Houston economy was going at a good clip until Harvey fury struck

washington — Houston’s economy has had some spring in its step thanks to a recovery in oil production after a more-than-year-long slump. Now, the nation’s fourthlargest city faces a new and more daunting challenge: rebounding from an epic storm named Harvey.

Downpours measured in feet have crippled the city and rescue efforts are still ongoing in many neighbourhoods. The economic toll of Harvey, which made landfall south of Houston as a category 4 hurricane, won’t be known for a while and the Federal Emergency Management Agency says more than 450,000 residents will require assistance.

Up until now, the outlook for the Houston metropolitan area’s economy, where United Continental Holdings, Exxon Mobil Corp and Wal-Mart Stores are among the biggest employers, has been steady. The Federal Reserve Bank of Dallas — whose district spans Texas and parts of neighbouring states — said in its latest summary that “June data were generally positive for Houston, pointing toward a healthy economy.”

A report on Monday from the Fed bank on the Texas manufacturing outlook showed solid growth during the August 15 to 23 survey period.

The Houston Business Cycle Index has expanded an annualised 3.2 per cent so far this year compared with a more than 1.8 per cent annualised decline through most of last year, according to the Dallas Fed. “Movements in the index suggest that the Houston economy is expanding again after nearly two years of modest contraction,” the bank said in an August 1 report.

It’s been steady-as-she-goes in Houston’s labour market as well. While there will undoubtedly be some displacements after Harvey, clean-up and rebuilding efforts will provide many with more opportunities. Employment in Houston is up 1.8 per cent from a year ago compared with 1.5 per cent for the US.

The largest gains in the second quarter, according to the Dallas Fed, were in business services, manufacturing and education and health services. Construction employment has fallen due to a slowdown in commercial building, particularly office-space projects.

The area’s housing market has been holding up. While sales of previously owned homes cooled in May and June, they’re near the high end of a range that has persisted since the start of 2013.