We are starting to see the broader impact of oil price decline across the San Antonio economy as reflected in the March job numbers. We saw a net decline of 3,400 nonfarm payroll jobs in March 2015 in the metropolitan area, the worst monthly performance since June 2011. It is surprising to note that San Antonio lost 4,210 service producing jobs in March while adding 60 in the natural resources and mining sector. Yet, the area witnessed the highest quarterly year-over-year job growth (about 3.7%) in nearly a decade in 2015Q1. As San Antonio’s labor market tightens up and the energy sector consolidates, we expect job growth to moderate going forward in 2015 and 2016.
According to Baker Hughes, the Eagle Ford basin has lost more than 123 oil rigs in the past year. However, the gas rig count had more than doubled to 19 by the first week of May 2015 after bottoming out in the early August 2014. Oil production per rig is increasing to a record high (>700 barrels/day) and oil and natural gas production is levelling out in the Eagle Ford basin recently. Crude oil prices have rebounded to nearly $60/barrel after bottoming out in mid-March. It is still too early to declare that the forces of supply and demand have established equilibrium in the oil prices. However, if the prices stay around $55-$60/barrel or above, drilling activity will increase in the region, thereby helping expand the local economy.
San Antonio’s real estate market has been buoyed by strong job and income growth. Housing inventories are very tight, as in other major Texas metro areas, thereby compounding pressure on property values. San Antonio’s home prices are growing above the U.S. average, supported by tight supply and higher demand. We expect housing supply to grow, bringing home price appreciation rates down later this year and in 2016.
Click here for the complete San Antonio MSA Regional Economic Update: SanAntonio 2015Q2.