Page 16 - NBIZ October 2020

project already underway halted in March; 38 percent had rise as merchants restock inventories depleted during the
at least one project ended in April. pandemic. On the other hand, the collapse in exploration ac-
tivity continues to stifle any demand for oil field equipment.
Wholesale trade will be one of the slower sectors to recoup
its pandemic job losses.

TRANSPORTATION AND WAREHOUSING
Passenger traffic through the Houston Airport System
(HAS) traffic has improved. Early in the pandemic, it was
down 90 percent. Today, traffic is down only 75 percent.
Though container volume at the Port of Houston is down
4.5 percent, those containers’ total weight is up 3.9 percent.
Shippers, to economize, appear to be packing more cargo
The market continues to soften. Through July, Houston into each box.
building permits track $900 million (18.4 percent) below Nationwide, rail traffic is down 15.8 percent through
last year’s pace. Construction starts in the nine-county July of this year, according to the American Railroad Asso-
area are down $3.7 billion (15.3 percent) compared to this ciation. The American Trucking Association reports freight
time last year. volumes are off 8.3 percent.
Contractors remain busy because they entered the Several air carriers have announced massive layoffs will
pandemic with sizable backlogs. But as those backlogs begin in October without any additional federal government
disappear, few new projects are coming in. Construction assistance. Manufacturing outside of oil and gas has started
will likely see further job losses as the pandemic wears on. to pick up, which should nudge demand for transportation
services. And as companies restock inventories, traffic at
RETAIL TRADE area ports and intermodal terminals should increase, giving
Retail, like energy, struggled before the pandemic. Local employment a boost.
employment peaked at 321,600 jobs in December 2016 and
has ratcheted lower ever since. The sector reported losses in FINANCE, INSURANCE, REAL ESTATE & RENTAL
2017, 2018 and 2019. Earlier in the decade, retail consis- Finance has fared well, with employment at banks,
tently added 5,000 to 8,000 jobs per year. brokerages and insurance agencies now above pre-pandem-
From February to April, retail sales fell $54.1 billion ic levels. Consumers rushing to buy or refinance a home,
(18.3 percent) nationwide. If not for the $11.8 billion surges the opening of a dozen or so bank offices and branches and
in online sales, the decline would have been worse. Local until recently, a hot stock market, has helped create finance
data is not available, but Houston likely experienced a jobs during the pandemic. This momentum should support
similar trend. additional growth over the coming months.
Since stores reopened in May, Houston’s retail sector Commercial real estate has struggled, however. The
has recouped two-thirds of the jobs lost in March and April. market recorded negative absorption for office, industrial
But those gains may be fleeting. Over 30 national retailers and retail space in the second quarter. Some tenants have
have declared bankruptcy, including Brooks Brothers, GNC, adopted a wait-and-see attitude to assess the impact of the
J. Crew, J.C. Penney, Lord & Taylor, Pier 1 Imports, Stage recession on their business before considering new space.
Stores, Stein Mart, Sur La Table and Tuesday Morning. Others are struggling to pay their current rent. Brokers
It doesn’t include the ”mom and pop” stores that closed have reported an uptick in inquiries in recent weeks,
without making headlines. suggesting demand may improve by Q4 2020 or Q1 2021.
Employment typically surges in the fall as retailers staff- Employment in commercial real estate will remain flat until
up for the holiday shopping season. The ongoing economic that happens.
uncertainty will temper any hiring this year.
ADMINISTRATIVE SERVICES
WHOLESALE TRADE The sector includes services to buildings (janitors,
The pandemic accelerated the shift from brick-and- housekeepers, security guards), employment services
mortar to online shopping. Open stores sold off existing (contract workers) and garbage collection.
inventory and pared back new orders to conserve cash. Employment in building services has grown during the
Oil field service firms stopped buying new equipment and pandemic, which is another case of mixed signals. With so
replacement parts for the same reason. This drop in demand many Houstonians working from home, offices don’t need
forced wholesalers to scale back their inventories and to be cleaned. But when someone is in the office, it needs to
reduce payrolls. be cleaned more often and disinfected.
Signals are mixed as to wholesale’s outlook over the There’s no mystery in employment services. With sales
next few months. The Wall Street Journal reports cargo down, businesses needed to cut costs. Contract workers
shipments from the Far East to the United States are on the were the first to go.

16 NBIZ ■ October 2020