Houston’s economy continues to strengthen as employers have expanded their payrolls by 79,800 jobs over the past 12 months ending in May, representing a 2.6% year-over-year gain. The industry sectors adding the most jobs over the past 12 months were professional, scientific, and technical services (18,000); durable goods manufacturing (13,300); health care (9,100); and other services (6,800). As a result, the metro area’s unemployment rate has fallen to 3.2%, its second lowest level on record, with the lowest being 3.1% in April ’81. Looking ahead, the Greater Houston Partnership is forecasting 71,000 overall jobs in 2019 and the University of Houston’s Institute for Regional Forecasting issued a medium forecast scenario that Houston could average 60,300 new jobs per year through 2021. Both forecasts are built on a $60-$65 oil price assumption.
OPEC recently agreed to extend production cuts of 1.2 million barrels per day until March 2020, which comes as the International Energy Agency and other market watchers peg back forecasts for demand amid a weakening global economy and soaring U.S. production. The extension was considered necessary to prevent crude prices from plunging and possibly trigger another oil bust just a couple of years after the last one ended. The extension is especially critical to the Houston oil and gas industry, which has been feeling the squeeze from lower than expected oil prices, disenchanted investors and shrinking budgets. During the second quarter, West Texas Intermediate (WTI) crude oil declined by 2.8% to just below the $60 per barrel mark, but has improved by 31.4% since hitting its recent low late in December 2018. Looking ahead, the U.S. Energy Information Administration (EIA) forecasts WTI to average $59 per barrel in 2019 and rise to an average of $63 per barrel in 2020.