Houston’s economy continues to hold up quite well. Non-farm payrolls is up 3.3% above year-ago levels. This growth rate is off its high last year but is still strong, representing a gain of more than 80,000 jobs over the past 12 months. Annual upstream energy growth has slowed from a high last fall of about 10% to the current level of 6.5%, but this sector remains the strength of the Houston economy. Other sectors have gradually slowed due to the national economic slowdown. Yet, the energy independent economic base is still growing at a 2.5% annual rate and the large secondary sectors are growing at 3.3%. Residential construction activity is declining quite sharply. In May new residential permits were down 21% and single family permits were down 31%. Still, overall construction employment is still growing, as non-residential construction activity continues to be strong. We still expect the Houston economy to moderate further with employment growth falling to about 2.9%, but in contrast to most other major urban areas in the country, local economic growth will likely look even more impressive this year than last.

Dr. Barton Smith
Director
Institute for Regional Forecasting