Dallas Fed: Texas Jobs Outlook Dimmed by Low Commodity Prices

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--An index based in part on the price of crude oil found that the employment outlook in Texas has dimmed, the Federal Reserve Bank of Dallas said.

Oil prices have been range-bound in the upper-$60 to lower-$70 range since late August on the back of a weak global economy and lackluster demand. On Friday, a report from the Federal Reserve Bank of Dallas found that employment growth in the state was disappointing, with annualized growth at 0.9% to November. Growth was only 0.1% in October.

"Gains were concentrated in smaller private sector services, such as information and financial activities, although some larger sectors also expanded including the education and health sector and government," said Jesus Canas, a senior business economist at the Dallas Fed. "In the major metropolitan areas, employment in Houston, Austin, Fort Worth and San Antonio grew while falling in Dallas."

The Dallas Fed earlier in December found that many of the upstream services firms working in the Permian Basin were hurt by lower natural gas prices, while it's getting a bit more expensive to drill for oil in Texas. Drillers were breaking even at $65 per barrel for WTI crude oil, a dollar higher than this time last year.

In its monthly market report for December, the Energy Information Administration (EIA), the data arm of the U.S. Department of Energy, said it expected WTI to fall from the 2024 average of $76.51 to $69.12 per barrel next year.

Though energy markets and crude oil prices were part of the conversation during the latest U.S. election cycle, the EIA stressed that the energy market is a global one. While prices in general are on a downward trend, they remain vulnerable to geopolitical events such as conflicts in the Middle East and in Eastern Europe.

On job prospects, leaders of the world's central banks have tackled lingering inflationary pressures left over from the demand surge that followed the introduction of vaccines against the COVID-19 coronavirus, with adjustments to their lending rates. For the U.S. economy, higher rates were designed to make lending more expensive and curb demand.

The U.S. Federal Reserve had worked to cool the economy without triggering widespread layoffs. With inflation closer to 2.5% annually, compared to highs closer to 9%, the Federal Reserve has started lowering rates, but said caution would prevail.

"From this point forward, it's appropriate to move cautiously and look for further progress on inflation," Federal Reserve Chairman Jerome Powell said in a recent press conference.

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