As part of our semiannual forecasting effort, I recently looked at the current historical performance of the state’s regions and metro areas as well as their short-term prospects. In a nutshell, while there was a sluggish period in the middle, the past five years saw growth in communities large and small across the Lone Star State. New opportunities ranged from technology-oriented ventures to old economy standbys. Export-related activity led to increased prosperity, and ongoing health in many industries helped Texas weather the storm of a national economic downturn far better than many locales. Here’s a look at key trends in the state’s largest cities.
Over the past five years, the Houston metro area saw the addition of almost 89,000 net new jobs, largely in the services, government, and construction sectors. In fact, every other sector actually lost jobs (with the exception of agriculture, which is a very minor component of employment in the local area). The shift in the Houston economy toward services has been striking, and the once-dominant mining sector is expected to continue to shrink in importance in the years to come. By 2009, our forecast calls for growth in employment of almost 215,700 positions to reach a total of nearly 2.43 million. Over the same timeframe, output (as measured by real gross product—RGP) is projected to grow at a 4.05% compound annual rate, which is slightly slower than the statewide 4.15% clip.
The Dallas area gained an estimated 36,200 jobs over the 1999-2004 period. Notable declines in manufacturing were more than offset by services and government sector expansion. During the next five years, Dallas job growth will outpace the state rate, leading to the creation of more than 227,700 positions. Employment in all sectors of the local economy is anticipated to see net gains, with per annum rates ranging from 0.42% in mining to 2.64% in services. Dallas will continue to be one of the growth engines of the state, spurring activity in the surrounding region and beyond.
San Antonio was another pace setter over the past five years with job gains of about 50,000. Weakness in manufacturing was overcome by strength in many other areas including services, government, and wholesale and retail trade. Nearly 819,330 persons are now working in the metro area; this number is expected to hit 906,700 by 2009. In terms of output, San Antonio is anticipated to add more than $11.9 billion to the size of the economy in the next five years, bringing the total to $65 billion. Key growth industries will continue to be concentrated in the services segment.
Fort Worth-Arlington led the pace of job growth over the past five years with 2.15% per annum expansion, well above the Texas rate of 0.73%. The finance, insurance, and real estate sector was a key engine for growth, a trend which is expected to moderate slightly in the years to come. Fort Worth-Arlington is forecast to continue to be one of the leading growth areas in Texas, with output rising at a 4.37% annual pace to reach almost $70 billion by 2009.
Austin-San Marcos saw some tough times with the tech slowdown, but added more than 30,000 jobs even so. The effect of significant setbacks in manufacturing industries was moderated by growth in the area’s largest employment sectors (services, wholesale and retail trade, and government). Recovery in technology industries and efforts by many to cement the position of the Austin area as a center for emerging technologies will contribute to the growth prospects of the region. Austin-San Marcos is forecast to regain its position as the fastest-growing major metro area in the state, with job gains at a 2.18% clip and output expansion at a 4.48% rate. The next five years are likely to see the addition of almost 80,000 new jobs in the local area.
The number of wage and salary employees in El Paso topped 284,000 this year according to our estimates, representing growth of 9,600 jobs since 1999. Like most of Texas (and the nation), El Paso’s manufacturing sectors exhibited weak performance. Even so, gains across a spectrum of services industries were sufficient to result in aggregate job growth. Through the next five years, we expect expansion to remain at a moderate pace for the area.
All in all, the major cities of the state are anticipated to continue to be the source of economic opportunity for communities throughout the Lone Star State. In all, more than 726,500 net new jobs will be created in the largest metro areas. Dallas and Houston both hundreds of thousands alone, with Dallas expected to slightly outpace Houston in terms of new jobs added. These centers for growth will enhance prospects for all Texans.