Full text of El Paso Economic Indicators : January 2009

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Federal Reserve Bank of Dallas, El Paso Branch

January 2009

ECONOMIC UPDATE
El Paso Business-Cycle Index
El Paso's economy, as measured by
its business-cycle index, posted a
sluggish performance in December
growing at a 0.1 annualized rate.
However, after observing a decline
earlier last year, the business-cycle
index appears to have leveled-off.

EL PASO

Index Jan-2000=100
116
112
108
104
100
96
2000

2001

2002

2003

2004

2005

2006

2007

2008

Source: Federal Reserve Bank of Dallas, El Paso Branch

Labor Market
El Paso non-farm employment
increased at an annual rate of 0.9
percent in December. In 2008, El
Paso generated 2,000 new jobs
equivalent to 0.7 percent growth.
This indicates a slowdown in the
labor market in El Paso during last
year, as the average growth rate in
employment over the last five
years has been double that
experienced last year. 1 The job
gains
in
December
were
concentrated in the service
sectors, particularly in professional
and
business
services
and
government sectors. In spite of
the added jobs, the unemployment
rate increased to 7.4 percent in
December from 7.2 percent in
November.

Employment Growth
Month-over-Month Annualized Growth Rates
El Paso
Nonfarm Employment

Jul-08
6.2
Goods Producing
0.0
Construction, Mining & Natural Resources8.1
Manufacturing
-6.0
Services Providing
7.1
Trade, Transportation & Utilities
0.0
Information
0.0
Financial Activities
0.0
Professional & Business Services
-3.7
Educational & Health Services
3.8
Leisure & Hospitality
14.0
Other Services
17.0
Government
19.7
Unemployment Rate
5.9

Aug-08 Sep-08 Oct-08 Nov-08 Dec-08
-3.0
-3.0
5.3
3.0
0.9
-6.7
-3.4
3.5
7.1
-3.4
0.0
0.0
0.0
0.0
0.0
-11.7
-6.1
6.5
13.2
-6.0
-2.4
-2.9
5.6
2.5
1.5
0.0
-2.0
0.0
6.2
0.0
0.0
0.0
0.0
0.0
-18.5
0.0
0.0
10.1
0.0
-9.2
-3.7
7.9
16.2
0.0
20.3
0.0
7.7
11.6
0.0
-3.6
4.4
0.0
-4.2
-4.3
0.0
0.0
0.0
0.0
0.0
0.0
-8.6
-15.0
7.5
5.6
1.8
6.4
6.7
7.0
7.2
7.4

Midland-Odessa
Nonfarm Employment

2.8

0.0

1.8

1.8

0.9

-0.9

Las Cruces
Nonfarm Employment

-6.7

14.9

1.7

5.3

3.5

n.a.

Notes: Seas onally Adjus ted Data
Source: Federal Res erve Bank of Dallas with data from the Bureau of Labor Statis tics

Federal Reserve Bank of Dallas, El Paso Branch

January 2009

ECONOMIC UPDATE

EL PASO

Trade and Border Crossings
Given the continued slowdown in
manufacturing activity south of the
border, total trade that goes
through El Paso port of entry
declined sharply in November at
16 percent on a year-over-year
basis. More specifically, imports
declined 21 percent while exports
declined 7.6 percent. In spite of
slower economic activity in El Paso,
as well as a weaker peso, retail
sales tax rebates increased by 1.7
percent in November. On yearover-year basis, this indicator is
down by 1.9 percent, however.
In December, more than 290thousand vehicles crossed into El
Paso from south the border
representing a decline of more
than 17 percent on a year-overyear basis. Most likely this reflects
slower economic activity in Ciudad
Juarez, as the maquiladora sector
cools down and the peso weakens.
Our estimates indicate that roughly
11-14 percent of all retail sales in
El Paso can be attributable to
Mexican shoppers.
Given the
recent 21 percent depreciation of
the peso vis-à-vis the dollar, this
represents a significant decline in
the purchasing power by Mexican
nationals. Truck crossings declined
in December 7.6 percent (yearover-year).

2

El Paso Border Crossings
Pesos per dollar

000s, SA
140

15
Nominal Exchange Rate

130
120

14

Truck Crossings
13

110
100

12

90

11

80

Vehicle
Crossings

70

10

60

9
2006

2007

2008

Source: Texas A&M International University, Texas Center for Boder Economic and Enterprise
Development

Housing Market
In El Paso, housing sales were
down 6.5 percent in November
(year-over-year
basis).
Furthermore, months of inventory
stand at 12 months, up from 8
months of inventory a year ago.
The number of single-family
building permits is also down 10
percent in November from a year
ago while average value per
dwelling unit is up 2 percent from
the same period a year ago.

Economic Conditions in Juarez
and Chihuahua
The U.S. industrial sector continues
to weaken. In December, the
manufacturing
industrial

production index fell 10 percent on
a
year-over-year
basis.
Furthermore,
formal
manufacturing employment in the
State of Chihuahua follow suit
declining 15 percent in December
from a year ago. Given the strong
correlation that exists between
these two series and the
maquiladora activity in Ciudad
Juarez (see chart below), we can
conclude that the maquiladora
sector has not been performing
well recently. Another indication
of weakness in Ciudad Juarez is the
retail sector. Retail sales declined
in October for sixth consecutive
month at a rate 7.5 percent on a
year-over-year basis.

Federal Reserve Bank of Dallas, El Paso Branch

January 2009

ECONOMIC UPDATE
Neighboring Metro Areas
Midland-Odessa felt the oil shock,
as nonfarm employment declined
at an annual rate of 0.9 percent in
December, and the unemployment
rate stands at 3.9 percent. Las
Cruces in contrast show nonfarm
employment rise at a 3.5 percent
annual rate during November with
the unemployment rate at 4.5
percent.
The Midland-Odessa

EL PASO

housing market remains largely
unchanged on a 12-month basis
measured by permits for new
homes. Las Cruces, however, is
down 37 percent.

U.S. Manufacturing and Maquiladora Industry
Year-over-Year

Percent
20
15
10
5
0
-5
-10

U.S. Mfg. Index

-15

Juarez Maquiladora Employment

-20

Chihuahua Manufacturing Employment

-25
2000

2001

2002

2003

2004

2005

2006

2007

2008

Note: Seasonally Adjusted Data
Source: INEGI & Federal Reserve Bank of Dallas

1

Employment data for Texas MSAs will be revised during the first quarter of this year. Covered Employment and Wages data are published on a quarterly basis. The
Dallas Fed uses this new information to estimate the Texas Workforce Commission (TWC) final series as soon as these data are published. The TWC revises its payroll
employment estimates once per year, with the release of January data in March.

3