The Greater Waco economy has advanced beyond recovering from recession to entering a “new growth” phase, as its June numbers for employment, spending and construction set a record dating back to August 2007, an Amarillo-based economist reported Wednesday.
Karr Ingham, who prepares a monthly snapshot of local economic activity, said the index hit 112 in June, besting the previous high mark of 111.7.
“The first half of 2013 was clearly a period of strong growth and expansion in the greater Waco area economy,” Ingham wrote in his report.
“The Greater Waco Economic Index has grown by nearly 4 percent in the first six months of the year, and all components are solidly improved through June compared to the first half of 2012.”
Ingham prepares his report for the First National Bank of Central Texas and the Tribune- Herald.
Two factors — spending and employment — continue to play a prominent role in the area’s economic resurgence.
Inflation-adjusted spending was up 4 percent from the first six months of last year in Waco and nine surrounding communities, according to sales tax receipts.
Meanwhile, the Waco area created 2,400 jobs in the 12 months through June, and Ingham thinks there will be “a steady addition of jobs over time” as the economy expands.
That does not mean the community won’t encounter blips along the way, as businesses shed workers as part of cost-cutting moves. Recent announcements by Providence Healthcare Network, Oak Farms, Sterling Trust and Myers Industries will mean the loss of 377 jobs.
But, overall, the June economic report reflects more highlights than low points, at least through midyear.
For the April-June quarter, spending on new and used autos was up 10.7 percent from the second quarter a year ago; year-to-date, they are up 5.7 percent.
“We’re seeing the same trend here. Customers come in and seem to be in a buying mood,” said Amy Hunter, general manager of Jeff Hunter Toyota/ Scion.
She said the new-look Avalon has become a popular choice, “but the Camry remains our top seller.”
Hotel tax record
Hotel/motel tax collections during the second quarter reached $570,691, which is the highest quarterly total since Ingham began tallying data in 2000, and 9 percent more than the previous high of about $522,000 during the third quarter of 2008.
Year-to-date, spending on hotel/motel occupancy is up 11 percent from the first six months of 2012.
“I think a significant part of that increase can probably be attributed to the economy as a whole, and I know that other areas of Texas, namely Bryan-College Station, are enjoying similar trends,” said Liz Taylor, director of the Waco Convention and Visitors Bureau.
“I think business people are ready to do business, and travel is a part of that. You also have to consider the major projects going on in Waco, construction of Baylor Stadium, for example, and the travel they may generate.
“I know we’re getting a lot more calls from convention groups asking for proposals from us and hotels in the area,” she said. “I don’t know that this is cause for celebration because it may not last forever.”
The value of building permits for new construction topped $333 million during the second quarter, an increase of 607 percent from the second quarter last year.
That figure is skewed by the awarding of a permit to build Baylor’s new $250 million football stadium, which will open in fall 2014.
Still, Ingham said, construction activity was up 165 percent from last year through April, one month before the permit was issued for the stadium in May.
Housing construction was up sharply in June, pushing the quarterly total for new-home permits to 37 percent more than the same period last year. For the year to date, the number of permits issued to build new homes is 24 percent above the first six months of last year.
“Right now, everybody is going right along. I seriously doubt anyone does not have work,” said Kent Garbett, president of the Heart of Texas Builders Association.
“Making that apparent is that window packages for homes used to arrive within two weeks. Now it’s taking four to five weeks, meaning there is a backlog and builders are busy.”
He added: “Interest rates have crept up a point, so looking down the road, we’ll have to see if that has any impact. Inside sources say they’ll probably go back down by the end of the year. Material costs finally have leveled off in the past 90 days, and the lumberyards I talk to say they should remain stable through the end of the year.”
A shortage of supply, caused in part by tornadoes in Oklahoma and the plant explosion in West, had driven prices upward.
Existing home sales jumped 13 percent during the second quarter compared to the same period last year, and are up more than 12 percent for the year.
“Strange though it may seem, the 1,117 recorded sales in the first six months of the year is still down compared to each year 2003-08,” Ingham said.
Monte Hulse, chairman and CEO of the First National Bank of Central Texas, said his bank and others locally are seeing increased demand for both residential and commercial real estate loans.
“Hopefully, that will continue into the fall,” he said, “though sometimes we see a bit of a slowdown at the end of the year.”