GALVESTON, Texas (AP) _ Despite some criticism that his call for an evacuation of the island was unnecessary, City Manager Doug Matthews said Friday he made the decision because his primary interest was in saving lives.

By Friday morning, about 65 percent of the 65,000 Galveston residents were off the island with 40 percent of them leaving before the evacuation recommendation was given, Matthews said.

Matthews said his decision to call for evacuation was based in part on a report by the Texas Department of Public Safety that the hurricane could hit near Freeport if it turned northward overnight.

The report said if that happened, Friday morning would be too late to evacuate the entire island, which takes 17 hours.

About 90 percent of the businesses were closed on the island Friday. Many homes and businesses were boarded up. ''It's like a ghost town around here,'' Matthews said.

As Gilbert's center moved onto the northern Mexican shore Friday afternoon, however, forecasters lifted a hurricane watch for the upper Texas coast at 2 p.m. and Galveston officials rescinded their evacuation recommendation.

DPS officials in Austin said the data may have been misinterpreted by Galveston officials and that evacuation may have been premature.

But Matthews said Friday he did not misinterpret the data and that it was just one piece of information used to decide whether to evacuate.

Even if the hurricane misses the Galveston area, the economic impact caused by lost tourist dollars and closed businesses could top $70 million, city manager Doug Matthews said Friday.

At least 30 area school districts were closed Friday and athletic and cultural events were postponed because of the hurricane's threat. NASA's Johnson Space Center sent all but a few employees home Thursday and closed the center to tourists.

In Houston, traffic was lighter than usual Friday morning as area schools, colleges and some businesses decided not to open. But many other businesses decided against closing as the threat of Gilbert waned.

Tenneco Inc., which employs nearly 4,000 people in the area, remained open Friday as did Shell Oil Co. with its 13,000 Houston workers.

Suzanne Thomas, a Tenneco spokeswoman, said ''it was business as usual'' Friday despite the threat earlier this week the storm might hit the area. She said the company had no problems conducting business.

''We stayed open. Most of the downtown businesses did,'' Ms. Thomas said.

The Bankers Association said Houston banks also were open Friday.

In hindsight, Matthews said he would have made the same decision because he was more concerned about saving lives than anything else. In Texas, officials may recommend an evacuation but they cannot order people from their homes.

Although the storm has forced many businesses to close and send employees home, it has meant big sales to some other companies.

Panic-buying this week cleared the shelves of many grocery stores in the area and sales also were booming at lumber and hardware stores. But sales could slow later as people use up their hurricane provisions.

And although oil prices increased earlier this week partly because of the storm, the decreasing chance that Gilbert would seriously disrupt energy production in the Gulf helped curb the recent rally.

Oil and gas companies operating in the Gulf evacuated many of their personnel from refineries and oil platforms, but observers said the prospect of major disruption in oil supplies had waned.