January 2016

By Karr Ingham


InghamEcon, LLC
The Odessa Economic Index was updated in January to reflect sweeping downward revisions in metro area employment data for all of 2015 and most of 2014.  The original employment estimates for last year, even through December 2015 continued to indicate modest year-over-year growth in Odessa payroll employment; however, there was absolutely no reason to believe those estimates were accurate and indeed the revisions just issued by the Texas Workforce Commission lowered those employment numbers by over 9,000 jobs from the original December 2015 estimate of 83,500 to the revised estimate of 74,200 for December 2015.  And indeed employment estimates were revised downward for each month in 2015, and for most of 2014, though by smaller amounts for the affected months in 2014.
 
The Odessa Economic Index was revised accordingly, and finished the year 2015 at 213.3 for December (a 7.6% year-over-year decline), compared to the original OEI of 225.0 prior to the downward revisions in Odessa metro area employment data.
 
The Odessa Economic Index declined again in January, falling sharply to 209.5 down from 213.3 in December and down 9.7% from the January 2015 OEI of 231.9.  Under the new benchmarks per the revised employment data, that 231.9 in January 2015 marks the peak of the Odessa Economic Index in advance of the decline that remains underway in the Odessa general economy.

 
The Texas Permian Basin Petroleum Index posted its 14th straight monthly decline in January, dropping to 233.3 down from 242.7 in December, and down by 36% from the January 2015 TPBPI of 365.3.  The January 2016 monthly average rig count across the Texas portion of the Permian Basin fell to 171 in January from a monthly average peak of 467 in November 2014, and has continued to decline since then.  Approximately 10,000 direct oil & gas jobs have been lost in the Texas Permian Basin Workforce Development Area thus far, and the logical expectation is that more will be lost before the current contraction is complete.  In Midland-Odessa alone, direct oil & gas employment is down by about 15% in January compared to January 2015. 
 
The various components of the Odessa Economic Index continue to suggest sharp declines in general economic activity from the lofty peaks achieved through 2014.  General real (inflation-adjusted) taxable spending per Odessa sales tax receipts was down by nearly 18% in January compared to January of a year ago, and real motor vehicle spending was down by a whopping 46% for the month.  Hotel/motel activity in the city was down by 46% year-over-year as well, and activity at Midland International Airport dropped by over 10% over the last 12 months.
 
Employment estimates in Odessa suggest the loss of about 6,600 jobs from January 2015 to January 2016, a year-over-year decline of 8.3%.  The metro area unemployment rate is on the rise as well adding two full points over the last 12 months at 5.4% in January, compared to 3.4% in January 2015.

 
 
Construction activity is on the decline with building permit valuations down by nearly 80% in January compared to January of a year ago, and new single-family housing construction permits continuing to fall as well.  Existing home sales declined in January compared to year-ago levels, even though the average price of those sales spiked upward, posting a 21% increase in January compared to the January 2015 monthly average. 
 
While there is a recovery out there somewhere, the timing of that recovery is not yet evident and will not be until the regional oil & gas activity index reverses course and begins to increase.  That will be based, of course, on meaningful and sustained increases in crude oil prices sufficient to stem the tide in declines in drilling permits, the rig count, industry employment, and other measures of oilfield activity in the region.  Meanwhile, the likely outcome is continued economic contraction as reflected by the Odessa Economic Index through at least the first half of 2016, and very likely for most of the balance of the year. 

 
The secret of getting ahead is
getting started.

Mark Twain
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Scott G. Jones
Economic Development Director 
Odessa Chamber of Commerce

700 North Grant, Suite 200
Odessa, Texas  79761
(432) 332-9111
(877) 363-3772 (Toll Free)
(432) 333-7858 (Fax)


scottj@odessaecodev.com
www.odessatex.com
www.odessachamber.com
www.growodessa.net
 

Tracy Jones
Economic Development Specialist
tracyj@odessaecodev.com
432-333-7886

Teresa Vasquez
Administrative Coordinator

teresav@odessaecodev.com
432-333-7881

Brittany Sotelo
Marketing Specialist
brittanys@odessaecodev.com
432-333-7882

Kathi Vaughn
Research and Communication Specialist

kathiv@odessaecodev.com
432-333-7883

 

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