Better Times Ahead? — The worst may be over for the energy industry. The price of crude has more than doubled from its February trough. The North American drilling fleet has added more than 150 rigs over the past five months. Announcements of layoffs in the oil patch are less frequent. And bellwether companies, like Halliburton and Schlumberger, reported profits―albeit small ones―in the third quarter.
But other sectors of Houston’s economy continue to struggle. Construction has tapered off. Retail sales have slipped. Vehicle purchases are at their lowest level in five years. Sales tax collections trail last year’s pace. Fewer passengers are flying out of Bush Intercontinental Airport. And million-dollar homes go unsold in The Woodlands.
Continue reading: http://www.houston.org/pdf/research/quickview/Economy_at_a_Glance.pdf
Age: The Houston-The Woodlands-Sugar Land metro area has one of the youngest populations among its peers. The median age in Houston is 34.1 years. That means that half of all residents are younger and half are older than 34.1 years. The median age for the nation as a whole is 37.8 years. Houston’s young population translates into a large supply of entry-level and earlycareer workers to meet local hiring needs, a substantial base of consumers entering their household formation and wealth-acquisition years, and a larger population more open to social change.
Age, Part II: Senior citizens represent a smaller share of Houston’s population. Only one in 10 Houston residents is over the age of 65 compared to one in seven in San Francisco, New York and Boston, and one in five in Tampa. Seniors are less likely to be in the workforce, thus less likely to contribute to the region’s economic growth. They also tend to have lower incomes, make fewer purchases, pay lower taxes, and place greater demands on infrastructure, social services and health care.
Educational Attainment: Though Houston has made progress in recent years, the region’s educational attainment lags behind that of its peers. When corporations consider a city for a relocation or major capital investment, a well-educated workforce is as important as a low cost of doing business and well-developed infrastructure. The Texas Workforce Commission recently forecast Houston-area employment will add 700,000 jobs between ’14 and ’24, with roughly one-third of the newly created jobs requiring a high-school diploma and slightly more than one-third requiring education beyond high school. However, the lack of a welleducated workforce could result in occupational shortages and inhibit the region’s growth.
Race: Houston’s racial profile is the most diverse of the major metros. While San Francisco has a large Asian community, few blacks live in the metro area. While Miami has a large Hispanic population, the metro has few Asians. In Minneapolis, whites still account for more than three-fourths of all residents. Houston’s ethnic diversity has long been a strength for the region, providing cultural, business and civic opportunities not available in less diverse metros.
Employment Outlook Brightens — The Houston metro area added 14,500 jobs in September, according to the Texas Workforce Commission (TWC). While the reported job growth is a bit above historic patterns, it’s not substantially higher. Over the past 25 years, September job gains have ranged from 5,000 to 18,000, averaging 10,000. The average of the past five years is 13,100. In the 12 months ending September ’16, the region has created 20,100 jobs. The data suggest that the low point of the current downturn occurred May ’16, when the region’s 12-month gain was just 3,200 jobs. Not once in the recent downturn has the 12-month change been negative.
The bulk of the September growth (18,800 jobs) occurred in local public education, a subsector of local government. Over the past 10 years, local education has added an average of 16,500 jobs in the month. Given Houston’s recent population growth and the current stage of the business cycle—public education always lags every other sector by a year or two— September’s robust job growth is not surprising.
Houston benefited from the 1,600 jobs added in health care in September. That sector continues to generate employment opportunities. As long as people continue to move here, have babies here, and grow old here, that sector should continue to add jobs.
Construction also added 1,600 jobs in September, but growth in the sector will taper off in the coming months as the office, multi-family and chemical plant construction booms wind down.
The loss of only 300 jobs in manufacturing, a sector that cut 2,000 to 3,000 jobs a month in ’15 and early ’16, suggests the worst may be over for manufacturing.
Job losses in wholesale, retail trade, finance, insurance, real estate, and other services partly offset gains in the other sectors.
Retail always loses jobs in September before adding them back in October, November and December. The weakness in wholesale is symptomatic of the weakness in the energy sector and energy-related manufacturing.
The drop in finance employment is part of ongoing restructuring as the industry tries to remain profitable in a low-interest environment. The losses in accommodation and food services are no surprise. Like retail, the sector always loses jobs in September before adding them back over the remainder of the year.