The Houston Economy
Jesse Thompson Regional Business Economist
The Federal Reserve Bank of Dallas, Houston Branch February 2017
Image from http://peoplesguidetohouston.wordpress.com/category/uncategorized/
Employment
96
97
98
99
100
101
102
103
104
2014 2015 2016
Index, Dec-2014=100 2015: Houston Plateaus 2016: Houston Loses a Few Jobs
Drilling activity collapses
Oil prices stop falling
in Q1:2016.
SOURCE: Bureau of Labor Statistics, adjustments by the Dallas Fed.
Texas (ex Houston)
U.S. (ex Texas)
Houston
Metro Down 14K+ Jobs
ytd in August
Employment 1.1
1.9
0.2
3.3
2.9
0.0
3.6
-2.5
2.8
-6.6
-4.4
-0.1
-0.4
-1.4
2.9
3.1
2.0
-4.7
-2.6
2.1
-0.5
-8.3
Total
Trade, transp & utilities (20%)
Professional & business svc (16%)
Government (13%)
Education & health services (13%)
Leisure & hospitality (10%)
Manufacturing (7%)
Construction (7%)
Financial activities (5%)
Other services (4%)
Mining & logging (3%)
Sept. to Dec.
Dec.15 to Dec.16
NOTES: Data show seasonally adjusted and annualized percentage employment growth by industry supersector. Numbers in parentheses represent share of total employment and may not sum to 100 due to rounding.
SOURCES: Bureau of Labor Statistics; adjustments by the Dallas Fed.
Real Retail Sales & Wages
24
27
30
33
36
35
39
42
46
49
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Billions of 2016:Q1 dollars
Billions of 2016:Q1 dollars
Real Wages Paid & Retail Sales Down From 2014
Wages
Retail Sales
SOURCES: Bureau of Labor Statistics; adjustments by the Dallas Fed.
Oil & Gas Extraction
Oil & Gas Extraction
220
230
240
250
260
270
280
290
300
20
35
50
65
80
95
110
2014 2015 2016 2017
Thousands of jobs
Index, June 2014=105.79 U.S. Rig Counts and Houston Employment
NOTE: Rig count and crude production seasonally adjusted. Rig count and nominal oil price indexed to June 2014.
Crude oil price
U.S. rig count
Mining-related jobs: Total
75,000 Jobs lost since 2014.
Oil and Gas Jobs
-45
-35
-25
-15
-5
5
15
25
2014 2015 2016
Percent Change Selected Mining-Related Job Losses Slowing
Fabricated metals
Support activities for mining
Total
Architectural, engineering & related
Extraction
Agriculture, construction & mining machinery
Note: data are three-month annualized percent changes.
SOURCE: Bureau of Labor statistics; Seasonal and other adjustments by the Dallas Fed.
Survey: Need WTI~$50 to drill
WTI: $53, ytd 2017
Oil & Gas Extraction
SOURCE: Baker Hughes
0
50
100
150
200
250
300
350
20160506W20160603W20160701W20160729W20160826W20160923W20161021W20161118W20161216W20170113W20170210W20170310W20170407W
Rigs
Permian Drives Rig Recovery
Permian
Eagle Ford
Williston
DJ-Niobrara
0
10
20
30
40
50
60
70
80
90
100
20160506W20160603W20160701W20160729W20160826W20160923W20161021W20161118W20161216W20170113W20170210W20170310W20170407W
Rigs Gas Basin Drilling Up
Marcellus
Utica
Haynesville
May-16 Apr-17 Oct-16 May-16 Apr-17 Oct-16
Inventories
2,500
2,600
2,700
2,800
2,900
3,000
3,100
3,200
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Total OECD Petroleum inventories projected to stay elevated
Million barrels
2010-2014 average
Dec.
3087
SOURCE: Energy Information Administration.
Inventories
20
25
30
35
40
45
50
2014 2015 2016 2017
U.S. crude inventories erode, product inventories surge.
Distillate fuelCrude (ex SPR)Gasoline
Note: dashed lines are seasonally adjusted. Numbers are for week ending november 25th.
SOURCE: EIA
Refining & Petrochemicals
Refining & Petrochemicals
-10
-5
0
5
10
15
20
25
30
0
1
2
3
4
5
6
7
8
198
6
198
7
19
88
198
9
199
0
199
1
199
2
199
3
199
4
199
5
199
6
199
7
199
8
199
9
200
0
200
1
200
2
200
3
200
4
20
05
200
6
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
Dollar Spread Oil/Gas Ratio Downstream advantage eroding?
Brent Spread
WTI/HH
Refining
-15
-10
-5
0
5
10
15
20
25
1996 1999 2002 2005 2008 2011 2014 2017
20
09
$ p
er
ba
rre
l d
evia
tio
n f
rom
me
an
Muse, Stancil & Co. East Coast Margins
Muse, Stancil, and Co. Gulf Coast Margins
WTI Crack
Note: data are seasonally adjusted, centered three-month moving-averages. SOURCE: Muse, Stancil, & Co., Wall Street Journal, Bureau of Labor Statistics.
Downstream Advantage
0
5
10
15
20
25
30
35
0
2
4
6
8
10
12
14
16
18
20
2015 2016 2017 2018 2019 2020 2021
Number of projects Billions of dollars Downstream construction in Houston
falls off in 2017 & 2018.
Value of projects delivered
Number of projects delivered
Note: Data are value of construction projects delivered. SOURCE: Baytown Economic Development Foundation. Institute for regional forecasting.
$55 Billion in capital
Investments announced
in Houston-area alone.
Punchline
2015 & 2016:
Upstream Jobs Down
Downstream-Related Jobs Up
2017:
Upstream Jobs Up
Downstream-Related Jobs Down
Houston Region Job Growth
Could be anemic into 2018
International Trade
Houston International Trade
76
78
80
82
84
86
88
90
92
94
9630
40
50
60
70
80
90
100
110
120
2011 2012 2013 2014 2015 2016
Index Jan.1988=100; Axis Inverted
Index, Jun.2014=100 Value of Trade Falls With Oil and Strong Dollar
NOTE: Data displayed are centered three-month moving averages, seasonally adjusted where appropriate.
SOURCE: Census Bureau. Dallas Fed. Energy Information Agency.
Value of Trade
West Texas Intermediate
Texas Value of the Dollar
Houston International Trade
30
40
50
60
70
80
90
100
110
120
2011 2012 2013 2014 2015 2016
Index, Jun.2014=100 Value of Trade Falls While Volumes Stay Stable
NOTE: Data displayed are centered three-month moving averages, seasonally adjusted where appropriate.
SOURCE: Census Bureau. Dallas Fed. Energy Information Agency.
Value of Trade
Vessel Weight
Texas Medical Center
Health Employment Growth
1.8
0.5
3.2
2.8
2.5
1.5
3.4 3.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Total Ambulatory health (47%) Hospitals (27%) Other health (26%)
Percent Job Growth Slowing.
Sept. to Dec.
Dec.15 to Dec.16
Average since 2000
NOTES: Data show seasonally adjusted and annualized percentage employment growth. Numbers in parentheses represent share of total health employment and may not sum to 100 due to rounding.
SOURCES: Bureau of Labor Statistics; adjustments by the Dallas Fed.
Construction & Real Estate
Construction & Real Estate
-2.5
-1.0
7.8
-6.9
-0.8
-2.6 -2.7
-6.4
-1.1 -0.3
-10
-5
0
5
10
Total construction Construction ofbuildings
Heavy & civilconstruction
Specialty trades Real estate & leasing
Construction Employment Falls.
Sept.16 to Dec. 16Dec.15 to Dec.16Average since 2000
Percent*
NOTE: Real estate and leasing is not a subsector of construction.
Houston Home Sales
0
2
4
6
8
10
12
75
100
125
150
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Months supply of inventory Index Jan2000=100
Tight Market Pushes Up Prices
Median
Home Sales*
Month's of supply
*per the 12mma of payroll employment
Note: Seasonally adjusted
SOURCE: Houston Association of Realtors. Author's calculations.
Houston Home Sales
-100
-50
0
50
100
150
2008 2009 2010 2011 2012 2013 2014 2015 2016
Multi-family pulls down total housing permits filed
Total
1-Family Units
Outlook
Outlook
Outlook
30
35
40
45
50
55
60
65
70
-10
-8
-6
-4
-2
0
2
4
6
8
10
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Index value Percent change Houston Purchasing Managers Index and Employment Growth
U.S. recessions
Houston employment
HPMI
NOTE: Employment growth is a three-month percent change.
SOURCES: Institute for Supply Managment; National Bureau of Economic Research; Bureau of Labor Statistics; Dallas Fed.
Outlook
-10
-8
-6
-4
-2
0
2
4
6
8
10
2009 2010 2011 2012 2013 2014 2015 2016 2017
Percent growth Total Number of Job Advertisements Slipping
Employment
Total ads
NOTE: Job ad data are a statistically optimized weighted moving averages, shifted forward two months.
Outlook
105
107
109
111
113
115
117
119
121
123
125
120
122
124
126
128
130
132
134
2012 2013 2014 2015 2016
Index, 2010=100 Index, 1987=100 Major Leading Indexes paint improved, modest picture
NOTES: July Texas Leading Index data point is an estimate.
SOURCES: The Conference Board; Dallas Fed.
Texas Leading Index
U.S. leading index
Looking Ahead
Forecast:
Dec-2015 to Dec-2016
Houston Job Growth*:
-0.1% in 2016
0.5 to 1.5% in 2017
Texas Job Growth:
1.5-2.5% in 2017
Looking Ahead
More Content Online Houston Economic Indicators
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Regional Economic Updates & Indicators
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Research Publications
St. Louis Federal Reserve Economic Data
The Houston Economy
Jesse Thompson Regional Business Economist
The Federal Reserve Bank of Dallas, Houston Branch February 2017
Image from http://peoplesguidetohouston.wordpress.com/category/uncategorized/
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