas led the nation in

population growth from ’10 to ’14, adding 1.8 million residents, according to the U.S.

Census Bureau. The 2014 American Community Survey estimates 60.1 percent of Texas’

27.0 million residents in ’14 were native-born (i.e., born in the state), 22.1 percent were

born in another U.S. state, and 17.8 percent were foreign-born. The proportion of the state’s

population that is native-born, from other U.S. states, and internationally was unchanged

from ’10.

While Texans are notorious for their state pride, only three out of every five of the state’s

residents are native-born, slightly above the national average of 57.6 percent. States with

the largest percent of native-born residents are Louisiana (77.7 percent), Michigan (76.7

percent), and Ohio

(75.1 percent).

States with the

smallest percent of

native-born resi-

dents are Nevada

(25.8 percent), Flor-

ida (36.1 percent),

and Washington,

D.C. (36.2 percent).

Twenty-two percent

of Texas residents

were born in another

U.S. state. Ten states

accounted for half of

Texas’ population

born in another

state, with Califor-

nia, Louisiana, and Oklahoma leading. Texas was home to 4.8 million foreign-born resi-

dents in ’14 and ranked second among the other U.S. states, behind California’s 10.9 mil-

lion foreign-born residents and ahead of New York’s 4.7 million foreign-born residents.

Texas ranked seventh in terms of its percent of foreign-born residents.

Texas Population by Location of Birth

2010 2014

Population Total 25,257,1141 26,956,958

Native-born 15,279,985 60.5% 16,206,575 60.1%

Foreign-born 4,369,685 17.3 4,804,384 17.8

Other U.S. state 5,607,444 22.2 5,945,999 22.1

Top 10 states of birth of Texas residents

California 646,276 2.6% 701,998 2.6%

Louisiana 505,705 2.0 509,168 1.9

Oklahoma 353,192 1.4 341,272 1.3

Illinois 309,764 1.2 331,954 1.2

New York 269,564 1.1 298,604 1.1

Ohio 215,760 0.9 217,425 0.8

Michigan 197,364 0.8 210,969 0.8

Florida 178,430 0.7 207,283 0.8

Arkansas 172,939 0.7 180,090 0.7

Missouri 165,372 0.7 170,085 0.6

1The 2010 population estimates cited in the table is from the 2010 American Community Survey. The 2010 Decennial Census estimated Texas population at 25,145,561. Source: U.S. Census Bureau, American Community Survey



SNAPSHOT—HOUSTON’S KEY ECONOMIC INDICATORS

Building Permits — City of Houston building permits totaled $7.6 billion for the first 11

months of ’15, down 5.3 percent from $8.0 billion in the same period last year, according

to the latest data released by the City’s Department of Public Works & Engineering Plan-

ning & Development Services. Both the commercial and residential sectors experienced

declines in permit activity. Non-residential permits dropped 3.8 percent, from $5.2 billion

November ’14 YTD to $5.0 billion November ’15 YTD. During the same period, residen-

tial permits declined 8.0 percent from $2.8 billion to $2.6 billion.


Index for All Urban Consumers (CPI-U) rose 0.5 percent nationwide from November ’14

to November ’15, according to data released recently by the U.S. Bureau of Labor Statis-

tics. The annual change in the U.S. CPI-U has tracked below one percent for the past 12

months. Over this same period, core inflation (all items less the volatile food and energy

categories) recorded annual increases between 1.6 percent and 2.0 percent

Home Sales — Houston-area realtors sold 4,595 single-family homes in November, down

10.5 percent from the 5,135 single-family homes sold in November the year before, ac-

cording to data released today by the Houston Association of REALTORS®. At $262,064,

the single-family home average price saw its first decline since February ’12. Total prop-

erty sales dropped 10.1 percent from 6,255 units in November ’14 to 5,623 units in No-

vember ’15. Year to date, Houston-area realtors closed on 81,801 properties, down 2.3

percent from last year’s YTD total of 83,687. Year-to-date, the dollar volume of sales

totaled $21.9 billion, up 2.6 percent from the $21.4 billion over the same period in ’14.


term leading indicator for regional production, registered 43.3 in November, down from

44.9 in November according to the latest report from the Institute for Supply Management-

Houston (ISM-Houston). With the December reading, the PMI signaled contraction every

month in ’15.


Contributed to this issue of Houston: The Economy at a Glance







Stay Up to Date!

















Nov '15 Oct '15 Nov '14 Oct '15 Nov '14 Oct '15 Nov '14


Total Private 2,612.3 2,609.7 2,598.8 2.6 13.5 0.1 0.5

Goods Producing 563.0 565.4 579.9 -2.4 -16.9 -0.4 -2.9





Support Activities for Mining 53.0 52.7 55.3 0.3 -2.3 0.6 -4.2

Construction 213.1 214.5 209.1 -1.4 4.0 -0.7 1.9

Manufacturing 242.0 242.5 257.4 -0.5 -15.4 -0.2 -6.0



Wholesale Trade 168.2 168.0 171.4 0.2 -3.2 0.1 -1.9

Retail Trade 312.8 306.5 303.7 6.3 9.1 2.1 3.0


Utilities 16.4 16.2 15.9 0.2 0.5 1.2 3.1




Information 33.8 34.1 32.7 -0.3 1.1 -0.9 3.4


Finance & Insurance 93.3 92.8 94.1 0.5 -0.8 0.5 -0.9


Professional & Business Services 469.5 473.1 471.3 -3.6 -1.8 -0.8 -0.4


Legal Services 25.4 25.1 24.7 0.3 0.7 1.2 2.8




Admin & Support/Waste Mgt & Remediation 215.0 218.7 214.5 -3.7 0.5 -1.7 0.2




Health Care & Social Assistance 318.1 318.2 305.1 -0.1 13.0 0.0 4.3



Other Services 103.6 104.8 104.9 -1.2 -1.3 -1.1 -1.2

Government 394.1 391.9 383.9 2.2 10.2 0.6 2.7













ENERGY

U.S. Active Rotary Rigs Dec '15 714 1,882 -62.1 972 * 1,862 * -47.8

Spot Crude Oil Price ($/bbl, West Texas Intermediate) Dec '15 37.19 59.29 -37.3 48.66 * 93.17 * -47.8

Spot Natural Gas ($/MMBtu, Henry Hub) Dec '15 1.93 3.48 -44.5 2.62 * 4.37 * -40.0


Houston Purchasing Managers Index Dec '15 43.3 51.5 -15.9 46.5 * 56.5 * -17.7

Nonresidential Electric Current Sales (Mwh, CNP Service Area) Nov '15 4,248,023 4,639,848 -8.4 51,050,758 49,829,340 2.5

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) Nov '15 823,882,363 557,555,813 47.8 7,618,424,712 8,045,099,536 -5.3

Nonresidential Nov '15 593,177,344 339,118,105 74.9 5,025,101,366 5,226,119,177 -3.8

New Nonresidential Nov '15 210,579,736 222,121,104 -5.2 2,545,135,437 3,020,860,894 -15.7

Nonresidential Additions/Alterations/Conversions Nov '15 382,597,608 116,997,001 227.0 2,479,965,929 2,205,258,283 12.5

Residential Nov '15 230,705,019 218,437,708 5.6 2,593,323,346 2,818,980,359 -8.0

New Residential Nov '15 194,389,432 203,537,825 -4.5 2,310,942,847 2,518,213,975 -8.2

Residential Additions/Alterations/Conversions Nov '15 36,315,587 14,899,883 143.7 282,380,499 300,766,384 -6.1


Property Sales Nov '15 5,623 6,255 -10.1 81,801 83,687 -2.3

Median Sales Price - SF Detached Nov '15 200,000 195,750 2.2 210,118 * 196,322 * 7.0

Active Listings Nov '15 33,272 27,374 21.5 31,257 * 28,595 * 9.3


Nonfarm Payroll Employment Nov '15 3,006,400 2,982,700 0.8 2,979,709 * 2,918,837 * 2.1

Goods Producing (Natural Resources/Mining/Const/Mfg) Nov '15 563,000 579,900 -2.9 566,436 0 567,455 * -0.2

Service Providing Nov '15 2,443,400 2,402,800 1.7 2,413,273 0 2,351,382 * 2.6


Houston-Sugar Land-Baytown MSA Nov '15 4.9 4.3 4.5 * 5.1 *

Texas Nov '15 4.5 4.5 4.4 * 5.2 *

U.S. Nov '15 4.8 5.5 5.3 * 6.2 *

TRANSPORTATION

Port of Houston Authority Shipments (Short Tons) Nov '15 3,130,068 3,527,846 -11.3 41,529,685 42,725,795 -2.8

Air Passengers (Houston Airport System) Nov '15 4,652,141 4,269,157 9.0 50,264,313 48,555,394 3.5

Domestic Passengers Nov '15 3,774,637 3,548,577 6.4 40,552,059 39,612,886 2.4

International Passengers Nov '15 877,504 720,580 21.8 9,712,254 8,942,508 8.6

Landings and Takeoffs Nov '15 64,331 66,962 -3.9 730,237 749,509 -2.6

Air Freight (metric tons) Nov '15 31,374 36,488 -14.0 373,644 402,395 -7.1

Enplaned Nov '15 14,798 18,553 -20.2 191,275 211,970 -9.8

Deplaned Nov '15 16,576 17,936 -7.6 182,369 190,425 -4.2

CONSUMERS

New Car and Truck Sales (Units, Houston MSA) Dec '15 27,478 25,528 7.6 376,481 373,998 0.7

Cars Dec '15 9,793 10,008 -2.1 150,622 159,899 -5.8

Trucks, SUVs and Commercials Dec '15 17,685 15,520 13.9 225,859 214,099 5.5



Houston-Galveston-Brazoria CMSA Nov '15 214.569 214.791 -0.1 213.048 * 210.700 * 1.1

United States Nov '15 237.336 236.151 0.5 237.062 * 236.911 * 0.1


Occupancy (%) 2Q15 71.2 74.9 71.5 * 74.3 *













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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://www.houston.org/

http://events.houston.org/?id=247&eid=787&myid=1&Mode=ViewDetails




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

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

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.










Stay Up to Date!

















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


Nondurable Goods Manufacturing 80.8 81.0 80.4 -0.2 0.4 -0.2 0.5

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



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



Real Estate & Rental and Leasing 52.2 51.4 55.8 0.8 -3.6 1.6 -6.5



Legal Services 24.3 24.4 24.6 -0.1 -0.3 -0.4 -1.2


Architectural, Engineering & Related Services 73.4 72.5 76.2 0.9 -2.8 1.2 -3.7

Computer Systems Design & Related Services 33.0 32.5 32.7 0.5 0.3 1.5 0.9



Employment Services 79.3 78.9 81.9 0.4 -2.6 0.5 -3.2





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 *













-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

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3,100

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

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2,500

420

460

500

540

580

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'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

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Job

s (0

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3

4

5

6

7

8

9

10

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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

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0

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60

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100

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'05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Nat

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, $ /

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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


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


Nondurable Goods Manufacturing 80.9 81.4 80.1 -0.5 0.8 -0.6 1.0

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


Truck Transportation 26.1 26.0 25.5 0.1 0.6 0.4 2.4


Information 34.5 34.5 32.4 0.0 2.1 0.0 6.5





Professional, Scientific & Technical Services 219.5 222.3 218.1 -2.8 1.4 -1.3 0.6

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







Accommodation & Food Services 273.7 277.9 256.2 -4.2 17.5 -1.5 6.8

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

Federal Government 27.7 27.8 27.7 -0.1 0.0 -0.4 0.0












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

Source: 2014 American Community Survey



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

Service Providing 2,420.6 2,428.9 2,350.4 -8.3 70.2 -0.3 3.0





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


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






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

Admin & Support/Waste Mgt & Remediation 222.9 222.2 217.6 0.7 5.3 0.3 2.4

Administrative & Support Services 211.8 211.2 206.9 0.6 4.9 0.3 2.4






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

Federal Government 27.8 28.1 27.6 -0.3 0.2 -1.1 0.7












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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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.












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


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

Transportation, Warehousing and Utilities 135.3 134.5 133.6 0.8 1.7 0.6 1.3

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

Finance & Insurance 94.1 93.9 93.7 0.2 0.4 0.2 0.4


Professional & Business Services 477.7 471.2 466.8 6.5 10.9 1.4 2.3

Professional, Scientific & Technical Services 224.6 223.1 217.2 1.5 7.4 0.7 3.4

Legal Services 25.1 25.1 24.1 0.0 1.0 0.0 4.1




Admin & Support/Waste Mgt & Remediation 219.7 215.0 215.0 4.7 4.7 2.2 2.2

Administrative & Support Services 207.8 203.2 204.1 4.6 3.7 2.3 1.8






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

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March 2015 ©2015, Greater Houston Partnership Page 1

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.









STAY UP TO DATE!



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 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.







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



Mining and Logging 115.5 113.4 107.6 2.1 7.9 1.9 7.3


Support Activities for Mining 56.1 55.3 51.7 0.8 4.4 1.4 8.5

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

Durable Goods Manufacturing 177.5 176.6 171.9 0.9 5.6 0.5 3.3


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

s)


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

2

4

6

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


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

















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

Finance & Insurance 92.0 92.9 89.8 -0.9 2.2 -1.0 2.4

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

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

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

YEAR-TO-DATE TOTAL orYTD AVERAGE*MONTHLY DATA



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

Source: 2013 American Community Survey

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


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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Shale Drilling Unprofitable

Shale Drilling Profitable


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







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


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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

Accounting, Tax Preparation, Bookkeeping 20.3 20.4 20.0 -0.1 0.3 -0.5 1.5

Architectural, Engineering & Related Services 79.4 78.6 70.1 0.8 9.3 1.0 13.3


Admin & Support/Waste Mgt & Remediation 202.5 200.1 203.4 2.4 -0.9 1.2 -0.4

Administrative & Support Services 191.4 189.1 193.7 2.3 -2.3 1.2 -1.2

Employment Services 80.2 78.2 76.1 2.0 4.1 2.6 5.4




Accommodation & Food Services 255.0 257.7 246.2 -2.7 8.8 -1.0 3.6

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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September 2014 ©2014, Greater Houston Partnership Page 1

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



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




Admin & Support/Waste Mgt & Remediation 201.2 201.1 201.9 0.1 -0.7 0.0 -0.3







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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June 2014 ©2014, Greater Houston Partnership Page 1

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














Apr '14 Mar '14 Apr '13 Mar '14 Apr '13 Mar '14 Apr '13


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






Legal Services 23.9 23.8 23.9 0.1 0.0 0.4 0.0

Accounting, Tax Preparation, Bookkeeping 22.6 23.0 21.9 -0.4 0.7 -1.7 3.2










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

Residential Additions/Alterations/Conversions Apr '14 47,421,452 19,940,455 137.8 105,806,256 69,950,135 51.3


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


Houston-Galveston-Brazoria CMSA Apr '14 213.3 207.5 2.8 212.100 * 206.000 * 3.0

United States Apr '14 237.1 232.5 2.0 235.500 * 231.900 * 1.6


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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Documents

Houston’s Still Setting Records...JLL, and Transwestern track the market.3 Any positive absorption this year will likely come from preleased deliveries, not new leas-ing activity