Texas Economy ‘Growing at a Solid Pace,’ says Dallas Fed Economist
Energy sector growth slows with dip in oil prices; exports gain momentum
For Immediate Release: August 3, 2017
DALLAS—Halfway through the year, the Texas economy continues to improve despite a slowdown in energy sector growth, according to the Federal Reserve Bank of Dallas’ Texas Economic Update.
“The Texas economy is growing at a solid pace,” Dallas Fed Senior Business Economist Jesus Cañas said in a video accompanying the report’s release. “Employment grew 3.6 percent in June. As a result, our Texas Employment Forecast predicts employment growth of 2.8 percent at the end of the year.”
Employment gains have been particularly strong among goods-producing industries, Cañas said. Oil, gas and support activities posted the fastest growth in the second quarter on the strength of earlier oil price gains, followed by manufacturing.
A decline in oil prices in mid-June slowed energy sector growth. After climbing steadily for over a year, the state rig count has fluctuated around 460, and some business contacts responding to the Eleventh District Beige Book survey said they expect it to plateau or taper off past mid-2017.
“Our business contacts have said that the rate of increase in the rig count might not be sustainable into the second half of the year,” Cañas said.
Manufacturing has been a bright spot in the economy, with factory activity increasing again in July, according to the latest Texas Manufacturing Outlook Survey. Service sector activity also reflected expansion in July, according to business executives responding to the Texas Service Sector Outlook Survey.
The state has also seen strength in exports, which were up 7.5 percent during the first five months of the year. Increased activity in export-related manufacturing has offset some of the deceleration in energy-related manufacturing, Cañas said, adding that the growth in exports is likely to continue.“Exports should continue growing as the Texas trade-weighted value of the dollar falls and global output improves,” Cañas said. A lower value of the dollar makes Texas exports more competitive in the global marketplace.
Federal Reserve Bank of Dallas
Phone: (214) 922-6748