San Angelo Economy Ends Year on High Note

San Angelo’s economy has continued to grow throughout 2014, marking the 51^st straight month of increases in sales tax rebated over previous month in October.

A huge jump of nearly 20.7% over October 2013 brought the year’s total up to 11.8% over 2013, and despite dropping oil prices, the local Chamber of Commerce is optimistic that the city will stay on top through 2015, beating out sales of this year, if only at a somewhat more moderate pace.

Chamber of Commerce President Phil Neighbors has been monitoring the city’s growth, and noted that in 2014, San Angelo ranked second highest to the other 25 metropolitan areas in the state as far as growth, falling only behind Midland/Odessa who pulled in 14-15% of growth over the previous year.

“It’s just very, very strong,” Neighbors said. “It’ll be interesting to see how we do next year; if we can continue the trend, or how long we can continue the trend of these increases.”

The city receives 1.5% of sales and use taxes back from the state comptroller, Neighbors explained. The chamber uses the figures as a barometer for business growth in the area.

“We’ve had increases for the 51 straight months, but some of them have been as small as .9, less than 1% increase,” he detailed. “Others have been as high as this one, 20.7%. So the increases vary widely, but that shows how much the purchasing has heated up in October of this year.”

One of the main contributors to the growth has been the city’s rising employment rate. Over the past year, San Angelo’s employment rate has risen from 53, 397 to 54,290, a total of 893 more people working in San Angelo.

“If there are 500, 800, 1,000 more people working than there were a year ago, that is directly inputted into purchases…and everything that goes into the local economy,” Neighbors explained.

A number of new jobs have been added to the local economy in the past year, among them many focused on energy as well as retail and wholesale workers. However with a drop in oil prices currently underway, Neighbors anticipates that San Angelo’s economy will remain fairly secure.

“We’re monitoring all of the indicators as we move forward,” he said. “We estimate that at least 30-40% of the growth in the last couple of years could be attributed directly to energy and its spin-off. Of course there have been indirect benefits as well. We do not anticipate ‘a bust’ in the sense that it has been a gradual ramp up and we think that if there are some declines in energy production, new drilling next year, that everything that has been added to the region in the way of producing wells will continue to have to be serviced as long as they’re operated.”

A lot of the energy sector jobs that have come to San Angelo have been back office and supplier positions, he said, and some of the workers from the Sprayberry and Wolfcamp areas have begun staying closer to those areas as opposed to taking up temporary residence in San Angelo, as they did a year or two prior.  

“I think a small amount of the population increase could be temporary,” he said. “A lot of it has been indirect growth. It’s hard to measure. We have been underbuilt in both multi-family and single-family residences and a lot has come online the last six months of this year and a lot more will come online in 2015.”

Some of the city’s development in the past year has also been in the military and healthcare sectors, Neighbors said, accompanied by growth in tourism.

Some 221 new hotel rooms came online in 2014, and a little over 500 are anticipated to come online in 2015 or in the first quarter of 2016. The prices of rooms have been slowly dropping over the past year, and as more rooms are available, Neighbors anticipates the prices might fall a little further.

Occupancy rates have also continued to drop, down to 66.7% in October.

“Two things have contributed to the dropping occupancy rate…221 more rooms have been added to the total in 2014, so there are more rooms to fill…but we have had very high rates and that has made it very difficult for us to attract group business…”

Neighbors said groups such as schools and sports teams have been deterred by high room rates, but with new hotel rooms being added, he anticipates we will start to attract those groups again in the future.

Predictions for 2015 at this point are fuzzy, Neighbors said, because we don’t know where the price of West Texas Intermediate is going to land long-term or if it will continue to fluctuate.

“Because we think that the economy will continue to move forward even in the midst of some slowing down, I would be very pleased with 4-5% growth in sales tax next year if we can sustain that,” he said. “That’s about a third of the growth we experienced this year…I don’t know if I would call that a prediction as much as a cautiously optimistic forecast for the economy in 2015. So many variables could impact that…”

In 2013, the chamber was predicting an 8-10 percent growth for 2014. The year ultimately ended at 11.8 percent with October. December's report won't be available until February.