The Odessa economy continued its stunning recovery through the first quarter of 2018 with the Odessa Economic Index improving by another 2.5 points in March. The index increased to 231.2 for the month up from 228.7 in February, and up 20.5% from the March 2017 OEI of 191.9. Over the course of the first quarter, the Odessa Economic Index expanded at an annualized rate of 18.5% and is now poised to surpass its previous record of 231.9 (from January 2015) with the release of the April index.
Only the construction indicators are posting year-over-year negatives in March; elsewhere the spending indicators continue to increase sharply compared to year-ago levels, along with existing home sales and the real dollar volume of those sales. The employment growth rate remains above 6% and the March unemployment rate is the lowest since 2008.
The Texas Permian Basin Petroleum Index logged its 18th straight monthly increase in March improving to 302.5 for the month up from 297.4 in February, and up by 28.2% compared to the March 2017 regional oil & gas activity index. Still the TPBPI remains down by about 21% compared to its all-time high of 382.3 achieved in November 2014.
Estimated oil and gas employment in Midland-Odessa increased to 36,715 in March, surpassing its pre-downturn high point of 36,220 from October 2014. During the current recovery nearly 11,200 jobs have been added to oil & gas industry payrolls in the combined metro area, including about 7,600 jobs in the last year alone for a year-over-year growth rate of over 26%. Even at that, however, industry employment growth is constrained by a lack of available labor to meet rapidly growing demand.
The monthly average rig count for RRC districts 7C, 8, and 8A added another six rigs in March, and has increased by 44 rigs since last October. The number of drilling permits issued across the region is up by some 10% compared to total through March of a year ago, which in turn was well over double the total for the first three months of the prior year.
Crude oil and natural gas production continue to climb even as surging production continues to overwhelm the capacity to move that production to the marketplace. The shortage of takeaway capacity worsens with every barrel and MCF produced and continues to cause ever widening discounts in the Permian for crude oil and natural gas compared to the posted benchmarks.
In the Odessa general economy, both the March monthly and the first quarter real taxable spending totals are at record levels by far, with the first quarter total up by nearly 48% year-over-year, and the March monthly total up by a whopping 60%. Auto spending for the month and quarter is at a record level as well, posting a 41% increase for the quarter compared to the first three months of a year ago.
Total employment growth continues at a rapid clip in Odessa, expanding by over 7% on average in the first quarter of the year and posting a 6.6% gain in March with an estimated 4,700 jobs added over the last 12 months. Employment has not yet returned to pre-contraction levels but is quickly headed that direction – the March 2018 employment estimate of 75,900 jobs compares to the March peak total of 78,400 jobs in March 2015. The seasonally adjusted data suggests Odessa employment through March remains down by some 5,500 jobs compared to peak employment achieved in December 2014.
The Odessa unemployment rate remains on the decline and is now very near its all-time low point achieved in 2008. The March unemployment rate of 3.1% is down from the March 2017 rate of 4.9% and is just slightly higher than the March 2008 unemployment rate of 3.0%. The seasonally adjusted unemployment rate continues to come down with each passing month and stands at 3.2% in March compared to its record low point of 3.0% in March and April 2008.
Existing home sales set a new record for the first quarter at 351 closed sales, outpacing the 341 sales recorded in the first quarter 2006. The average price of those sales is up sharply as well (and is also at record levels) up by over 5% in March and 7.6% in the first quarter compared to year-ago levels. The real (inflation-adjusted) total dollar volume of residential real estate sales in Odessa continues to push ever deeper into record territory, posting 29% and 39% year-over-year increases in March and the first quarter, respectively.
At record levels through March 2018 are general spending, auto spending, and home sales and prices. The unemployment rate is very close to its record low point and may reach that mark in the next month or two. Employment continues to improve rapidly but has not yet returned to record levels. Hotel/motel activity is also below its previous peak but that won’t last long. And the construction and home building numbers, which were the only year-over-year declines on the current table of economic indicators, are also down compared to prior peak levels. The Odessa Economic Index itself is poised to reach a new milestone – the April 2018 OEI will surpass all prior periods and begin to chart new records for aggregate Odessa metro level economic performance.