The Odessa Economic Index increased for the 19th straight month in May rising to 240.5 for the month up from 237.4 in April, and up 22.3% from the May 2017 OEI of 196.7. The Odessa metro area economy as measured by the index achieved full recovery last month with the Odessa Economic Index surpassing its previous record from January 2015.
All components of the Odessa Economic Index are higher compared to year-ago levels both for the month of May and for the year-to-date, most by at least double-digit percentage points, and most at all-time record levels. Building permit valuations and employment remain below their previous peaks; all other local economic indicators are in record territory through May.
The Texas Permian Basin Petroleum Index posted its 20th straight monthly increase in May improving to 317.3 for the month up from 311.2 in April and up 27.2% from the May 2017 TPBPI of 249.4. The Texas Permian Basin Petroleum Index peaked at 382.3 in November 2014 and remains some 17% below that level as of May 2018. Crude oil prices are below 2014 peak levels as are natural gas prices, the rig count, drilling permits, and well completions.
With the exception of natural gas prices, the value of regional natural gas production, and natural gas well completions all components of the index are higher compared to year-ago levels. The rig count continues to climb along with drilling permits and well completions, but the Permian natural gas market is generally unfavorable to continued gas-directed development and production is climbing only as a function of associated production from crude oil wells.
Both crude oil and natural gas production continue to climb even in the face of regionally depressed pricing, which is attempting to bring production into line with the ability to move it from the Permian to the marketplace as pipeline takeaway capacity becomes an increasingly critical issue.
In the general economy, spending growth continues at a scorching pace through May with inflation-adjusted taxable spending per May sales tax receipts in Odessa up by close to 50% compared to year-ago levels, and the total for the year-to-date now up by 47% compared to the first five months of 2017. On the heels of a 100% increase in April auto spending is up by over 22% in May, and real auto spending through the month of May is up by over 46% compared to year-ago levels. Hotel/motel revenue moved back into record territory with second quarter lodging tax collections (based on first quarter 2018 occupancy), doubling the totals from a year ago.
Real (inflation-adjusted) building permit valuations were the highest for the month of May since 2002 and were up by 161% compared to the May 2017 total. For the year-to-date the value of permitted projects is up by nearly 25% compared to the total through May of last year. The monthly single-family residence construction permit total was the second-highest ever for the month of May behind the 65 permits issued in May 2013; the total for the year-to-date is a record total by far, however, at 334 permits, an increase of 48% compared to the total through May 2017.
Home sales activity is in record territory by every measure for the month and year-to-date with existing home sales up by 36% in May and 40% for the year-to-date compared to year-ago levels. The average price of those sales continues to climb sharply posting a 19% year-over-year increase in May, and a 13% increase for the year-to-date. The total inflation-adjusted dollar volume of home sales activity was up by a whopping 58% in May and is now up by nearly 55% for the year-to-date.
The pace of employment growth has narrowed a bit over the last two months and stands at 4.4% in May, which ranks as third-highest among all Texas metro areas behind Midland and Bryan-College Station. According to the seasonally adjusted payroll employment estimates some 7,000 jobs have been added to the Odessa metro area economy since the June 2016 cyclical low point but total employment remains down by 5,200 jobs compared to the employment peak in December 2014. The unemployment rate remains below 3% in May at 2.8% down from 4.1% in May of a year ago.
