Texas Employment Index Down on Oil Prices

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Data show employers are hiring in the upstream energy sector in Texas, though an employment forecast index for the state was bogged down by weakness in commodity prices.

The Federal Reserve Bank of Dallas expects to see job growth expand by 2.1% for the year, though the picture was somewhat mixed. Employment showed annualized growth of 3.7% in September, though it declined 0.6% year-on-year to October.

Overall, the Dallas Fed found that about 6,600 jobs were wiped off the payrolls last month.

"Losses were concentrated in the private-sector services, particularly professional and business services, although some sectors expanded such as information and financial activities," said Jesus Canas, the Fed's senior business economist, on Friday. "Government and goods producing sectors also expanded."

The Texas economy is the second largest in the nation after California's, with last year's gross state product at about $2.7 trillion. If it were a nation, its economy would rank in the Top 10 worldwide.

The Dallas Fed said its leading index on job prospects declined over the three-month period ending in October. New filings for unemployment declined, while hirings improved.

"However, the index was dragged down by decreases in average hours worked, the U.S. leading index, well permits, the real price of West Texas Intermediate oil and the increase in the Texas value of the dollar," the Dallas Fed found.

West Texas Intermediate (WTI), the U.S. benchmark for the price of oil, has seen headwinds as of late amid concerns of an increase in supplies and a strengthening dollar. Over the last month, WTI shed about 3% of its value to move in the $68-per-barrel range.

WTI was trading about $85 per barrel during the first quarter. The Energy Information Administration (EIA) said in its November forecast that it expects WTI to average $77 per barrel this year and then drop to $71.60 for 2025.

That's created headwinds in the energy sector during the third quarter, after companies such as Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) and Chesapeake, which later merged with Southwestern Energy Corporation to form Expand Energy Corporation (NASDAQ:EXE) (Oklahoma City, Oklahoma), announced layoffs this year. Over the nine months ending September 30, Expand reported a $315 million loss, compared with a $1.85 billion profit over the same period in 2023.

But analysis of federal data from the Texas Independent Producers and Royalty Owners Association (TIPRO) found the upstream energy sector added 1,400 people to its payrolls last month, though much of the gains came from retail service stations such as Love's. Oil and gas extraction employment remained unchanged month-on-month.

President-elect Donald Trump is widely expected to pursue legislation that would benefit the oil and gas sector, though a long-term oversupply outlook, coupled with protectionist policies, could backfire. TIRPO, which advocates in support of the industry, is optimistic.

"Given the outcome of the elections, TIPRO looks forward to working with the new administration, incumbents and newly elected officials at the state level in Texas to reinforce the importance of domestic oil and natural gas production," said TIPRO President Ed Longanecker.

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