Nonagricultural wage and salary employment growth in the Southwest region slowed to 2.5 percent for the 12-month period ending in June 1997. Oklahoma led the region with a 3-percent growth rate, followed by Texas at 2.6 percent, Louisiana at 2.1 percent, New Mexico at 1.6 percent, and Arkansas at 1.3 percent. New Mexico's job growth slowed in the first half of 1997. However, employment growth at Intel Corporation's Rio Rancho plant is expected to reach 7,000 employees by the end of 1997 as it continues to hire, and Phillips Semiconductors is also expanding from its current number of 1,400 employees.

Oklahoma wage and salary employment increased by 39,500 jobs for the 12 months ending in June 1997. The largest gains were reported in services (20,800), trade (7,200), and manufacturing (4,500). A recent study released by the University of Oklahoma predicts that 32,000 jobs will be created in the State in the coming year, including 14,000 jobs in the Oklahoma City metropolitan area and 10,000 jobs in the Tulsa area.

More than one-half of the new jobs created in Texas over the past 5 years have been in busi-ness services, local government (mainly public schools), health services, food services, and construction. Over the same 5-year period, Texas accounted for 22 percent of the Nation's new electronics jobs and 15 percent of the Nation's new computer manufacturing and assembly jobs.

Louisiana's economy is on an upswing. Avondale Shipyard in New Orleans expects to add 1,000 workers to its 5,300-person workforce as a result of winning the biggest order for commercial ships in its history. A Navy Computer Center planned for the University of New Orleans is expected to create 1,500 jobs by the year 2000.

A number of large-scale, mixed-use developments are in planning and development stages in the Dallas-Fort Worth area. The Legacy office cam-pus in the suburb of Plano is adding a hotel, apartments, and retail space to accompany its commercial office tenants, which include the headquarters of EDS, J.C. Penney, and Frito-Lay. Addison Circle is an office center/retail/apartment complex under construction in suburban Addison that will have about 455 apartments when completed. Several other mixed-use developments are being planned around new Dallas Area Rapid Transit (DART) stops. The Perot Group is planning a new town west of its Alliance Cargo Airport complex, which is north of Fort Worth.

For the first 6 months of 1997, single-family building permits in the Southwest (59,324 units) declined 9.1 percent compared with the same period in 1996. Activity in Texas was down by almost 10 percent to 40,436 homes in the first half of the year. In Austin-San Marcos, single-family permits for the first half of 1997 fell 25 percent from a very strong 1996, when more than 8,000 units were permitted for the entire year. Although activity is down in the Austin area, at the current pace it could exceed 1995's volume. In the Dallas-Fort Worth area, single-family permits in the first half of 1997 totalled 12,990, a 6-percent drop from the comparable 1996 period. Most of the decline was due to a cutback in the Fort Worth portion of the Metroplex. Houston-Galveston continued to report strong new home activity, with 10,446 permits in the first half of the year -- a 2-percent drop from the same period in 1996.

In response to the success of local home builders in major Texas markets such as San Antonio and Dallas-Fort Worth, builders are returning to building homes in the price range of $100,000 and under. Because most of the new jobs are in service-oriented firms that pay modest salaries, low-priced housing will continue to be most in demand.

Multifamily housing in the Southwest region continues to show strength. The number of multifamily units authorized by permits in the first 6 months of 1997 (26,969) was up 37 percent over the volume for the same period in 1996. Multifamily activity for 1997 could well exceed the activity in 1996, which was the highest volume year of the 1990s. All States reported increased multifamily activity.

In Oklahoma the number of units permitted doubled, albeit on a small base, to 1,746. Dramatic increases were also reported in the already very active Dallas-Fort Worth and Houston-Galveston areas. The number of units permitted in the Dallas-Fort Worth market for the first 6 months of 1997 was up 75 percent to 7,415 units. The Dallas portion of the Metroplex accounted for 84 percent of the units. In Houston-Galveston multifamily units for the first half of 1997 totalled 6,190, which was a 229-percent increase over the same period in 1996. In Austin-San Marcos permits were issued for 2,205 units in the first half of 1997, which was almost identical to the volume for the same period in 1996.

The rental markets in the Dallas-Fort Worth, Austin-San Marcos, and Houston-Galveston areas are currently balanced, and new units are being absorbed within the expected time. However, an increasing number of people in the housing industry have expressed serious concerns about overbuilding in all three market areas, particularly in Class A and Class AA rentals, due to the large volume of construction in the past 3 years and to the substantial numbers of units in the pipeline. In the Austin-San Marcos area, occupancy rates are expected to decline during 1997 as a result of the large pipeline of new units and the slower rate of job growth. One developer in the Austin area postponed until at least 1999 the start of construction on several projects that had site plan releases.

Rental markets in New Orleans and Baton Rouge are showing signs of softness; occupancy rates in both markets are about 91 percent.

Spotlight on Lower Rio Grande Valley, Texas

The Lower Rio Grande Valley housing market (the Valley) comprises the Brownsville-Harlingen-San Benito metropolitan area and the adjacent McAllen-Edinburg-Mission metropolitan area to the west. Between 1990 and June 1996, the Valley experienced a 26-percent increase in population -- 810,600 people -- due to several factors: a high birthrate, a substantial in-migration of retirees, and an influx of persons seeking better job opportunities. In 1995 the Census Bureau rated the McAllen area the third-fastest-growing metropolitan area in the United States. Together with the 1.02 million people in the Mexican border cities of Reynosa, Rio Bravo, and Matamoros, the Valley has a population of almost 2 million people.

Although agriculture continues to play a major role in the Valley's economy, in recent years the area has become an increasingly popular tourist and retirement destination. During the period from 1990 to 1996, nonfarm employment in the area increased by 24 percent to 220,200 jobs. For the 12-month period ending in May 1997, the Texas Workforce Commission reported that total nonfarm employment in the Valley grew by 2.6 percent (5,700 persons) to 229,176 jobs. Approximately 70 percent of the employment gains in the Valley were in the McAllen area.

The growth in the Valley's economy reflects the recharging Mexican economy. The Valley is across from the Mexican State of Tamaulipas. According to the Mexican Investment Board, Tamaulipas ranks 11th in gross regional product of the 32 Mexican States. Key industries in the State of Tamaulipas include oil refining, chemicals, petrochemicals, electronics, automotive parts, and agriculture, with most industries concentrated in the border region under the Maquiladora program. This concentration of industrial and manufacturing production has directly influenced the Valley's economic expansion. The area experienced a 23.5-percent growth in bilateral trade traffic between 1991 and 1995. In addition trade jobs in the area increased by 7,100 between 1990 and 1996 -- a 13.8-percent increase -- and service jobs increased by 48 percent to 52,300. This economic expansion is expected to continue as a result of the North American Free Trade Agreement (NAFTA).

Although it has historically been high, the unemployment rate in the Valley has been decreasing in recent years. As a result of a growing, more diversified economy, the unemployment rate in the Valley decreased from 18.7 percent in 1990 to 16.4 percent in 1996.

There were 1,858 single-family building permits issued in the Valley in 1990, about the same number of permits that were issued during the latter part of the 1980s. However, in 1991 the number of permits increased to 4,410, reaching a high of 7,051 permits in 1993. As a result of this increased level of production, permit activity decreased to 4,954 homes in 1995 and 5,554 homes in 1996. For the first 6 months of 1997, permits had been issued for 2,745 homes, an 11-percent decline over the same period in 1996. The McAllen area accounted for approximately 75 percent of the permit activity.

Manufactured housing is an important part of the sales market in the Lower Valley. The Texas Manufactured Housing Association reports that 1,278 new manufactured homes were installed in the Valley in 1996. From 1991 through 1996, 4,632 manufactured homes were installed in the Valley. For the first 4 months of 1997, 481 new manufactured homes were installed and 1,764 total installations were completed.

According to Texas A&M University's Real Estate Research Center, total sales over the 12-month period ending in March 1997 were up slightly compared with the same period in 1996. Median sales prices in the Valley ranged from $69,800 in Brownsville and Harlingen to $72,800 in McAllen.

Because of the oversupply of apartments created by the building boom of the early 1980s as well as the peso devaluations, an average of only 248 multifamily units was built annually from 1986 through 1991. In 1992 building began to pick up, with 463 units permitted; this increased to 821 units permitted in 1993 and 1,182 in 1994. In 1996, permits were up to 1,838, the highest level in more than 10 years. In the first 6 months of 1997, permits were issued for 614 units, which was only slightly less than the number for the same period in 1996. Despite the volume of apartment construction in recent years, the rental market does not show signs of softening. According to Apartment MarketData Research Services, apartment occupancy in the Valley rose from 91.2 percent in March 1997 to 94 percent in May 1997.

All indicators are for continued growth in the area. One of the most significant events that will affect the future of the Lower Rio Grande Valley, in addition to the development of NAFTA, is the proposal to extend Interstate 69 (I-69) to the area to facilitate trade with Mexico. The completion of I-69 along with current expansion of bridges into Mexico should have a major impact on growth in the Valley by maximizing movement of goods between the United States and areas south of the U.S. border and by promoting tourism in the area.