Like the rest of the country, the Houston economy continues to weather the effects of the ongoing COVID-19 pandemic. Fortunately, in the Houston area the midsummer surge in hospitalizations has steadily declined since the beginning of July and the positivity rate on tests has stayed under 5% for three consecutive weeks according to statistics maintained by the Texas Medical Center. While caution is still warranted, it is encouraging that more retail, restaurant, and office businesses are poised to reopen as Texas Governor Abbott announced an easing of restrictions to allow these businesses to increase their capacity to 75%.
Looking at the most recent payroll numbers from the Bureau of Labor Statistics, Houston lost 350k jobs in March and April, quickly recovered 126.7K of those jobs in May and June, then stalled out in July and August as Texas responded to a resurgence in coronavirus cases. As of now, using seasonally adjusted payroll data, we have only recovered 33.5% of jobs lost during the March/April lockdown. It is important to note that the recovery has been uneven with losses continuing to compile in key Houston industries like the oil-dependent Mining and Logging and Manufacturing sectors. However, it is promising that more office dependent industries are recovering at a more robust 65.6% pace through August. Looking ahead, the University of Houston Institute for Regional Forecasting projects that Houston will end 2020 down 128.6k jobs but rebound in 2021 to add 111.8k jobs and 100.1k jobs in 2022.
While a broad recovery has not yet arrived for the oil and gas sector, the overall outlook has improved. The quarterly energy survey produced by the Dallas Federal Reserve shows that the pace of contraction has significantly lessened now that prices have stabilized near $40 and are expected to end the year in the $40-45 range. While most respondents to the survey do not expect a substantial increase in the rig count to come until prices are at least above $50, more respondents report their primary goal is to either grow or maintain production levels than reducing costs.