The contraction in the Odessa metro area general economy is now 13 months in the making; the Odessa Economic Index declined in February to 206.9 down from 209.5 in January, and down 10.6% from the February 2016 OEI of 231.4. The Odessa Economic Index peaked in January 2015 at 231.9, and is down by 10.8% from that pinnacle through February 2016.
Increased building permit activity for the month, along with new single-family housing construction and existing home sales were insufficient to overcome continued sharp declines in general spending, auto sales, hotel/motel activity, and employment.
The Texas Permian Basin Petroleum Index also declined again in February, falling to 225.4 for the month down from 233.4 in January, and down 36.6% from the February 2015 TPBPI of 355.7. The regional oil & gas activity index peaked at 381.2 in November 2014, and has now fallen by 41% compared to that peak level. The posted West Texas Intermediate crude oil price averaged $27.08 in February, a decline of 43% from its year-ago level. The daily low point in the current decline was $22.75 on February 11, which is about 80% below its mid-2014 levels prior to the onset of falling prices for crude oil. The regional rig count averaged 151 for the month, a 50% decline compared to the February 2015 monthly average. Through Friday of last week (April 1), the rig count for Railroad Commission Districts 7C, 8, and 8A totaled 130, a decline of 72% from the weekly peak of 468 in November 2014.
Real (inflation-adjusted) spending per February sales tax receipts was down by 23% compared to February of a year ago (which in turn was up by 17% compared to February of the prior year). Through February real taxable spending is down by 20.5% compared to the first two months of 2015. Real auto spending posted a 20% year-over-year decline in February and is down by 35% for the year-to-date.
Payroll employment in the Odessa metro area fell by an estimated 5,200 jobs over the last 12 months, a decline of 6.6% compared to February of a year ago. The mining (oil & gas) sector was the hardest hit with “mining, logging, and construction” losing 3,000 jobs over the year, followed by “trade, transportation, and utilities” which lost 1,300 jobs compared to February of a year ago. The manufacturing sector lost an estimated 900 jobs over the last 12 months. The unemployment rate continues to move upward at 5.6% in February compared to 3.7% in February 2015.
Not all indicators were lower in February, however. Construction activity was sharply higher for the month with building permit valuations up by 114% in February compared to February of a year ago. And in fact, that would be a record for the month of February if not for the $400 million series of permits issued in February 2001 for a new power plant in Odessa. Even at that, however, real permit valuations are down by 19% for the first two months of the year. Single-family housing construction is up for the month and year-to-date with 57 permits issued through February compared to 55 in January-February of a year ago.
Existing home sales also improved in February with an increase of 8% in closed sales compared to February of a year ago. The prices of those sales continue to climb with the February monthly average up by 5% compared to February of a year ago, and up by over 12% on average for the first two months of the year.
Optimism is the faith that leads to achievement. Nothing can be done without hope and confidence.