Permian Basin Economic Indicators
October 31, 2023
|Midland–Odessa economy dashboard (third quarter 2023)
|Job growth (annualized)
Dec. '22–Sept. '23
|Avg. unemployment rate
|Avg. hourly earnings
|Avg. hourly earnings growth
Permian Basin employment rose in the third quarter while wages declined. The unemployment rate was roughly unchanged. The region’s rig count declined, but the price of oil rose significantly. In addition, home sales increased, and median home prices were flat as the supply of homes available for sale declined.
Oil prices up on OPEC+ policies
The price of West Texas Intermediate crude oil in the third quarter 2023 was up 29 percent from the previous quarter, averaging $91 per barrel (Chart 1). The main reason for the jump in prices is production cuts by OPEC and its allies. Starting in July, Saudi Arabia trimmed 1 million barrels per day (mb/d) of production and the kingdom said it would extend the cut until the end of the year. Additionally, over the same time frame Russia extended its cut of 300,000 barrels per day. The squeeze on supply pushed prices higher. Some analysts now predict oil could hit $100 per barrel by the end of the year.
Permian oil production hits new high
Oil production continues to climb, reaching a fresh all-time high of 5.81 mb/d in the third quarter, up 6 percent year over year (Chart 2). Both the U.S. and Permian Basin oil rig count declined by 7 percent. The Permian’s rig count is at its lowest point since early 2022.
Employment growth cools
Year to date, the Permian region has seen moderate employment growth of 2.3 percent (Chart 3). Total nonfarm employment growth ticked up slightly in the third quarter, rising 1 percent, slower than the 3 percent growth in the previous quarter. By comparison, Texas grew at a rate of 3 percent and the U.S. grew slower at 2 percent in the third quarter.
Leisure and hospitality (down 5.5 percent) and manufacturing (down 4.2 percent) experienced the most notable slowdowns in job growth during the third quarter.The effects of the oil price hike since the outbreak of the Russia-Ukraine War are waning, but improved well productivity and higher crude oil prices have kept the region’s mining, logging and construction sector growing at 5.3 percent year to date. However, during the third quarter some firms in the basin reported cutting the number of fracking fleets due to pessimistic outlooks, resulting in a 2.6 percent slowdown in the job sector’s growth.
Midland wages on the decline; Odessa’s continue to grow
Hourly earnings fell 2.5 percent in Midland but were roughly unchanged in Odessa during the third quarter (Chart 4). The gap between wages in Midland and Odessa continues to narrow, falling 49 percent year over year in September. This year respondents to the Dallas Fed third quarter energy survey reported the need for wage increases to attract fieldworkers, who are mainly concentrated in Odessa. Oil and gas firms reported a lack of available and trained hourly mechanics. Year to date, Odessa’s wages rose 5 percent, significantly above the U.S. average of 1.5 percent.
Prices flat; sales up
The Midland-Odessa area median home price was $294,000 in the third quarter, only 0.7 percent above the second quarter median of $292,000 (Chart 5). Meanwhile, monthly home sales rose (3.3 percent) and averaged 373 during the third quarter, markedly above the prior quarter’s average of 361.
Inventories roughly flat
Midland-Odessa’s supply of existing homes for sale declined during third quarter 2023 (Chart 6). The three-month moving average for months of inventory was 2.2 in Midland. Odessa’s supply saw a bigger drop over the same period, with a decline to 2.1 months.
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 email@example.com. Permian Basin Economic Indicators is released quarterly.