Permian Basin Economic Indicators
August 21, 2023
|Midland–Odessa economy dashboard (second quarter 2023)|
|Job growth (annualized)
|Avg. unemployment rate
||Avg. hourly earnings||Avg. hourly earnings growth
Employment in the Permian Basin in the second quarter increased while wages remained stable. Oil prices fell as production reached a new high, but the rig count declined. Home prices in Midland–Odessa increased, and sales dropped dramatically.
Oil prices on the decline
The price of West Texas Intermediate crude oil averaged $71 per barrel in the second quarter, down 33.2 percent from its peak in June 2022, when the market reached its highest point since the outbreak of the Russia–Ukraine war (Chart 1).
Macroeconomic uncertainty in the U.S. related to recession fears and debt ceiling negotiations, signs of a sluggish Chinese economy after the lunar new year when pandemic restrictions were lifted, and an increase in implied global inventories in part due to more resilient exports from Russia than expected all likely contributed to weaker oil prices in the second quarter.
Oil production climbs
Oil production continued to climb in the second quarter, reaching an all-time high of 5.75 million barrels per day in the Permian Basin (Chart 2). At the same time, the rig count declined 8.4 percent year over year in the U.S. but only 5.2 percent in the Permian Basin. The decline in the rig count is due to weaker prices and higher costs, as well as companies focusing spending on share buybacks and dividends.
Strong job gains in the energy sector
Total nonfarm employment for Midland–Odessa grew considerably during the quarter (6.2 percent) after shrinking in the first quarter (Chart 3). Energy job growth in the basin remains robust. During the second quarter on an annualized basis, mining, logging and construction jobs grew 10.5 percent for the region, greater than in Texas (8.2 percent) and the nation (2.5 percent).
Leisure and hospitality saw strong growth in the second quarter (12.0 percent), while the region’s governmental sector shrank 3.8 percent. Year-to-date employment in Midland–Odessa grew 2.9 percent. Texas’ grew slightly faster at 3.1 percent, and U.S. jobs grew slower at 2.1 percent.
Permian Basin unemployment below the state and nation
The unemployment rate rose during the second quarter in Midland to 2.5 percent and in Odessa to 3.3 percent, with the average for the region at 2.9 percent. Unemployment rates were higher in both Texas (4.1 percent) and the U.S. (3.6 percent) (Chart 4).
At the same time, wages were relatively flat in the Permian Basin over the same period. Wages were $33.04 per hour in the second quarter, little changed from $33.05 per hour in second quarter 2022.
Home prices rise, and sales drop dramatically
The Midland–Odessa area’s median home price increased to $293,850 in the second quarter, above the first quarter’s median of $280,230 (Chart 5). Meanwhile, monthly home sales declined sharply 16.3 percent and averaged 359 during the second quarter, below the prior quarter’s average of 429.
Existing-home inventories hover around prepandemic levels
Midland–Odessa’s supply of existing homes for sale rose during second quarter, but even with the increase inventories remain low (Chart 6). Six months of inventory is considered a balanced housing market. Inventory in Midland rose to 2.2 months, below the 2.6-month prepandemic level in 2019. Odessa’s supply of homes for sale rose to 2.4 months, the same value registered in 2019.
NOTES: Employment data are for the Midland–Odessa metropolitan statistical area (Martin, Midland and Ector counties), unless otherwise specified. Energy data include the 55 counties in West Texas and southern New Mexico that make up the Permian Basin region. Data may not match previously published numbers due to revisions.
About Permian Basin Economic Indicators
Questions or suggestions can be addressed to Kenya Schott at firstname.lastname@example.org. Permian Basin Economic Indicators is released quarterly.