A publication of the Greater Houston Partnership

Volume 24 Number 5 May 2015

At Last, Some Good News The spot price for West Texas Intermediate (WTI), the U.S.
benchmark for light, sweet crude, closed at $59.63 per barrel on April 30. The following
day, Baker Hughes reported the fleet of drilling rigs working in North America fell to 905,
less than half the number of working rigs seven months ago. Both reports were good news
for the industry. Oil flirting with $60 suggests prices may be firming. A cellar-dwelling rig
count should gradually force production to decline, balancing supply and demand. Energy
markets welcomed these signs of hope. In April, they received several others:
RigData reported that 2,600 fewer wells were drilled in Q1/15 versus Q1/14. Since the
typical shale well delivers 70-80 percent of its production in the first year, a drop in new
wells drilled portends a near-term drop in production.
The U.S. Energy Information Administration (EIA) forecast production in the Bakken,
Eagle Ford and Niobrara would drop by 70,000 barrels per day in May. These fields,
along with the Permian Basin and the Utica, account for 95 percent of U.S. production
growth over the past few years.
EIA also reported that U.S. refiners have increased their crude purchases. Refinery input
always slips in the spring as plants idle capacity for routine maintenance and overhauls.
As the summer driving season approaches and repairs are completed, refiners ramp up
their crude purchases. EIA reports that U.S. refiners demand for crude rose by more
than 900,000 barrels per day in late April.
The inventory build at Cushing, Oklahoma, appears to be slowing. From December
through March, inventories grew by an average of 2.1 million barrels per week. The
pace slowed to 1.0 million barrels in mid-April. In the week ending April 24, inventories
actually fell by half a million barrels.
In its April Short-Term Energy Outlook (STEO), EIA forecast U.S. production to decline May through September before growth, fed by higher oil prices, resumes in October. EIA projects U.S. production will average 9.2 million bbl/d in 15 and 9.3 million
bbl/d in 16.
Though supply and demand have a more sustainable impact on prices, the escalating
violence between Saudi Arabia and Yemen, Irans reported firing of shots across the
bow of a cargo ship near the Strait of Hormuz, and the continued civil unrest in Libya
and Iraq has also helped boost crude prices.
May 2015

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HOUSTONTHE ECONOMY AT A GLANCE

If history is a guide, the North American rig count may also be approaching a bottom. Since 90, the industry
has experienced five down cycles in
which the rig count has fallen by 40
percent or more. The sharpest decline
occurred from September 08 to June
09 when the rig count fell 56.9 percent. The current rig count needs to
lose only 74 more rigs to equal the
worst percentage decline in the past
25 years.

STEEPEST DROPS IN THE NORTH AMERICAN

RIG COUNT - 90 TO THE PRESENT
Time Frame

Rigs Lost

% Decline

Dec 90 Jun 92

-583

-49.4

Sep 97 May 99

-520

-51.2

Jul 01 Apr 02

-555

-42.9

Sep 08 Jun 09

-1,155

-56.9

Sep 14 Apr 15

-922

-53.1

Source: Baker Hughes, Inc.

Over the past few months, many exploration firms have drilled wells but chosen not to
complete them, essentially storing oil in the ground until crude prices rose and fracking
costs fell. Now, at $59 per barrel, a well producing 1,000 barrels per daytypical for an
Eagle Ford wellgenerates $16,000 more per day in cash flow than it did in mid-March,
or nearly $500,000 more per month. Furthermore, completion costs are down by 10-30
percent. Tudor, Pickering & Holt notes that every 10 percent reduction in well costs lowers
the breakeven point of a well by $5 a barrel. Of course, this figure will vary by well, formation, and the companys internal cost structure.
Halliburton estimates as many as 4,000 wells in North America await fracking, about twothirds of them in Texas. This fracklog is a mixed blessing. On one hand, it represents
much needed business for oil field service companies. On the other hand, it represents an
additional 400,000 to 500,000 additional barrels of daily production that would delay the
markets recovery.
Negotiations with Iran might further complicate the situation. Iran is believed to hold at
least 30 million barrels in storage, and EIA believes that the nation has the technical capability to ramp up crude oil production to at least 700,000 bbl/d by the end of 16. The pace
and magnitude at which those volumes reach the market would depend on terms of the
final agreement.
Job Growth Weak But Still Positive Metro Houston created 82,500 jobs in the 12
months ending March 14, a 2.9 percent increase.1 A look at the monthly data is more
telling. The region created 5,500 jobs in March, the second weakest March for job growth
in the past 15 years. If not for strong growth in May, September and October last year, the

Metro Houston includes Austin, Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery and Waller counties.

May 2015

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HOUSTONTHE ECONOMY AT A GLANCE

running 12-month total would be significantly lower. As Houston moves further into 15,
when more layoffs are anticipated, the 12-month total undoubtedly will trend downward.
Layoffs announced to date in the energy industry have finally begun to appear in the employment data. In March, mining and logging (which in Houston is mainly oil and gas) lost
700 jobs. Wholesale trade, which is closely linked to oil and gas, lost 2,200. Business and
professional services, which includes engineering, was essentially flat. Employment services, the sector responsible for temporary and contract workers, fell by 1,800 jobs in
March and by 10,500 since August 14.
The crash in oil prices has impacted local employment in oil and gas, but not to the extent
one would imagine from commentary in the national media. The Wall Street Journal and
Bloomberg have reported industrywide layoffs of 100,000 and 140,000 respectively, their
figures likely derived from adding up all the announcements that have appeared their publications. To put those numbers in perspective, the U.S. Bureau of Labor Statistics reports
that U.S. employment in oil and gas extraction totaled 201,900 in December 14. BLS also
reports the industry has lost 5,100 jobs since then. The discrepancy suggests layoffs have
been announced but not taken place yet, have taken place outside the U.S., or have been
overstated by the media.
The Greater Houston Partnership anticipates more layoff announcements in coming weeks,
and the monthly employment reports may turn negative. However, the Partnership doesnt
expect a draconian downturn, and certainly not a drop of the magnitude the national media
have portrayed. In its April 15 STEO, EIA actually forecasts drilling activity to increase
this autumn even with lower prices for WTIas companies take advantage of lower
costs for leasing acreage, drilling and well completion. Simmons & Co. notes that workforce cuts already have reached the point where the industry would have difficulty handling
a sudden increase in demand. This situation suggests that late 15 or early 16 will see less
pressure to control costs by reducing payroll, and that employment growth may return.
Going Global Houstons ties to
the global economy extend beyond
crude, chemicals and oil field
equipment. The Partnership is currently analyzing the regions ties to
the global economyties that will
offset the impacts of the downturn
in the oil and gas industry. On May
27 at the JW Marriott Galleria, the Partnership will present the results of that analysis.
Following the report, local experts in trade finance, global supply chains, third-party logistics and international marketing will share their insights on conducting global business
from the Texas Gulf Coast. Panelists participants are:
May 2015

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HOUSTONTHE ECONOMY AT A GLANCE

Lori Vetters, Sr. VP and Regional Commercial Executive, HSBC Holdings

John Magee, President and CEO, Crane Worldwide Logistics

Sam Bikman, Sr. VP Global Supply Chain, Goodman Global Inc.

David Peebles, Vice President, Business Development, Odebrecht Group

Attendees will receive a copy of the Partnerships formal analysis, which will discuss the
number of firms here doing business abroad, their impact on the regions economy, recent
trends in foreign direct investment in Houston, and potential demand for Houstons exports. Attendees will receive both this document and a second study, a historical analysis
of Houstons import/export flows.
More information about the May 27 event can be found by clicking here or visiting the
Events section under the Membership tab at www.houston.org.

May 2015

2015, Greater Houston Partnership

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HOUSTONTHE ECONOMY AT A GLANCE

SNAPSHOT HOUSTONS KEY ECONOMIC INDICATORS

Building Permits City of Houston construction permits totaled $8.9 billion for the
12 months ending March 15, up 40.3 percent from $6.3 billion for the 12 months ending
March 14. According to the latest data released by the citys Department of Public
Works & Engineering Planning & Development Services, residential permit values rose
32.4 percent from $2.4 billion to $3.2 billion, and nonresidential permits grew 45.2 percent from $3.9 billion to $5.7 billion.
Inflation The cost of consumer goods and services as measured by the Consumer
Price Index for All Urban Consumers (CPI-U) decreased 0.1 percent nationwide from
March 14 to March 15, its third consecutive decline. According to data released today
by the U.S. Bureau of Labor Statistics, the decrease is a result of an 18.3 percent drop in
the energy index. Core inflation (all items less the volatile food and energy categories)
rose 1.8 percent over the past 12 months.
Home Sales The Houston housing market rebounded strongly in March after a slowdown in February. Total property sales, single-family home sales, total dollar volume
and pricing all posted over the year gains. Houston-area realtors sold 6,232 homes in
March 15, up 3.8 percent from 6,005 sold the same time last year. Total dollar volume
increased 9.0 percent over the year to $2.0 billion in March. Home prices reached record
highs for a March with the average sales price of a single-family home increasing 6.5
percent to $276,837 and the median price of a single-family home rising 8.9 percent to
$208,000.
Purchasing Managers Index The Houston Purchasing Managers Index (PMI), a
short-term leading indicator for regional production, registered 44.5 in March, a sharp
drop from 49.3 in February, according to the latest report from the Institute for Supply
Management-Houston (ISM-Houston). For the third consecutive month, the PMI is signaling potential contraction in production in the near term.
Vehicle Sales Houston-area auto dealers sold 30,119 vehicles in March 15, a 20.2
percent decrease from the 37,733 sold March 14, according to TexAuto Facts, published
by InfoNation, Inc. of Sugar Land. For the 12 months ending March 15, vehicle sales
totaled 363,876, a 1.4 percent increase from the 358,861 sold in the 12 months ending
March 14. The running total, however, has slipped from its most recent peak of 376,598
vehicles sold in the 12 months ending January 15.
Patrick Jankowski and Jenny Philip
contributed to this issue of
Houston: The Economy at a Glance
May 2015

2015, Greater Houston Partnership

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HOUSTONTHE ECONOMY AT A GLANCE

Stay Up To Date!
To access past issues of Economy at a Glance, please click here.
If you are a nonmember and would like to receive this electronic publication, please email
your request for Economy at a Glance to echambers@houston.org. Include your name, title
and phone number and your companys name and address. For information about joining
the Greater Houston Partnership, call Member Services at 713-844-3683.
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 e-mail, usually accompanied by commentary, please email your request for Key Economic Indicators to
echambers@houston.org with the same identifying information. You may request Glance
and Indicators in the same email.

May 2015

2015, Greater Houston Partnership

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HOUSTONTHE ECONOMY AT A GLANCE

HOUSTON MSA NONFARM PAYROLL EMPLOYMENT (000)

Change from
Feb '15
Mar '14

% Change from
Feb '15
Mar '14

Mar '15

Feb '15

Mar '14

2,971.2
2,585.0
574.6
2,396.6
2,010.4

2,965.7
2,579.6
574.6
2,391.1
2,005.0

2,888.7
2,509.2
558.2
2,330.5
1,951.0

5.5
5.4
0.0
5.5
5.4

82.5
75.8
16.4
66.1
59.4

0.2
0.2
0.0
0.2
0.3

2.9
3.0
2.9
2.8
3.0

Mining and Logging

Oil & Gas Extraction
Support Activities for Mining

113.0
54.8
55.7

113.7
54.9
56.0

107.5
53.8
52.5

-0.7
-0.1
-0.3

5.5
1.0
3.2

-0.6
-0.2
-0.5

5.1
1.9
6.1

Construction

206.9

206.1

198.3

0.8

8.6

0.4

4.3

Manufacturing
Durable Goods Manufacturing
Nondurable Goods Manufacturing

254.7
173.3
81.4

254.8
174.0
80.8

252.4
172.5
79.9

-0.1
-0.7
0.6

2.3
0.8
1.5

0.0
-0.4
0.7

0.9
0.5
1.9

Wholesale Trade

169.3

171.5

165.6

-2.2

3.7

-1.3

2.2

Retail Trade

296.8

295.7

288.2

1.1

8.6

0.4

3.0

Transportation, Warehousing and Utilities

Utilities
Air Transportation
Truck Transportation
Pipeline Transportation

135.6
16.0
20.2
25.5
10.5

134.9
16.0
20.1
25.4
10.4

132.0
15.7
20.6
24.2
10.1

0.7
0.0
0.1
0.1
0.1

3.6
0.3
-0.4
1.3
0.4

0.5
0.0
0.5
0.4
1.0

2.7
1.9
-1.9
5.4
4.0

Information
Telecommunications

33.2
15.1

33.2
15.1

33.1
15.1

0.0
0.0

0.1
0.0

0.0
0.0

0.3
0.0

Finance & Insurance

94.4

93.6

92.7

0.8

1.7

0.9

1.8

Real Estate & Rental and Leasing

54.4

54.4

53.1

0.0

1.3

0.0

2.4

466.1
223.0
25.3
25.1
75.8
33.2
209.5
199.6
72.9

466.2
222.5
25.5
25.3
76.1
32.8
210.3
200.0
74.7

455.4
214.4
23.5
24.3
72.2
31.6
207.1
196.7
77.8

-0.1
0.5
-0.2
-0.2
-0.3
0.4
-0.8
-0.4
-1.8

10.7
8.6
1.8
0.8
3.6
1.6
2.4
2.9
-4.9

0.0
0.2
-0.8
-0.8
-0.4
1.2
-0.4
-0.2
-2.4

2.3
4.0
7.7
3.3
5.0
5.1
1.2
1.5
-6.3

54.8

55.0

52.1

-0.2

2.7

-0.4

5.2

Health Care & Social Assistance

307.3

306.5

293.5

0.8

13.8

0.3

4.7

Arts, Entertainment & Recreation

30.1

28.6

28.9

1.5

1.2

5.2

4.2

Accommodation & Food Services

265.0

261.8

253.3

3.2

11.7

1.2

4.6

Other Services

103.4

103.6

103.1

-0.2

0.3

-0.2

0.3

Government
Federal Government
State Government
State Government Educational Services
Local Government
Local Government Educational Services

386.2
27.8
73.4
40.3
285.0
199.6

386.1
27.7
73.0
40.1
285.4
200.0

379.5
27.6
73.1
40.0
278.8
194.9

0.1
0.1
0.4
0.2
-0.4
-0.4

6.7
0.2
0.3
0.3
6.2
4.7

0.0
0.4
0.5
0.5
-0.1
-0.2

1.8
0.7
0.4
0.7
2.2
2.4

Total Nonfarm Payroll Jobs

Total Private
Goods Producing
Service Providing
Private Service Providing

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

SOURCE: Texas Workforce Commission

May 2015

2015, Greater Houston Partnership

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HOUSTONTHE ECONOMY AT A GLANCE

Houston Economic Indicators

A Service of the Greater Houston Partnership

YEAR-TO-DATE TOTAL or
YTD AVERAGE*

MONTHLY DATA
Month

Most
Recent

ENERGY
U.S. Active Rotary Rigs
Spot Crude Oil Price ($/bbl, West Texas Intermediate)
Spot Natural Gas ($/MMBtu, Henry Hub)

Apr '15
Apr '15
Apr '15

976
52.56
2.67

1,835
102.50
4.66

-46.8
-48.7
-42.7

1,302 *
49.91 *
2.82 *

1,793 *
99.63 *
4.83 *

-27.4
-49.9
-41.6

UTILITIES AND PRODUCTION

Houston Purchasing Managers Index
Nonresidential Electric Current Sales (Mwh, CNP Service Area)

Mar '15
Mar '15

44.5
4,291,555

57.1
4,006,924

-22.1
7.1

47.6 *
12,601,981

57.6 *
12,466,019

-17.4
1.1

Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15

1,237,630,000
317,448,000
920,182,000
626,751,768
480,005,443
250,708,550
229,296,893
146,746,325
124,042,056
22,704,269

2,115,385,000
1,294,257,000
821,128,000
630,151,045
422,557,697
241,994,592
180,563,105
207,593,348
188,135,844
19,457,504

-41.5
-75.5
12.1
-0.5
13.6
3.6
27.0
-29.3
-34.1
16.7

Mar '15
Mar '15
Mar '15

7,564
208,000
28,507

7,298
191,000
28,085

3.6
8.9
1.5

17,942
199,333 *
27,684 *

Mar '15
Mar '15
Mar '15

2,971,200
574,600
2,396,600

2,888,700
558,200
2,330,500

2.9
2.9
2.8

2,960,833 *
574,433 0
2,386,400 0

Mar '15
Mar '15
Mar '15

4.2
4.2
5.6

5.2
5.4
6.8

Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15
Mar '15

4,062,416
4,652,692
3,748,267
904,425
68,261
37,703
19,463
18,240

3,739,892
4,589,282
3,730,805
858,477
70,867
36,774
19,270
17,504

8.6
1.4
0.5
5.4
-3.7
2.5
1.0
4.2

11,698,392
12,633,395
10,178,283
2,455,112
193,506
112,267
60,688
51,579

10,805,022
12,393,293
10,055,529
2,337,764
200,259
104,015
55,455
48,560

8.3
1.9
1.2
5.0
-3.4
7.9
9.4
6.2

Mar '15
Mar '15
Mar '15
3Q14

30,119
12,585
17,534
31,494

37,733
16,214
21,519
23,423

-20.2
-22.4
-18.5
34.5

85,587
35,538
50,049
88,671

95,709
41,198
54,511
78,749

-10.6
-13.7
-8.2
12.6

Mar '15
Mar '15

210.283
236.119

211.745
236.293

-0.7
-0.1

210.755 *
234.849 *

211.262 *
234.997 *

-0.2
-0.1

4Q14
4Q14
4Q14

68.1
106.52
72.49

65.9
101.26
66.77

5.2
8.6

71.8 *
106.87 *
76.76 *

69.1 *
101.19 *
69.92 *

5.6
9.8

CONSTRUCTION
Total Building Contracts ($, Houston MSA)
Nonresidential
Residential
Building Permits ($, City of Houston)
Nonresidential
New Nonresidential
Nonresidential Additions/Alterations/Conversions
Residential
New Residential
Residential Additions/Alterations/Conversions
Multiple Listing Service (MLS) Activity
Property Sales
Median Sales Price - SF Detached
Active Listings
EMPLOYMENT (Houston-Sugar Land-Baytown MSA)
Nonfarm Payroll Employment
Goods Producing (Natural Resources/Mining/Const/Mfg)
Service Providing
Unemployment Rate (%) - Not Seasonally Adjusted
Houston-Sugar Land-Baytown MSA
Texas
U.S.
TRANSPORTATION
Port of Houston Authority Shipments (Short Tons)
Air Passengers (Houston Airport System)
Domestic Passengers
International Passengers
Landings and Takeoffs
Air Freight (metric tons)
Enplaned
Deplaned
CONSUMERS
New Car and Truck Sales (Units, Houston MSA)
Cars
Trucks, SUVs and Commercials
Total Retail Sales ($000,000, Houston MSA, NAICS Basis)
Consumer Price Index for All Urban Consumers ('82-'84=100)
Houston-Galveston-Brazoria CMSA
United States
Hotel Performance (Houston MSA)
Occupancy (%)
Average Room Rate ($)
Revenue Per Available Room ($)

May 2015

Year
%
Earlier Change

Most
Recent

4,516,399,000
1,816,808,000
2,699,591,000
1,878,985,666
1,168,029,228
576,029,396
591,999,832
710,956,438
649,130,852
61,825,586

4.3 *
4.4 *
5.8 *

2015, Greater Houston Partnership

Year
Earlier

5,324,440,000
3,132,159,000
2,192,281,000
1,695,355,325
1,146,101,442
600,190,018
545,911,424
549,253,883
490,869,079
58,384,804

%
Change

-15.2
-42.0
23.1
10.8
1.9
-4.0
8.4
29.4
32.2
5.9

18,038
184,247 *
28,031 *

-0.5
8.2
-1.2

2,876,033 *
557,000 *
2,319,033 *

2.9
3.1
2.9

5.5 *
5.7 *
6.9 *

Page 8

HOUSTONTHE ECONOMY AT A GLANCE

Sources
Rig Count
Spot WTI, Spot Natural Gas
Houston Purchasing Managers
Index

Baker Hughes Incorporated

U.S. Energy Information Admin.
National Association of
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

May 2015

Port Shipments
Aviation
Car and Truck Sales
Retail Sales
Consumer Price Index
Hotels
Postings, Foreclosures

2015, Greater Houston Partnership

Port of Houston Authority

Aviation Department, City of
Houston
TexAuto Facts Report, InfoNation, Inc.,
Sugar Land TX
Texas Comptrollers Office
U.S. Bureau of Labor Statistics
PKF Consulting/HospitalityAsset
Advisors International
Foreclosure Information &Listing
Service

Page 9

HOUSTONTHE ECONOMY AT A GLANCE

3,000

150

2,900

120

2,800

90

2,700

60

2,600

30

2,500

2,400

-30

2,300

-60

2,200

-90

2,100

-120

2,000

12-Month Change (000)

Nonfarm Payroll Employment (000)

Nonfarm Payroll Employment, Houston MSA

-150
'05

'06

'07

'08

'09

'10

'11

12-Month Change

'12

'13

'14

'15

'16

Total Payroll Employment

Source: Texas Workforce Commission

Goods-Producing and Service-Providing Employment

Houston MSA
620

2,500

2,300
540

2,200
2,100

500

2,000
460

Service-Providing Jobs (000s)

Goods-Producing Jobs (000s)

2,400
580

1,900
420

1,800

'05

'06

'07

'08

'09

'10

Goods-Producing Jobs

'11

'12

'13

'14

'15

'16

Service-Providing Jobs

Source: Texas Workforce Commission

May 2015

2015, Greater Houston Partnership

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HOUSTONTHE ECONOMY AT A GLANCE

Unemployment Rate - Houston, Texas and U.S.
11
10

% Civilian Labor Force

9
8
7
6
5
4
3
'05

'06

'07

'08

'09

'10

Houston

'11

'12

Texas

'13

'14

'15

'16

U.S.

Source: Texas Workforce Commission

Spot Crude and Natural Gas Prices

160

16

140

14

120

12

100

10

80

60

40

20

0
'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

Natural Gas, $ /mcf

WTI, $ barrel

Monthly Averages

'16

WTI
Natural Gas
Source: U.S. Energy Information Administration

May 2015

2015, Greater Houston Partnership

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