Following strong job growth from last October through January, payroll job gains have downshifted in North Texas. After adding nearly 11,000 jobs per month in 2014, only 2,800 jobs were added to the Dallas-Fort Worth metro area in February. In March the metro area lost 10,200 payroll jobs, the first monthly decline since a negligible dip in November 2010. The March job loss was the largest monthly decline since June 2009. One month of bad data does not make a trend, but it comes at a time when energy-related industries are under pressure from the significant slide in crude oil prices over the second half of last year into early 2015. Recent firming of crude oil prices is a good sign for the North Texas economy, but we are still in the early days of the near-$60 crude oil.
U.S. crude oil production appears to be levelling out after ramping up sharply since 2009. Inventories of crude oil in storage are also levelling out. Both are positive signs for stabilizing crude oil prices. Interestingly, some Texas drillers are preparing to bring more rigs into play is response to recently higher crude oil prices, potentially changing the production/storage relationship. So this feels like an oil market that is still searching for equilibrium in terms of both prices and drilling activity. The impact of the energy sector on the North Texas economy is also shifting. We have seen a one-way drag since the rig count started falling at mid-year 2014. We expect to see a consolidated energy sector with improved and stable drilling activity that will add support to the North Texas economy in 2016, if oil prices stabilize…still a big “if”.
There is a lot more to North Texas than the oil business. Commercial and residential property markets remain very active. The Case-Shiller House Price Index for Dallas was up 8.6 percent in February, over the previous year. Companies looking for a mid-continent location are still finding the North Texas area very attractive. Kubota Tractor and Credit Corporation has just announced that they will be moving their U.S. headquarters from Torrance, California to Grapevine, Texas, where they will employ 675 workers.
Click here for the complete North Texas Regional Economic Update: NorthTexas2015Q2.