A publication of the Greater Houston Partnership Volume 23, Number 3 March 2014

Transcription

1 A publication of the Greater Houston Partnership Volume 23, Number 3 March 2014 Partnership Nails Jobs Forecast The Houston-Sugar Land-Baytown Metropolitan Statistical Area created 76,200 jobs in 13, a 2.8 percent increase, according to the benchmark revisions 1 recently released by the Texas Workforce Commission (TWC). In December 12, the Partnership forecast the region would add 76,000 jobs by the end of 13. The Partnership s forecast was off by a mere 200 jobs, essentially a rounding error for a market that now counts more than 2.8 million payroll jobs. In 14, the Partnership forecasts the region will post a net gain of 69,800 jobs with growth occurring in every sector. For GHP s 14 forecast, click here. GHP s forecast for 13 was off by 200 jobs, essentially a rounding error for a market with more than 2.8 million jobs. contractors (e.g., plumbers, welders, electricians), non-durable manufacturing (e.g., chemicals, plastics, refined products, consumer perishables) and other services (e.g., repair services, personal services, nonprofits). TWC also revised annual employment data for Houston going back to the 90s. The revisions show: The region has created more than 364,000 jobs since the bottom of the recession. 12 was Houston s best year for job creation in more than two decades. And growth slowed substantially in 13. Three sectors accounted for half of all jobs added last year professional and business services; trade, transportation, and utilities; and leisure and hospitality. Only the finance and insurance sectors reported losses. The revisions also showed that four sectors fared better than first thought dining establishments, specialty trade ANNUAL JOB GROWTH METRO HOUSTON Year Jobs* Year Jobs* '91-10,400 '03-11,300 '92 17,700 '04 37,600 '93 43,400 '05 89,200 '94 52,900 '06 106,000 '95 51,800 '07 89,100 '96 52,400 '08 19,900 '97 105,200 '09-108,800 '98 90,800 '10 47,300 '99 17,400 '11 80,500 '00 59,000 '12 115,400 '01 3,600 '13 76,200 '02-3,100 '14** 69,800 *December to December * *GHP forecast Source: Texas Workforce Commission 1 Throughout the year, the TWC estimates job growth or losses based on a survey of area employers. The agency revises its estimates each spring based on data available from unemployment insurance accounts. These benchmark revisions cover employment data for the previous 21 months but often extend well beyond that. March , Greater Houston Partnership Page 1

2 The slowing does not portend a downturn. Rather, it suggests that growth is finally returning to normal. More First Place Finishes Houston led the state in job growth in 13, with Dallas-Fort Worth-Arlington (67,900 jobs) ranking second and Austin-Round Rock-San Marcos (34,800 jobs) ranking third. Midland led the state in growth rate (5.4 percent), followed by College Station-Bryan (4.3 percent) and Austin-Round Rock-San Marcos (4.1 percent). Houston, with a 2.8 percent rate, tied for fifth with Tyler and San Angelo. NET CHANGE IN NONFARM PAYROLL EMPLOYMENT December 12 December 13, Texas Metro Areas Metro Jobs % Metro Jobs % Houston 76, Longview 1, Dallas-Fort Worth-Arlington 67, Odessa 1, Austin-Round Rock-San Marcos 34, El Paso 1, San Antonio-New Braunfels 18, Abilene 1, Midland 4, San Angelo 1, College Station-Bryan 4, Victoria 1, Lubbock 4, Waco 1, McAllen-Edinburg-Mission 3, Amarillo Corpus Christi 3, Sherman-Denison Tyler 2, Wichita Falls Brownsville-Harlingen 2, Beaumont-Port Arthur Killeen-Temple-Fort Hood 2, Texarkana -1, Laredo 2, Source: Texas Workforce Commission TWC released revised employment data for the state as a whole and for all metros. Between 10 and 13, Texas job growth proved marginally weaker than originally thought. The commission revised job creation downward in two of the past four years, removing 33,000 jobs from the four-year total. The state had 11.4 million nonfarm payroll jobs at the end of 13, an increase of 1.1 million (10.6 percent) since December 09. Dallas-Fort Worth (DFW) didn t fare as well as Houston in the revisions. TWC reduced DFW employment in 12 by 20,500 jobs. The revision shifted the rankings for metro job growth. Houston can again boast it has led the state in job growth for three consecutive years. JOB CREATION* TEXAS EIGHT MOST POPULOUS METRO AREAS Year Texas Houston DFW Austin El Paso San Antonio McAllen- Edinburg Corpus Christi Tem- ple- Killeen '10 216,200 47,300 52,800 24,100 11,800 4,600 4,400-1,000 2,100 '11 237,600 80,500 71,700 26,100 17,800 1,200 4,100 4, '12 366, ,400 89,000 38,500 28,300 6,300 5,900 5,600 2,400 '13 270,900 76,200 67,900 34,800 18,600 1,500 3,600 3,400 2,500 Total 1,091, , , ,500 76,500 13,600 18,000 12,400 7,100 Source: Texas Workforce Commission * December to December March , Greater Houston Partnership Page 2

3 Observations follow on a few key sectors. EMPLOYMENT GROWTH RATES, ECONOMIC BASE INDUSTRIES Industry Annual % '13 '12 '11 '10 Oil and Gas Extraction Oilfield Services Oilfield Equip Manufacturing Architectural & Engineering Total Nonfarm Employment Source: GHP calculations based on Texas Workforce Commission data Energy: Exploration and production, oil field equipment manufacturing, and engineering compose much of Houston s economic base. The base must grow for Houston s secondary sectors (retail, restaurants, health care, government, etc.) to grow. Growth in the base began to taper in 12. The secondary sectors felt the impact in 13. If the base now settles into a sustainable pace of growth somewhere above 3.0 percent the secondary sectors should follow suit. If the base contracts, however, the secondary sectors will eventually contract. The bright spot is that exploration and production employment grew 7.0 percent and engineering 5.8 percent in 13.Oil field services, however, grew a tepid 1.7 percent. Manufacturing: For the first time in the recovery, nondurables enjoyed healthy growth, adding 3,800 jobs, outperforming durables (3,200 jobs) for the first time since the end of the recession. Chemicals manufacturing added 3,000 jobs over the last three years, and such growth should continue as more plants and facilities are built to tap the inexpensive gas now available due to horizontal drilling and hydraulic fracking. Chemicals manufacturing has a high jobs multiplier. One job in a chemical plant supports between three and 10 jobs elsewhere in the local economy. Tudor, Pickering, Holt & Company has identified more than $40 billion in chemical plant expansions and startups announced or underway along the Texas and Louisiana Gulf Coast. This activity bodes well for Houston s economy beyond the construction phase. Construction: The industry lost 46,200 jobs in the recession, of which only 16,200 have been recouped. A number of forces are pulling in opposite directions: CBRE has identified 16.3 million square feet of office space, 7.8 million square feet of industrial space, and 1.9 million square feet of retail space under construction. However, developers are building only half as many homes as they did prior to the recession. The region suffers from a shortage of residential lots to build on, yet only a handful of lenders are willing to finance the development of more lots. Contractors could employ more carpenters, welders and electricians if there weren t a shortage of workers with the requisite skills. The Partnership is working to address the shortage through its Regional Workforce Development Task Force. Construction activity will remain strong in 14 but will be impacted by the lack of lots and skilled workers. March , Greater Houston Partnership Page 3

4 Retail: Local merchants added 27,400 jobs in the past four years, a reasonable number given Houston s recent population, employment and wage growth. However, last year s growth 5,500 jobs, 1.9 percent was the weakest yet in the recovery. The good news is that the city of Houston in 13 collected $38.2 million more in sales tax, a 6.7 percent increase from 12. Wholesale Trade: Export growth, demand for oil field equipment, and the strong Houston economy in general has helped this sector perform consistently over the past three years. Wholesale trade added 6,800 jobs in 13 and accounted for one in every 12 jobs added last year. Finance and Insurance: In 13, the sector gave back half the jobs it had recouped since December 09. Uncertainty brought on by the Dodd Frank Wall Street Reform and Consumer Protection Act and the trend to provide more services online continue to suppress employment growth. However, the real estate subsector has added 3,000 jobs over the past four years and local bank deposits topped $208.0 billion as of June 30, 2013, nearly double where they stood five years earlier. Professional and Business Services: The weak growth in employment services, a subsector of this industry, gives reason for concern. Growth or contraction in employment services often portend growth or contraction in the economy as a whole. After adding 8,600 jobs in 10, 6,300 in 11 and 6,300 in 12, employment services added only 900 jobs in 13. Health Care: Uncertainties associated with the Affordable Care Act finally appear to be impacting Houston area employment. Health care and social assistance added 3,900 jobs in 13, the weakest job growth since 98. Food Services: One of the strongest performing sectors has been food services and drinking establishments (e.g., restaurants, bars). The sector added 16,200 jobs in 13 and 42,600 over the past four years. Houston continues to receive rave reviews in the national media for the quality of its restaurants. Government: The bulk of the public sector employment growth 6,300 out of 6,800 jobs total occurred in local government (e.g., cities, counties and school districts). The government sector is always the last to enter the recession and one of the last to exit. That healthy job growth has resumed suggests the economy has fully recovered. Employment remains well below pre-recession levels in several sectors computer manufacturing, construction, air transportation, finance and information. This far into the expansion, their lackluster job growth suggests that these sectors suffer not from the aftermath of the Great Recession, but from structural changes. If that s the case, it may take several years before employment in these sectors returns to their pre-recession levels. March , Greater Houston Partnership Page 4

5 Trade Roundup The Houston-Galveston Customs District handled $252.0 billion in trade in 13, down 8.1 percent from $274.2 billion in 12. Despite the drop in trade, Houston remained the nation s third busiest customs district for the ninth consecutive year, behind Los Angeles ($414.8 billion) and New York ($378.9 billion). Houston-Galveston Customs District Traffic $240.9 $ Billions $268.0 $274.2 $252.0 $104.6 Imports $136.4 $47.0 Exports $162.2 $58.1 $185.3 $72.3 $89.9 $167.6 $75.2 $211.5 $94.7 $119.4 $127.1 $129.1 $39.5 $65.1 $89.4 $104.1 $113.0 $151.0 $92.4 $116.8 $148.6 $147.1 $122.9 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Source: U.S. Census Bureau, Foreign Trade Division Exports grew 1.6 percent from $127.1 billion in 12 to $129.1 billion in 13, but imports fell 16.5 percent from $147.1 billion in 12 to $122.9 billion in 13. Mineral fuel and oil, which accounts for 54.9 percent of total imports, fell 21.2 percent from $85.7 billion in 12 to $67.5 billion in 13. This is the lowest level of imports through Houston for mineral fuel and oil since 09. Unlike 09, when the decline was due to the Great Recession, this drop was a result of robust growth in domestic crude production from unconventional drilling in shale plays. The U.S. Energy Information Administration (EIA) expects strong growth in crude oil production, primarily in the Bakken, Eagle Ford and Permian regions, to continue through 15. According to the EIA, the share of total U.S. liquid fuels consumption met by net imports peaked at more than 60 percent in 05 and fell to an average of 33 percent in 13. The net import share is expected to decline to 25 percent in 15, which would be the lowest level since 71. As a result, import activity through Houston s customs district may continue to decline over the next few years. March , Greater Houston Partnership Page 5

6 $, billions Import Value Growth Through Houston-Galveston Customs District All Other Organic Chemicals Electric Machinery Articles of Iron or Steel Industrial Machinery Mineral Fuel and Oil 0 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Source: U.S. Census Bureau, Foreign Trade Division Houston s top five imports have remained unchanged since 04: oil, industrial machinery, iron and steel, electrical machinery and organic chemicals. In 13, the top five totaled $95.1 billion and accounted for three-fourths of all imports. Since 04, their value has risen from $65.1 billion to $122.9 billion in 13, a 7.3 percent annual growth rate. Top 5 Imports Through Houston-Galveston Customs District, ($ billions) Import Commodity '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Mineral Fuel and Oil Industrial Machinery Articles of Iron or Steel Electric Machinery Organic Chemicals All Other Commodities Total Imports Source: U.S. Census Bureau, Foreign Trade Division In contrast, Houston s exports have increased at nearly double the pace of imports, growing at an annual rate of 14.1 percent from $39.5 billion in 04 to $129.1 billion in 13. The future of exports out of the customs district depends largely on the health of the economies of its trade partners. In 13, Houston s top 20 trade partners accounted for 68.6 percent of exports. The GDP growth rate of 13 of the top 20 trade partners is forecasted to be stronger this year than it was in 13, suggesting a positive outlook for the district s export growth. March , Greater Houston Partnership Page 6

7 Rank HOUSTON S TOP 20 EXPORT DESTINATIONS Country Export Value $ Billions % of Total Forecasted GDP Growth in 14 (%) 1 Mexico Brazil Netherlands Colombia Venezuela China Chile Belgium Singapore Peru United Kingdom South Korea Saudi Arabia Canada France Nigeria Argentina Ecuador Panama U.A.E All Other Total % - Source: U.S. Census Bureau, Foreign Trade Division and the IMF Flight Update Traffic through the Houston Airport System (HAS) grew 3.1 percent from 3.9 million in January 13 to 4.0 million in January 14. International passenger traffic rose 8.8 percent from 731,594 in January 13 to 795,962 in January 14. January is the second consecutive month of exceptional year-over-year growth in international traffic, following an 8.9 percent increase from December 12 to December 13. Large year-over-year increases are expected for the first few months of 14 as the data reflect last year s launch of nonstop routes to Istanbul in April and Beijing in July. Domestic travel increased 1.8 percent from 3.17 million in January 13 to 3.23 million in January 14. Hobby Airport continues to drive the growth in domestic passengers. Although Hobby represents only a quarter of domestic travel through Houston, it accounts for all of its growth. Intercontinental Airport experienced a 0.7 percent decline in domestic traffic from January 13 to January 14, while Hobby grew by 8.5 percent over the same period. March , Greater Houston Partnership Page 7

8 SNAPSHOT HOUSTON S KEY ECONOMIC INDICATORS Building Permits City of Houston building permits reached an all-time high in January. For the 12 months ending January 14, the city issued building permits totaling $6.2 billion, surpassing the pre-recession peak of $6.0 billion in October 08. The January 12-month total was also a 25.5 percent increase over the $5.0 billion issued during the 12 months ending January 13. Residential permits increased 31.1 percent from $1.8 billion to $2.4 billion and nonresidential permits increased 22.2 percent from $3.1 billion to $3.9 billion. Inflation The Consumer Price Index for All Urban Consumers (CPI-U) grew 1.6 percent nationwide from January 13 to January 14. Core inflation rose 1.6 percent over that period. The energy index increased 2.1 percent, food prices grew 1.1 percent, and the shelter index rose 2.4 percent. Home Sales Houston-area realtors sold 89,050 homes in the 12 months ending January 14, an 18.4 percent increase over the 75,205 homes sold in the 12 months ending January 13, according to the Houston Association of REALTORS (HAR). Total sales volume approached $21.4 billion in the 12 months ending January 14, a 31.5 percent increase over the $16.3 billion recorded in the 12 months ending January 13, and the highest 12-month sales volume on record. Purchasing Managers Index The Houston Purchasing Managers Index (PMI), a shortterm leading indicator for regional production, registered 58.7 in February, up from 57.1in January, according to the latest report from the Institute for Supply Management-Houston. The PMI has a possible 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 February reading, the PMI has held at or above 50 for 54 consecutive months. Vehicle Sales Houston-area auto dealers sold 345,874 vehicles in the 12 months ending January 14, up 6.7 percent from the 324,256 sold in the 12 months ending January 13, according to TexAuto Facts, published by InfoNation, Inc. of Sugar Land. InfoNation forecasts 360,000 new vehicles to be sold in the Houston area in 14. Patrick Jankowski and Jenny Phillip contributed to this issue of Houston: The Economy at a Glance March , Greater Houston Partnership Page 8

9 STAY UP TO DATE! Are you a GHP Member? If so, log in to your account here and access archived issues of Glance available only to Members. You can also sign-up RSS feeds to receive Houston s latest economic data throughout the month. If you are a nonmember and would like to receive this electronic publication on the first working day of each month, please your request for Economy at a Glance to dmorrow@houston.org. 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 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 , usually accompanied by commentary, please your request for Key Economic Indicators to dmorrow@houston.org with the same identifying information. You may request Glance and Indicators in the same . Follow me on Subscribe to my blog The Glass Half Full also posted at March , Greater Houston Partnership Page 9

10 HOUSTON THE ECONOMY AT A GLANCE HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000) Change from % Change from Dec '13 Dec '12 Dec '12 Dec '12 Total Nonfarm Payroll Jobs 2, , Total Private 2, , Goods Producing Service Providing 2, , Private Service Providing 1, , Mining and Logging Oil & Gas Extraction Support Activities for Mining Construction Manufacturing Durable Goods Manufacturing Nondurable Goods Manufacturing Wholesale Trade Retail Trade Transportation, Warehousing and Utilities Utilities Air Transportation Truck Transportation Pipeline Transportation Information Telecommunications Finance & Insurance Real Estate & Rental and Leasing Professional & Business Services Professional, Scientific & Technical Services Legal Services Accounting, Tax Preparation, Bookkeeping Architectural, Engineering & Related Services Computer Systems Design & Related Services Admin & Support/Waste Mgt & Remediation Administrative & Support Services Employment Services Educational Services Health Care & Social Assistance Arts, Entertainment & Recreation Accommodation & Food Services Other Services Government Federal Government State Government State Government Educational Services Local Government Local Government Educational Services SOURCE: Texas Workforce Commission March , Greater Houston Partnership Page 10

11 HOUSTON THE ECONOMY AT A GLANCE Houston Economic Indicators A Service of the Greater Houston Partnership MONTHLY DATA YEAR-TO-DATE TOTAL or YTD AVERAGE* Most Year % Most Year % Month Recent Earlier Change Recent Earlier Change ENERGY U.S. Active Rotary Rigs Feb '14 1,769 1, ,769 * 1,756 * 0.7 Spot Crude Oil Price ($/bbl, West Texas Intermediate) Feb ' * * 2.9 Spot Natural Gas ($/MMBtu, Henry Hub) Feb ' * 3.30 * 53.0 UTILITIES AND PRODUCTION Houston Purchasing Managers Index Feb ' * 60.0 * -3.5 Nonresidential Electric Current Sales (Mwh, CNP Service Area) Jan '14 4,202,519 3,931, ,202,519 3,931, CONSTRUCTION Total Building Contracts ($, Houston MSA) Dec '13 800,345, ,420, ,708,477,000 11,243,480, Nonresidential Dec '13 256,980, ,143, ,502,965,000 4,072,056, Residential Dec '13 543,365, ,277, ,205,512,000 7,171,424, Building Permits ($, City of Houston) Jan '14 580,228, ,807, ,228, ,807, Nonresidential Jan '14 373,754, ,133, ,754, ,133, New Nonresidential Jan '14 177,555, ,985, ,555, ,985, Nonresidential Additions/Alterations/Conversions Jan '14 196,199, ,147, ,199, ,147, Residential Jan '14 206,474, ,674, ,474, ,674, New Residential Jan '14 189,809, ,567, ,809, ,567, Residential Additions/Alterations/Conversions Jan '14 16,664,450 17,106, ,664,450 17,106, Multiple Listing Service (MLS) Activity Property Sales Jan '14 4,929 4, ,929 4, Median Sales Price - SF Detached Jan '14 177, , ,000 * 150,000 * 18.0 Active Listings Jan '14 28,211 33, ,211 * 33,532 * EMPLOYMENT (Houston-Sugar Land-Baytown MSA) Unemployment Rate (%) - Not Seasonally Adjusted Houston-Sugar Land-Baytown MSA Jan ' * 6.9 * Texas Jan ' * 7.0 * U.S. Jan ' * 8.5 * FOREIGN TRADE (Houston-Galveston Customs District) Port of Houston Authority Shipments (Short Tons) Jan '14 3,793,302 3,452, ,793,302 3,452, Air Passengers (Houston Airport System) Jan '14 4,024,607 3,902, ,024,607 3,902, Domestic Passengers Jan '14 3,228,645 3,170, ,228,645 3,170, International Passengers Jan '14 795, , , , Landings and Takeoffs Jan '14 67,345 64, ,345 64, Air Freight (metric tons) Jan '14 33,417 33, ,417 33, Enplaned Jan '14 18,374 17, ,374 17, Deplaned Jan '14 15,043 16, ,043 16, CONSUMERS New Car and Truck Sales (Units, Houston MSA) Jan '14 24,991 26, ,991 26, Total Retail Sales ($000,000, Houston MSA, NAICS Basis) 4Q12 30,682 30, , , Consumer Price Index for All Urban Consumers ('82-'84=100) Houston-Galveston-Brazoria CMSA Jan ' * * 1.7 United States Jan ' * * 1.6 Hotel Performance (Houston MSA) Occupancy (%) 3Q * 66.4 * Average Room Rate ($) 3Q * * 7.8 Revenue Per Available Room ($) 3Q * * 13.7 POSTINGS AND FORECLOSURES Postings (Harris County) Dec '13 1,310 2, ,976 34, Foreclosures (Harris County) Dec ' ,419 9, March , Greater Houston Partnership Page 11

12 HOUSTON THE ECONOMY AT A GLANCE 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 Aviation Car and Truck Sales Retail Sales Consumer Price Index Hotels Postings, Foreclosures Port of Houston Authority Aviation Department, City of Houston TexAuto Facts Report, InfoNation, Inc., Sugar Land TX Texas Comptroller s Office U.S. Bureau of Labor Statistics PKF Consulting/HospitalityAsset Advisors International Foreclosure Information &Listing Servi March , Greater Houston Partnership Page 12

13 Goods-Producing Jobs (000s) Service-Providing Jobs (000s) Nonfarm Payroll Employment (000) 12-Month Change (000) HOUSTON THE ECONOMY AT A GLANCE Nonfarm Payroll Employment, Houston MSA 3,000 2,900 2,800 2,700 2,600 2,500 2,400 2,300 2,200 2, , '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 12-Month Change Source: Texas Workforce Commission Total Payroll Employment Goods-Producing and Service-Providing Employment Houston MSA ,300 2,250 2, ,150 2,100 2,050 2,000 1,950 1,900 1, ,800 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Goods-Producing Jobs Service-Providing Jobs Source: Texas Workforce Commission March , Greater Houston Partnership Page 13

14 WTI, $ barrel Natural Gas, $ /mcf % Civilian Labor Force HOUSTON THE ECONOMY AT A GLANCE 11 Unemployment Rate - Houston, Texas and U.S '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 Houston Texas U.S. Source: Texas Workforce Commission 160 Spot Crude and Natural Gas Prices Monthly Averages '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 WTI Natural Gas Source: U.S. Energy Information Administration 0 March , Greater Houston Partnership Page 14