greater houston partnership 2013 employment forecast

GREATER HOUSTON PARTNERSHIP 2013 EMPLOYMENT FORECAST A publication of the Greater Houston Partnership

December 12, 2012

Another Year of Job Growth

The Current Situation

The Greater Houston Partnership forecasts the 10county Houston metro area will create 76,000 jobs in ‟13. Employment will grow in all sectors, with construction, health care, and leisure and hospitality turning in the strongest performances. Next year should end with Houston at a little more than 2.8 million jobs, a milestone for the region. By December ‟13, Houston will employ more people than are employed in 34 states or the District of Columbia.

For the 12 months ending October ‟12, the metro area created 95,800 jobs. This represents the strongest job creation since ‟07, when Houston created 95,400 jobs over the 12 months ending in October of that year.2 Four sectors account for the bulk of that job creation this year—leisure and hospitality, 22,300 jobs; education and health care, 18,400 jobs; construction, 17,400 jobs; and trade, transportation and utilities, 16,900 jobs. This year should end with 92,200 more jobs than ‟11, making it the third best year for job creation in the past two decades.

Several factors will drive job growth—stable oil prices, construction at area chemical plants, healthy demand overseas for Houston‟s exports, strong demand for single- and multi-family housing, and sustained population and income growth. The Partnership‟s forecast is based on several assumptions:  

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Congress reaches an accord on spending cuts and tax increases―if not soon, then early in ‟13. Gross domestic product (GDP), the broadest measure of the nation‟s economic activity, grows at an annual rate of 2.0 percent or better. The price of West Texas Intermediate (WTI), the benchmark U.S. light sweet crude, remains above $75 per barrel. The value of the U.S. dollar remains stable against other major currencies. Houston‟s major trading partners1 continue to buy the region‟s goods and services.

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Houston major trading partners include Mexico, Venezuela, Saudi Arabia, Brazil, China, Colombia, Nigeria, Netherlands, Russia, and Germany

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The forces driving job growth have shifted, though. In January, the energy sector accounted for one in 10 new jobs; construction, one in 22. By October, the roles had reversed. Energy accounted for one in 20 new jobs; construction, one in six. Historically, construction is late to enter a recession and among the last sectors to recover. This reversal suggests that Houston has entered a new phase in the business cycle, one in which the region will need to look to industries other than energy to stimulate local job growth. Current indicators suggest the region‟s economy remains healthy. Airport Traffic: The Houston Airport System (HAS) handled 42.1 million passengers through the first 10 months of ‟12, up 1.1 percent from 41.1 million passengers over the same period last year.

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Employment data for the calendar year won‟t be available until January ‟13.

©2012 Greater Houston Partnership

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Auto Sales: Houston area auto dealers sold 299,632 cars, trucks and SUVs through November ‟12, a 24.5 percent increase over the 235,010 sold in the same period last year, according to the TexAuto Facts Report, published by InfoNation, Inc. of Sugar Land. Growing auto sales signal improving consumer confidence. Chemical Production: The American Chemistry Council reports that Gulf Coast chemical production was 2.1 percent higher in October ‟12 than it was in October ‟11. Chemicals and refined products account for half the region‟s exports.

four months; readings below 50 suggest contraction. In recent months, the Houston PMI has signaled slowing gains in production. New Business Announcements: The Partnership‟s New Business Announcements database has identified 241 companies that in ‟12 announced plans to relocate, expand or start new operations in Houston in the near future.

What Could Go Wrong?

Several scenarios could derail the forecast—the budget standoff dragging on through mid-year, U.S. GDP growth sinking below 1 percent, oil prices fallExploration Activity: The Baker Hughes count of ing below $75 a barrel, natural gas falling below $2 active rigs in North America averaged 1,809 in Noper MMBtu, construction halting on the region‟s vember ‟12, down 10.0 percent from 2,011 in Nochemical plants, recessions in Houston‟s major tradvember ‟11. This is worriing partners, or new regulasome because energy explo“. . . the value of any forecast lies not in tions from Washington that ration supports a large portion severely curtail domestic exthe accuracy of the numbers, but in of Houston‟s economy. ploration activity. A single understanding the trends and discontiForeign Trade: More than event wouldn‟t significantly nuities driving the data.” $208.4 billion in trade passed impact the forecast, but two or through the Houstonmore would warrant revisiting Galveston Customs District the assumptions and revising job growth downward. during the first nine months of this year, a 5.1 percent The tax increases and spending cuts scheduled to increase over the $198.4 billion handled through Sepkick in Jan. 1 are particularly worrisome. A likely tember of last year. A recent study by IHS Global scenario is that Congress and the Obama AdministraInsight determined that one-fifth of Houston‟s econtion agree at the last minute to extend tax cuts and omy is tied to global trade. maintain current spending levels for three to six months, thus averting an immediate crisis until the Home Sales: The Houston Association of Realtors® two parties can work out a compromise. Unfortunate(HAR) reported that area home sales in October ly, such an eventuality would prolong uncertainty and reached their highest 12-month total since September delay hiring and investment decisions until after mid‟08. Active listings fell to their lowest level since year. January ‟04. Strong demand for existing homes drives new home building.

Behind the Forecast

Industrial Production: The Houston Purchasing Managers Index was 54.6 in November, down from 57.7 in October, according to the Institute for Supply Management-Houston. Readings above 50 indicate likely growth in production over the next three to

Note that the primary value of any forecast lies not in the accuracy of the numbers, but in understanding the trends and discontinuities driving the data. Armed with this knowledge, readers should be able to make better-informed decisions in the coming months.

December 12, 2012


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That said, last December the Partnership forecasted the region would create 84,600 jobs in ‟12. For the 12 months ending October ‟12, the Houston metro area created 95,800 jobs. The actual number of jobs created this year won‟t be known until March ‟13, when the Texas Workforce Commission (TWC) issues its benchmark revisions to the employment data. Those revisions will be covered in a spring issue of Houston: The Economy at a Glance. Here, in greater detail, are insights into the direction Houston‟s economy will take in ‟13.

Mining and Logging3 Houston owes much of its recovery to the oil and gas industry. The exploration sector lost 1,200 jobs during the recession but added 8,100 in the recovery. Oil field services lost 9,700 jobs and has since recouped 9,500. Job growth in the oil industry is important because of its multiplier effect, which is in large part because the average annual wage in this industry exceeds $100,000. The concentration of oil and gas resources in Houston means that a slight increase in energyrelated employment sends waves, not ripples, throughout the economy. The U.S. Bureau of Labor Statistics (BLS) estimates that every 100 jobs in exploration support an additional 480 jobs elsewhere in the region; every 100 oil field service jobs support another 210 jobs. The 1:4.8 ratio for exploration and 1:2.1 ratio for oil field services translates into approximately 75,000 jobs, about 30 percent of the jobs created in the recovery, tied to growth in the oil and gas sector. Much of this growth depends on hydraulic fracturing—injecting sand, water and chemicals into rock formations under high pressure to break apart the

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The Bureau of Labor Statistics defines the industry as “mining and logging,” but in Houston that‟s primarily oil and gas exploration and related services.

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rock and release the hydrocarbons trapped inside. The process has juiced the industry. 

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In ‟09, the Railroad Commission of Texas (RRC) issued 94 permits to drill in the Eagle Ford, a shale play running through much of south and central Texas. Through the first nine months of this year, the RRC has already issued 4,293 permits there. The Eagle Ford produced 844 barrels of crude per day in ‟09. In August of this year, the Eagle Ford produced 297,079 per day, according to the RRC.

But fracking requires significant investments in labor and equipment. A June ‟11 article in Rigzone News placed drilling and completion costs at $5.5 million to $9.5 million per well. That expense requires crude to be priced above $75 per barrel and natural gas above $4.50 per MMBtu for fracking to make economic sense. Natural gas, however, has traded below $4 on the spot market since September ‟11. As a result, the number of rigs drilling for natural gas in North America has fallen from a peak of 992 in August ‟10 to 417 the first week of this December. Oil prices have fared better. Since November ‟10, the weekly average spot price for WTI traded above $80 for all but one week. As a result, the number of rigs drilling for oil in North America has nearly double over that period. The oil-directed rig count stood at 1,382 the first week of December. This increase, however, has not been enough to offset the decline in gas drilling. The current rig count is 225 below the peak of 2,026 in November ‟11. The U.S. Energy Information Administration (EIA) forecasts WTI to average $88.29 per barrel and natural gas at the Henry Hub to average $3.49 in ‟13, high enough to maintain oil drilling near current levels but not high enough to stimulate additional gas-directed drilling. Job growth in energy will be weaker next year. The Partnership‟s forecast calls for mining and logging to add 3,100 jobs in ‟13.


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Construction After several years on the sidelines, Houston‟s construction industry is finally back in the game. As recently as May, the industry had recouped less than one-sixth of its jobs lost in the recession. Now, the industry has passed the halfway mark and needs only 20,600 jobs to reach its pre-recession peak. The industry is well on its way to closing that gap as contracts, permits, home starts, home sales and employment are growing at healthy paces. 

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McGraw-Hill Construction reports more than $9.3 billion in contracts were awarded in the 10county metro area during the 12 months ending October ‟12. That‟s up 9.3 percent from the $8.5 billion awarded during the same period the prior year. The City of Houston issued building permits totaling $4.6 billion during the 12 months ending October ‟12, a 35.0 percent increase over the $3.4 billion issued during the same period in ‟11. The U.S. Census Bureau reports that 24,344 permits for construction of single-family homes have been issued during the first 10 months of this year, compared to 19,355 during the same period last year. That‟s an increase of 4,989 homes, or 25.8 percent. The Houston Association of Realtors® reports that listings of homes for sale in its Multiple Listing Service database are at their lowest point since January ‟04. The dearth of resale inventory should lead to new home construction. The Texas Workforce Commission reports the local construction industry added 17,400 jobs, a 10.1 increase, from October ‟11 to October ‟12. Construction is now the fastest growing job generator in the region.

Fracking has an additional benefit. Texas now has an ample supply of inexpensive natural gas, the feedstock for chemical plants along the Texas Gulf Coast.

December 12, 2012

In recent months, Dow Chemical, Chevron, ExxonMobil, INEOS and Lyondell Basell have announced plans to build chemical plants in the region. A typical chemical plant takes three to five years to build, so the spate of announcements should support growth in construction employment over the next few years. The Partnership‟s forecast calls for an additional 16,200 construction jobs in ‟13.

Manufacturing The manufacturing sector has recouped 70 percent of the 29,300 jobs lost in the recession. Most of the recovery has been in durable goods manufacturing, i.e. goods with a lifespan of three or more years. The durable goods sector has recouped 93.2 percent of its losses. The drilling boom has supported growth in the manufacturing of industrial equipment, primarily oil field equipment, while the improving construction sector has supported growth in fabricated metal products, mainly structural steel. The recovery in nondurables manufacturing, i.e, refined products, chemicals, plastics, food, apparel, and paper goods, has been less robust. The sector has recovered only 9.9 percent of the 8,100 jobs lost during the recession. As the housing and automobile markets recover, both large consumers of plastics and chemicals, nondurables employment should recover. The demand is already there to warrant hiring more production workers. The U.S. Bureau of Labor Statistics reports that production workers in Houston‟s factories clocked 49.1 hours a week in October ‟12, up from 47.9 in October ‟11 and 45.8 in October ‟10. It appears this situation can be explained there ways— manufacturers would rather pay overtime than hire additional workers, perhaps they can‟t find qualified workers, or a combination of both. The Partnership‟s forecast calls for durable goods manufacturing to add another 4,200 jobs next year. Nondurables will add another 1,000.


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Wholesale Trade Wholesale trade employment returned to its prerecession levels in June ‟12. Four categories account for the bulk of the job growth: metal wholesaling (bars, pipe and plate to firms that make oil field equipment), machinery wholesaling (equipment to firms that drill for oil), petroleum wholesaling (refined products to domestic and overseas markets) and electronic brokers (business-to-business sales via the internet). The drilling boom and the weak U.S. dollar have driven wholesale employment growth. Over the past three years, the value of the dollar has fallen nearly 10 percent, making goods exported from Houston more affordable overseas. As a result, exports via the Houston-Galveston Customs District grew from $75.2 billion in ‟09 to $119.4 billion in ‟11. Exports are on pace to exceed $127.0 billion this year. The consensus among economists is that the U.S. dollar will remain weak, and so will the European and Asian economies. That‟s already shown up in the trade data. Houston‟s exports grew 7.8 percent through the first nine months of ‟12, compared to 26.1 percent over same period last year. Though growth has slowed, it remains at record levels. The forecast calls for the sector to add 3,000 jobs in ‟13.

Retail Trade Houston‟s fundamentals continue to drive retail. 

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The U.S. Census Bureau estimates the metro area added 110,000 residents between July 1, 2010 and July 1, 2011. At that pace, Houston will add more than 500,000 residents over the next five years. Local builders are on pace to add nearly 25,000 single-family homes in ‟12 and a comparable number in ‟13. New homes translate into purchases of carpeting, drapes, furniture, and appliances.

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The region‟s purchasing power continues to grow. Total wages paid to workers in the Houston area in Q2/12 were up $2.7 billion from Q2/11, according to the U.S. Bureau of Labor Statistics‟ Quarterly Census of Employment and Wages. In constant (i.e., inflation-adjusted) dollars, Houston region retail sales rose 5.9 percent from $92.5 billion for the four quarters ending Q2/11 to $98.0 billion for the same period in ‟12.

Houston‟s strong fundamentals must be weighed against an almost certain increase in federal personal income taxes next year, which will somewhat reduce local purchasing power. The Partnership forecast calls for retail employment to grow by 4,100 jobs next year.

Transportation, Warehousing and Utilities All subsectors except air transportation fared well in ‟12. Trade through the region‟s ports and airports requires trucks, trains, steamships, and logistics companies to move goods from point A to point Z. Population growth equals customer growth for local utilities. Houston-based pipeline companies have kept busy moving the abundant natural gas and crude around the country. Only the aviation sector continues to struggle. It‟s an industry-wide trend as air carriers exercise “capacity discipline” and cut seats and service on unprofitable routes—a tactic that will limit aviation job growth in the aviation subsector. This may be somewhat offset by new carriers entering the Houston market. The Partnership‟s forecast calls for this sector to add 2,800 jobs in ‟13.

Information The information sector includes newspapers, magazines, radio, television, cable, movies, software and telecommunications. Information has lost jobs steadily since the early ‟00s. This is a national phenomenon, as the Internet and improvements in telecommunications technology have transformed the way people receive their news. The Partnership‟s Eco-


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nomic Development Division has seen an uptick in inquiries from firms wanting to relocate call centers from high-wage areas on the East and West Coasts. Houston‟s growing diversity may provide opportunities for new media ventures serving niche audiences, may offset losses in traditional media. The Partnership forecasts a 200 job gain in this sector next year—the first gain in five years.

Finance, Insurance and Real Estate The nation‟s financial institutions continue to struggle with the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Those struggles have spilled over to Houston. The act contains more than 150 provisions for protecting consumers and the nation‟s banking system. Formal rules and guidelines have been written for fewer than half. Many provisions limit activities in areas once lucrative for banks. The new consumer preference for lowrisk investments has cut into the sale of once highly profitable, albeit speculative investment vehicles. The slowdown in global growth has made firms reluctant to borrow. Interest rates remain low. These shifts have cut into profits, so banks have turned to cutting costs, the largest being payroll. Bank of America, JP Morgan Chase, Morgan Stanley, Wells Fargo, Goldman Sachs and Citigroup have all announced company-wide layoffs in ‟12. Some of those layoffs have quietly occurred here. More are expected in ‟13. Of the 245,000 jobs created in Houston since the bottom of the recession, fewer than 1,000 have been in banking. Several factors in Houston may mitigate what's occurring at the national level. For one, local bank deposits are growing. The Federal Deposit Insurance Corporation reports that deposits at insured institutions in Houston grew from $154.1 billion in June ‟11 to $179.2 billion in June ‟12, a 16.3 percent increase over the course of 12 months. Second, the local banking community benefits from the high level of activity in the energy industry, as firms seek loans,

December 12, 2012

access lines of credit, and tap banking services. Third, Houston continues to outperform the nation in job growth. If finance is the ugly step-sister, then real estate may be the Cinderella in this family. Since the bottom of the Houston office market (June ‟10) and the bottom of the industrial market (Q3/09), Houston has absorbed 6.2 million square feet of office space and 14.2 million square feet of industrial space, according to CBRE Global Research and Consulting. CBRE reports the industrial vacancy rate continues to decline, standing at 5.2 percent in Q3/12, down from 7.2 percent during the depth of the recession. The Class A office vacancy rate dipped to 8.8 percent in Q3/12, the lowest since ‟08. CBRE has identified 15 office buildings totaling 3.9 million square feet of space, and 56 industrial buildings, currently under construction. At Houston‟s current pace of economic growth, the market should easily absorb the space without much difficulty. The real estate community should continue to post good numbers in sales, leases and employment gains next year, insurance should continue to grow at its normal historic pace, while banking should experience minimal growth. The Partnership forecasts finance, insurance and real estate to add 1,900 jobs in ‟13.

Professional, Scientific, Technical Services The Partnership believes employment growth is stronger in this sector than is being reported. According to the BLS‟s Current Employment Statistics (CES), professional, business and technical services lost 100 jobs between October ‟11 and October ‟12. That defies common sense, given the surge in energy exploration and local construction activity. By comparison, the Quarterly Census of Employment and Wages (QCEW) shows that Houston created 4,600 jobs in this sector the first six months of ‟12. GHP


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believes the QCEW data better reflect job creation in the region.4 Factors driving job growth:   

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The current construction boom will spur the need for architectural and engineering services. Increased merger and acquisition activity will spur hiring in accounting and law. The need to keep up with innovation will support growth in computer systems engineering and design. The expanding economy will warrant additional spending on marketing and public relations campaigns.

Next year should be another strong year for job growth in this sector. The Partnership expects another 3,700 jobs by next December.

Administrative Support, Waste Management and Remediation Services This sector could also be called “Outsourcing and Trash Hauling.” It includes firms that provide clerical, human resource, cleaning, security and administrative services to other organizations, and firms involved in hazardous materials clean-up for a fee. Employment services (i.e., contract employees, including temporary employees), dominate job growth in this sector. Firms whose workforce needs vary throughout the year or are reluctant to hire permanent staff often rely on contract workers. In Houston, employment services jobs have fluctuated all year making forecasting job growth especially difficult. Even so, GHP expects the sector to add 4,900 jobs in „13.

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The QCEW data are considered more reliable since they come from reports submitted by every employer subject to unemployment insurance (UI) laws, but several months transpire between data gathering and release. The CES data are based on a survey of 141,000 businesses nationwide, of which Houston is a subset. The data, though less reliable, are used by many economists because they are one month old when released.

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Educational Services This sector covers private education—vocational training, technical schools, private universities, testing services and the like.5 Enrollments continue to rise as workers upgrade their skills or seek retraining to remain competitive, creating the demand for more instructors, administrators and tutors. The Partnership forecasts educational services to add another 300 jobs next year.

Health Care and Social Assistance The Patient Protection and Affordable Health Care Act hasn‟t deterred growth in this sector yet. Between July ‟11 and July ‟12, the region added more than 400 new health care establishments, one in every six new businesses formed in the region. The Texas Workforce Commission estimates the region created 18,100 care jobs in this industry between October ‟11 and October ‟12. A number of factors feed that growth. The Texas Medical Center, so large it has its own gravitational pull, continues to draw talent to the region. Population growth means there are more people here who need health care. And Houston‟s aging population— more than 600,000 Houstonians will reach retirement age in the next 10 years—translates into increased demand for health care services. The big unknown remains the Affordable Care Act. It requires insurance companies to cover all applicants and offer the same rates regardless of pre-existing conditions or gender. Individuals not covered by an employer-sponsored health plan, Medicaid, Medicare or other public insurance program must purchase an approved private insurance policy or pay a penalty. Medicaid eligibility has been expanded. The act also changes Medicare from a fee-for-service system to a bundled payment system. Hospitals and physician 5

School districts and universities, like the University of Houston and the University of Texas Health Science Center, are public institutions and considered part of the government sector.


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groups will receive a lump sum for treating a specific episode of care, such as gall bladder surgery, rather than being paid by procedure or visit. The change was made to increase efficiency in patient treatments.

incomes declined after Congress reaches a budget accord, Houstonians would have less discretionary income to spend on arts and entertainment.

The Affordable Care Act will change how we pay for―but not the need for―health care. Houston‟s doctor and nurse corps will continue to grow. The Partnership forecasts this sector to add 14,600 jobs in ‟13.

The Partnership‟s employment forecast assumes the charitable deduction will remain intact, the region‟s population will continue to grow, and discretionary incomes may rise even with a modest federal tax increase. The Partnership forecasts arts and entertainment to add 800 new jobs next year.

Arts and Entertainment

Accommodation and Food Services

This sector includes the performing arts, spectator sports, museums and recreational activities such as golf courses and marinas. Support for the arts and entertainment purchases is discretionary. Consumers scale back in uncertain times. Nationally, households are spending 10 percent less now on arts and entertainment than they did prior to the recession.

Travel to Houston is up. Dean Runyon Associates which prepares an annual travel and tourism analysis for the Texas Governor‟s Office estimates travelers spent $11.1 billion in Houston during ‟11, up from $9.8 billion in ‟09 (bottom of the recession). Lodging accounts for about 60 percent of all travel expenditures, with the remainder spent in bars, restaurants, stores, museums, attractions and on ground transportation. Next year promises to be a good one for Houston‟s convention business. The industry will add fewer than 1,000 rooms next year, and PKF Hospitality research expects hotel occupancies to grow 2 percent or better next year. Houston‟s healthy economy will also draw more business travelers to Houston next year. The Partnership forecasts accommodations will add 600 jobs in ‟13.

The arts also depend heavily on support from corporations, foundations and wealthy individuals. Nearly half of the Houston Symphony Orchestra‟s and Houston Grand Opera‟s operating revenues come from such sources. A mid-year survey by the Chronicle of Philanthropy found most corporations expect to hold their level of giving constant in ‟13 due to economic uncertainty. That‟s a national assessment. Consumers and corporations tend to be better off in Houston. Household incomes are up and corporate profits remain healthy, which should translate into more discretionary purchases and discretionary giving. Like so many other sectors, Houston‟s arts community faces challenges related to the nation‟s budget woes. Congress is considering limiting charitable deductions for high income households. Giving USA estimates that households that itemize their deductions provided 79 percent of all donations to nonprofit organizations in ‟10. If donors lost even part of the charitable income tax deduction, Houston‟s arts organizations would suffer. Likewise, if local after-tax

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Food services could also be called the “restaurant industry.” It includes fancy restaurants, cafes, fast food franchises, cafeterias, food trucks, caterers and bars. A number of factors impact demand for eating out: population growth, consumer confidence, hectic lifestyles, convenience and opportunity. All these factors have come into play in Houston. The region has added approximately 250 new bars and restaurants per year over the past four years. These clubs and cafes need chefs, cooks, hostesses, wait staff, bus boys, dishwashers and the like. The Partnership anticipates the trend to continue, with another 200-250 eating


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and drinking places to open next year, and the food service industry to add 9,800 jobs in ‟13.

16.1 percent, during the recession. Other cities suffered similar declines.

Other Services

With sales tax revenues, property tax revenues, and state funding declining, layoffs in the public sector were inevitable. Those job losses, however, are more difficult to calculate because public sector employment fluctuates throughout the year. But one can grasp the magnitude by comparing staff levels for the same month several years apart. In April ‟12, local counties and municipalities had 4,900 fewer employees on their payrolls than in April ‟10. In September this year, local school districts started the academic year with 8,200 fewer employees than in September ‟10.

This sector could also be called “Consumer Services, Clubs and Churches.” It includes firms such as automotive and appliance repair shops, barber shops and beauty salons, dry cleaners and funeral parlors, churches, nonprofits and professional and social organizations. Job growth in “other services” depends on population, income and general economic growth. Times are good in Houston and the population continues to grow. GHP‟s forecast calls for “other services” to add 4,300 jobs next year.

Government Two factors drive employment in the public sector— a growing population and an expanding tax base. During the recession, population continued to grow but the tax base didn‟t. Houston added 300,000 residents between July ‟08 and July ‟10, according to the U.S. Census Bureau. Property values fell over the same period. In Harris County, the taxable value of property fell $12.1 billion, or 4.2 percent, during the recession. The City of Houston saw its property tax base decline $7.2 billion, or 4.3 percent. The Houston Independent School District witnessed revenues from property taxes slip $62.8 million, or 5.8 percent. The tax base shrank as the state, also under fiscal constraints, reduced its contribution to local education. Texas contributed $66.1 billion less to HISD‟s budget for the 20112012 school year than it did the year before6. Sales and use taxes, which provide one-fourth of the revenues for many city budgets, suffered even greater declines. The Texas State Comptroller reports that collections in Houston7 declined $31.3 million, or

Public finances have begun to recover. The state comptroller reports sales tax collections in the region‟s 115 cities are up $81.0 million in the first nine months of ‟12, a 10.2 percent increase over the same period last year. Property values have begun to rise. The Harris County Budget Department reports taxable property values grew $3.7 billion from February ‟11 to February ‟12. Values should be even higher in ‟13. The higher tax revenues should allow for hiring next year. As a result, the Partnership forecasts 1,200 public sector jobs will be created in ‟13.

This forecast was prepared by Patrick Jankowski with assistance from Jenny Philip, Roel Martinez, Deanna Morrow, Deborah Mostert, Edith Chambers and Pooja Patel.

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The sources for the tax and revenue data are the various jurisdictions‟ own budgets and budget presentations. 7 Approximately 72 percent of the region‟s taxable sales occur in the city of Houston.

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GHP FORECAST FOR HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000) Note: Columns may not add up due to rounding and omission of residual categories.

Total Nonfarm Total Private Goods Producing Service Providing Mining and Logging Oil and Gas Extraction Support Activities for Mining Construction Manufacturing Durable Goods Non-Durable Goods Wholesale Trade Retail Trade Transportation, Warehousing, and Utilities Utilities Air Transportation Truck Transportation Pipeline Transportation Balance, including Warehousing Water & Rail Information Telecommunications Finance and Insurance Real Estate and Rental and Leasing Professional and Business Services Professional, Scientific & Technical Services Legal Services Accounting, Tax Preparation, Bookkeeping Architectural, Engineering & Related Services Computer Systems Design & Related Services Adm & Support/Waste Mgmt & Remediation Administrative & Support Services Educational Services Health Care and Social Assistance Leisure and Hospitality Arts, Entertainment & Recreation Accommodation & Food Services Other Services Government Federal Government State Government State Government Educational Services Local Government Local Government Educational Services

Employment as of Dec '12 Dec '13

Net Change '12 '13

% Change '12 '13

2,738.7 2,363.3 520.8 2,217.9

2,815.1 2,438.5 545.8 2,269.3

92.2 92.7 28.3 63.9

76.0 74.8 24.5 51.5

3.5 4.1 5.7 3.0

2.8 3.2 4.7 2.3

96.9 53.8 40.6 186.1 237.8 160.5 77.3 141.7 287.4 131.3 17.7 19.3 23.6 11.0 59.7 31.6 15.6 93.1 48.8 390.0 189.2 23.6 17.8 61.1 27.1 179.2 169.7 44.3 305.1 268.2 26.8 241.4 101.0 375.4 27.1 73.5 39.7 274.8 193.0

100.3 56.1 41.5 202.5 243.1 164.7 78.4 144.7 291.5 134.1 18.4 19.4 24.3 11.3 60.7 31.8 15.7 94.4 49.4 397.9 192.0 23.8 18.0 61.9 28.0 184.0 174.5 44.6 319.7 279.4 27.6 251.8 105.3 376.6 27.1 73.9 40.0 275.6 193.8

4.1 3.0 1.0 17.2 7.0 7.5 -0.5 4.7 5.7 6.5 1.2 -0.5 1.1 0.3 4.4 0.1 -0.2 1.6 0.0 6.8 4.8 0.2 0.3 2.1 1.3 2.6 2.4 0.3 18.1 22.3 1.5 20.8 5.3 -0.5 -0.4 1.1 0.3 -1.2 0.3

3.1 2.2 0.8 16.2 5.3 4.2 1.1 3.0 4.1 2.8 0.7 0.1 0.7 0.3 1.0 0.2 0.1 1.3 0.6 8.0 3.7 0.2 0.3 1.5 0.9 4.9 3.8 0.3 14.6 11.2 0.8 10.4 4.3 1.2 0.0 0.4 0.3 0.8 0.8

4.4 5.9 2.5 10.2 3.0 4.9 -0.6 3.4 2.0 5.2 7.3 -2.5 4.9 2.8 8.0 0.3 -1.3 1.7 0.0 -0.1 -0.1 0.9 -2.2 -3.3 5.0 -0.2 -0.2 0.7 6.3 9.1 5.9 9.4 5.5 -0.1 -1.5 1.5 0.8 -0.4 0.2

3.1 4.1 1.8 8.7 2.2 2.6 1.4 2.1 1.4 2.1 4.0 0.5 3.0 2.7 1.7 0.6 0.6 1.4 1.2 2.0 1.5 0.8 1.1 1.2 3.3 2.7 2.8 0.7 4.8 4.2 2.8 4.3 4.3 0.3 0.0 0.5 0.8 0.3 0.4

SOURCE: GHP Research Department based on Texas Workforce Commission data

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