It may not seem like a secret that things are looking better for Texas in 2017 than 2016. After a painful two years of oil trends, the data around energy, manufacturing and employment all seem to keep trending better for the Lone Star state. Housing has been mixed, but we should be getting more state-specific readings in the coming weeks.
24/7 Wall St. has taken a fresh look at several key local economic readings for Texas which support more growth in Texas. Some are rather definitive, and some are still more contextual rather than statistical.
One crucial issue that almost has to hold high for Texas is the price of oil. At $54.21 per barrel, the price of oil has been steady since ending 2016 at almost $54 per barrel. While intraday prices have seen more volatility, the price of crude generally has been stuck between $51.00 and $54.50. This is far better than the $30 (and worse) readings around the start of 2016, but it is still far from boom-time in the oil patch.
One top report from the Federal Reserve Bank of Dallas showed another improvement in the Dallas Manufacturing Survey. This index for February popped up to 24.5 (from 22.1) in the general activity index and jumped to 16.7 (from 11.9) in the production index. This manufacturing reading did show at least one area of caution as new orders slowed. Other measures of current manufacturing activity also indicated expansion:
- The new orders and growth rate of orders indexes fell but remained positive, coming in at 11.6 and 2.0, respectively.
- The shipments index also moved down but stayed positive, posting a reading of 12.2 in February.
- The capacity utilization index rose from 9.1 to 14.7 this month.
- The company outlook index posted a sixth consecutive reading above zero this month, but slipped slightly to 17.6.
- The Texas employment index posted a second positive reading in a row, rising from 6.1 to 9.6.
- Firms hiring showed 19% having net hiring, while 10% of firms had net layoffs.
Note that there are many more issues to consider outside of the Dallas Fed’s manufacturing index. One would be that most Texas regional reports would have very easy comparisons versus a year ago. Back then, oil was in the tank and energy-related layoffs were still coming on strong.
LinkedIn is not usually a source for economic reports, but here’s what the company has to say about the Houston jobs market. One February 22, LinkedIn sent us an email that job openings were more than 57,000 in the Houston, Texas area. That was versus over 49,000 job openings in the February 8 email.
Texas was recently featured as the seventh best state for businesses by 24/7 Wall St. That number may be lower than in prior years, but it is still a solid reading. The one-year real gross domestic product (GDP) change of 4.8% was the second highest in the nation. The average salary of $53,769 was the 12th highest in America, but the percentage of adults with a bachelor’s degree reading of 28.4% was the 23rd lowest. Texas was also listed as being the second highest among patent gains with some 9,934 patents issued. That special report said:
Texas is home to several of the nation’s largest metropolitan economies. While depressed oil prices have of late dealt much of the Texas economy a blow, the major metro economies of Dallas, Austin, and other areas have remained strong, providing companies throughout the state a solid climate to do business.
The most recent data from the Texas Employment Forecast predicted 1.9% growth for jobs in 2017. This suggested that 233,000 jobs will be added in Texas this year, but that was lower than the initial projection for 2.0% in job growth for 2017.
The 2016 to 2017 economic forecast from the Texas Comptroller’s office showed that 2004 was the first year the Texas economic gross state product hit $1 trillion — versus and estimate of $1.5 trillion in 2016. That state equivalent of a GDP report is for Texas to hit $1.69 trillion in 2020, $1.97 trillion in 2025, and $2.29 trillion in 2030.
At the end of 2016, Forbes showed that the $1.6 trillion Texas economy was the nation’s second largest, behind only California. Texas also was shown to hold 109 of the 1,000 largest public and private companies in the country.
Realtor.com released “America’s Hottest Real Estate Markets” for February 2017 showing that Texas had two of the top 20 hottest markets. Dallas was ranked as number three (versus fourth in January) and Midland ranked as number 12 (versus 27th in January).
The growth trends might not be universal, and some of the more recent data have to be viewed contextually rather than statistically. Regardless of each set of data, things are looking much better for Texas at the start of 2017 than in most of 2016.