Houston seems to be putting the effects of low oil prices behind it, although the recovery in oil and chemicals remains tentative. Local job growth in mining and manufacturing is turning positive, and the Houston Purchasing Managers Index also points to turnaround and slow expansion in oil extraction and manufacturing. If confidence can be developed that high oil prices are sustainable, Houston could hop on the fast track for job growth in 2000. Retail and Auto Sales Retail sales softened in October and November, but the long, warm autumn was generally blamed for the slower sales. A good cold snap and some winter weather are needed to get customers excited about what is now on display.
Home furnishings continue to be the star of the retail sector.
Houston auto sales in October were flat compared with last year, but October 1998 set a very strong record. The price of heating oil and gasoline both followed the price of crude upward, but not by the full amount of the crude price increase. The result was that refiners' profit margins, already quite weak, were pushed down even further. Texas and Louisiana refiners responded to poor demand and weak margins by cutting back production to less than 90 percent of capacity. However, the increase in oil service work remains less than proportional to the rig increase.