HOUSTON (Greater Houston Partnership via Jeff Morgan-Wells Fargo) – December 16, 2019 – The Partnership’s forecast calls for the region to create 42,300 jobs in ’20. Growth in ’20 in Houston will occur out-side of energy, especially in sectors tied to population growth, the U.S. economy, and global trade.
- Health care, government, accommodation and food services, construction and administrative support services will turn in the strongest performances.
- Professional scientific and technical services and transportation and warehousing will see moderate gains.
- Other services, education services, finance and insurance real estate and arts, entertainment and recreation will log marginal growth.
- Manufacturing and wholesale trade will be flat to slightly up.
- Energy, retail and information will contract.
With unemployment at 3.6 percent, the U.S. labor market is the tightest it’s been in 50 years. The tight labor market has finally begun to affect wages and consumer optimism. The U.S. Bureau of Labor Statistics reports that the average hourly wage was 3.0 percent higher in October ’19 than a year prior. That’s affected consumer behavior
The outlook for global growth looks better today than it did a year ago. The Organisation for Economic Co-operation and Development (OECD) expects the global economy to grow 3.0 percent in ’20, marginally above the 2.9 percent this year, and decidedly not the crash many economists predicted earlier this year.
Over the past 10 years, more than $150 billion in construction contracts have been awarded in the Houston region. This activity has added 43.8 million square feet (msf) of office space, 88.4 msf of warehouse/distribution space, 43.4 msf of retail space, about 300,000 single-family homes, nearly 125,000 multi-family units, and more than $60 billion in new chemical plants and refinery upgrades to Houston’s property inventory.
Weakness in oil and gas continues to weigh on Houston’s manufacturing sector. The Partnership estimates that 25 to 33 percent of the region’s manufacturing jobs are tied to oil and gas extraction.That’s down from the height of the fracking boom, when as many as 40 percent supported upstream energy.
Exploration activity, already down in ’19, will continue to contract in ’20. Though few firms have finalized their exploration budgets for next year, cuts of 10 to 20 percent should be expected. EIA expects oil prices to slip in ’20, putting an even tighter squeeze on the cash flows of many firms. The industry will continue to see a high number of bankruptcy filings.