A Sustainable Workforce Starts With You

The latest benchmark revisions to the Houston MSA employment numbers show a significantly lower net gain of 200 jobs in 2015 and a more robust 18,700 in 2016, signaling that 2015 may have been slower than originally thought, but that momentum began to increase at a more rapid pace in 2016.For construction, which lags behind the overall Houston economy, public work continues to dominate.  The Texas Department of Transportation and Harris County Toll Road Authority have unveiled over $2 billion in freeway improvements over the next five years, with the hopes of dramatically improving mobility across the city.  
April 07, 2017
The following article originally appeared in the February newsletter to clients of Kiley Advisors, now a part of FMI Corporation, for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.Houston managed to squeak through 2016 with a net job growth of 14,800 jobs. For what many economists have stated is the worst recession to hit Houston in decades, that is a major achievement for our region and a testament to the diversification of our city.Thanks to our ever-growing Port of Houston and Texas Medical Center, and the heavy industrial boom on the east side of town, Houston was buffered from a more severe downturn. However, companies were also quicker to act. Right-sizing and making the difficult decisions early. Breaking the bone to ensure it resets itself right the first time.  
February 10, 2017
The following article originally appeared in the January newsletter to clients of Kiley Advisors, now a part of FMI Corporation, for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.“[2017] isn’t likely to be a banner year for the region’s economy, but it should be a further step on the road back to robust growth.” Those were the sentiments of Patrick Jankowski, Senior Vice President of Research at the Greater Houston Partnership, after unveiling his Houston employment forecast of 29,700 for 2017.For construction, however, there is still more pain to be had. Digging into Jankowski’s numbers, construction is predicted to lose 16,000 jobs in 2017, largely due to the expected slowdown in the heavy industrial work. City of Houston permits also continue to track down in total dollar volume from a year ago, and are more heavily weighted to renovations and additions rather than new construction.  
January 04, 2017
The following article originally appeared in the December newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.On November 10th, in front of thousands of attendees, Dr. Bill Gilmer, Director of the Institute for Regional Forecasting at the University of Houston, laid out his forecast for Houston in 2017. After recognizing the bumpy and considerably steep decline in the energy sector, Dr. Gilmer remained optimistic about Houston’s economy overall, feeling that the worst is likely in the rear view mirror and that Houston will begin to recover in 2017.Dr. Gilmer outlined a series of scenarios, largely dependent on when the energy sector will rebound, with the weighted average being a loss of approximately 22,000 job growth in 2016, 4,500 jobs added in 2017 and then ramping up to 74,800 jobs in 2018 and 85,100 in 2019.  
December 02, 2016
The following article originally appeared in the November newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.The worst is likely behind us.  At least that was the sentiment around a panel of economists discussing Houston’s economy.  While the recovery will be slower and longer than previous recessions, barring an unforeseen event, it appears that Houston is beginning to recover.The focus of the panel, instead, was on how far Houston fell before the change in direction.  An early re-benchmark of the employment numbers by the Federal Reserve Bank of Dallas shows employment numbers from the Texas Workforce Commission will likely be revised down, though how far is anyone’s guess.  
November 03, 2016
The following article originally appeared in the October newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.Did Houston already go into a recession? Jesse Thompson, Business Economist at the Federal Reserve Bank of Dallas - Houston Branch, noted the Houston Business Cycle Index shows that Houston entered a recession late 2015/early 2016. He provided a chart (right) showing the correlation between rig count and Houston’s core oil and gas related employment noting “further revisions will like confirm what we’ve already observed: that Houston’s economy is contracting, and that Houston may or may not be out of it yet.”However, fueling the recovery discussion is the renewed optimism in the Purchasing Managers Index’s oil and gas respondents, who for the first time in several months, seemed happier and more upbeat. The PMI itself increased to 46.1 in August – still in an overall contraction phase, but production, sales and new orders were all noticeably up, a leading indicator.  
October 13, 2016
The following article originally appeared in the September newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.The latest City of Houston permit data provided the local newspapers with headlines announcing that commercial construction was up 40% while residential construction floundered. However, upon closer inspection, the increase in the value of new permits is a direct result of medical, school and public work construction projects, while nearly all other sectors are relatively flat or slightly down compared to a year ago. Also trending is an increasing amount of renovation work versus the new construction, a trend likely to continue in the months ahead.The drop in residential permits isn’t as bad as suggested either. Builders are finding creative ways to offer homes in a lower price range. Metrostudy is projecting housing starts will end up down about 14% this year when compared to a year ago, but that drops Houston from the largest new home volume market nationally to the second largest, behind Dallas-Ft Worth.  
September 07, 2016
The following article originally appeared in the August newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.A tale of two market segments. As the second quarter numbers begin to role in, the precipitous drop of Class A general purpose office space construction and the rocketing growth of retail construction become increasingly clear. While the office market is breaking records in the amount of sublease space available (a 20 year high according to CBRE), and experiencing its first quarter of negative absorption in over five years, retail is thriving, with the strongest single quarter absorption since 2007 – nearly 1.5 msf, a record high occupancy rate and over 3 msf under construction, of which 85% is preleased.  
August 04, 2016
The following article originally appeared in the July newsletter to clients of Kiley Advisors, LLC for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.While Brexit and its implications globally are still being analyzed and debated, the United Kingdom’s decision to separate itself from the European Union is seen as a positive, and necessary, move.  While it will stunt the growth of Europe in the short term, to paraphrase Dr. Bill Gilmer with the Institute for Regional Forecasting, the train wreck is unavoidable so at least they are off the train.  
July 07, 2016
The following article originally appeared in the June newsletter to clients of Kiley Advisors, LLC  for the purpose of providing the latest leading indicators and industry issues to those clients. Reprinted with permission.When it comes to oil, $50 is not enough. Those were the sentiments of Jesse Thompson, Business Economist for the Federal Reserve Bank of Dallas, Houston Branch. Complimenting that opinion, Dr. Bill Gilmer, Director of the UH Bauer Institute for Regional Forecasting, earlier this month during his bi-annual symposium, noted that a non-volatile $60 price for oil would result in increased activity. The chart above shows the breakeven price, further supporting their claims.   
June 08, 2016