Full text of El Paso Economic Indicators : January 2012

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Federal Reserve Bank of Dallas, El Paso Branch

January 2012

ECONOMIC UPDATE
El Paso Business-Cycle Index
The El Paso business-cycle index
expanded in November at a 3.7
percent annualized rate. In spite of
recent government job losses, the
El Paso economy continued on its
upward trend in the second half of
last year.

EL PASO

Index, January 2000 = 100
116
112
108
104
100

Given the recent pickup in the U.S.
industrial sector and, most importantly, in the automotive sector,
employment in Ciudad Juarez maquiladoras is on the rise.

96
'00

'01

'02

'03

'04

'05

'06

'07

The expansion at Fort Bliss is now
shifting gears into population

'09

'10

'11

growth and is expected to boost
the local economy.

Labor Market

Employment Growth

El Paso’s nonfarm employment increased by 1.3 percent annualized
rate in December. Altogether in
2011, El Paso added 3,800 nonfarm jobs, representing a 1.4 percent growth. It is worthwhile noticing that private employment
grew vigorously in 2011, adding
6,000 jobs while government employment contracted by 2,200 jobs.
Job gains in the private sector were
widespread across sectors.

(Month-over-month annualized growth rates)

As a result of the continued job
growth throughout last year, the
unemployment rate finally began
to decline in the second half of last
year. El Paso’s unemployment rate
now stands at 9.6 percent, slightly
down from 10 percent in December 2010. The Texas unemployment rate is 7.8 percent, while the
national rate is 8.5 percent.

'08

SOURCE: Federal Reserve Bank of Dallas, El Paso Branch.

El Paso
Nonfarm employment

Jul-11
0.9
3.7
0.0
0.0
0.5
8.7
0.0
10.6
8.1
17.3
0.0
13.5
-18.8

Aug-11
0.9
3.7
7.9
7.1
0.5
2.1
0.0
0.0
3.9
3.2
4.3
0.0
-6.8

Sep-11
7.4
0.0
0.0
-6.6
8.5
13.2
28.1
10.5
8.0
17.0
8.7
13.4
0.0

Oct-11
-4.9
-3.5
0.0
0.0
-5.1
-7.9
-21.9
0.0
0.0
-6.1
0.0
0.0
-8.5

10.4

10.4

10.6

10.5

9.8

9.6

Nonfarm employment
Unemployment rate

13.9
5.5

7.2
5.4

2.6
5.5

4.4
5.3

-8.2
4.9

9.0
4.9

Las Cruces
Nonfarm employment
Unemployment rate

14.9
7.3

-11.5
6.5

-5.1
6.2

9.1
6.3

-6.7
6.3

n.a.
n.a.

Goods producing
Construction, mining & natural res.
Manufacturing
Services providing
Trade, transportation & utilities
Information
Financial activities
Professional & business services
Educational & health services
Leisure & hospitality
Other services
Government
Unemployment rate

Nov-11 Dec-11
1.3
1.3
3.7
-3.5
0.0
-7.3
0.0
0.0
1.0
2.4
6.4
6.4
0.0
0.0
0.0
21.7
3.9
3.9
3.2
6.4
8.7
8.6
13.2
0.0
-8.5
-8.6

Midland-Odessa

NOTE: Seasonally adjusted data.
SOURCES: Federal Reserve Bank of Dallas; Bureau of Labor Statistics.

Federal Reserve Bank of Dallas, El Paso Branch

January 2012

ECONOMIC UPDATE
Trade and Border Crossings
In November, trade flows through
the El Paso port of entry increased
0.8 percent, after two months of
contraction. Both exports and imports contributed to the increase
in total trade. Despite a weaker
peso, which in turn would mean
less traffic from shoppers from
across the Rio Grande, El Paso
sales tax rebates slightly increased
in November at 0.3 percent, on a
12-month basis.
In spite of the recent weakening of
the peso against the dollar, the
number of personal vehicles crossing into El Paso from Ciudad Juarez
continued to expand at a moderate
pace in recent months. Commercial traffic has also shown the same
trend with truck crossings picking
up over the last few months. The
latter might be the result of the
maquiladora industry recovery
gaining momentum.

Housing Market
El Paso housing market cooled
down in the last couple of months
of 2011 with sales contracting, on
average, by 7 percent per month.
In December, the median home
price was $137,500. Inventories
are just a notch above 7 months,
down from 7.6 in October. Singlefamily building permits—a leading
indicator for the housing sector—
have began to show signs of life in
the local market. In December, sin2

é

EL PASO

El Paso Border Crossings
Pesos per dollar
15

Index, January 2006 = 100
140
Nominal exchange rate
130
Truck crossings
120

14

110

13

100

12

90
Vehicle
crossings

80
70

11
10

60
50

9
2006

2007

2008

2009

2010

2011

NOTE: Seasonally adjusted data.
SOURCES: Texas A&M International University; Texas Center for Border Economic and
Enterprise Development; Banco de México.

gle-family permits increased 9 percent from a year ago.

Conditions in Chihuahua
and Juarez

It is likely that the El Paso housing
market will experience growth in
coming months due to ongoing expansion at Fort Bliss. Close to
16,000 people (soldiers, spouses
and children) arrived in El Paso
during the summer of 2011. In addition, it is anticipated that around
8,000 and 9,000 people will arrive
in El Paso in 2012 and 2013, respectively, as a result of the expansion at the military post. Furthermore, anecdotal evidence indicates that the market continues to
see a stream of immigrants as a
result of drug-related violence
across the Rio Grande. This adds to
the pent-up demand for housing
locally.

The U.S. industrial sector has
gained some momentum during
the last couple of months. The Institute for Supply Management
manufacturing index and its associated new orders index (a leading
indicator of industrial activity) have
increased at a solid pace over the
last few months, after experiencing
a soft patch during the summer of
last year. Furthermore, growth in
formal manufacturing employment
in the Mexican state of Chihuahua
accelerated in December.
The Dallas Fed developed a model—based on the U.S. industrial
production index and Chihuahua
manufacturing employment—that
tracks Juarez maquiladora employment since 2006.

Federal Reserve Bank of Dallas, El Paso Branch

January 2012

ECONOMIC UPDATE
The model indicates that Juarez
maquiladoras continued to add
jobs in December at an 8.3 percent
annualized rate. In 2011, maquiladora employment increased at a
5.4 percent rate, which represents
close to 12,000 new jobs. So far,
according to our estimates, maquiladoras in Ciudad Juarez have recovered about 75 percent of all the
jobs lost during the last recession.
U.S. auto production in December
was at 8.9 million units, up from
7.6 in June, suggesting the supplychain disruptions created by the
Japanese earthquake and tsunami

EL PASO

were short-lived. This is good news
for the local economy because
roughly half of the maquiladoras
across the Rio Grande are auto related.

Las Cruces, N.M., nonfarm employment contracted in November
at a 6.7 percent annualized rate. In
spite of the job losses, the unemployment rate remained unchanged at 6.3 percent.

Neighboring Metro Areas

The Midland–Odessa housing sector continues to improve, with
home sales and permits rising at
double-digit rates over the last few
months. The data suggest that the
Permian Basin housing market may
have turned a corner.

Midland–Odessa employment increased in December at a 9 percent annualized rate. As a result,
the unemployment rate decreased
to 4.9 percent in December, the
lowest level since late-2008. The
Permian Basin region continues to
benefit from high energy prices.

U.S. Manufacturing and Maquiladora Employment
(Year over year)
Percent
20
15
10
5
0
-5
-10
Juarez maquiladora employment

-15

Juarez maquiladora employment, FRB El
Paso estimate
U.S. industrial production index

-20
-25
-30
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

NOTE: Seasonally adjusted data.
SOURCES: Instituto Nacional de Estadística y Geografía; Federal Reserve Board; Federal Reserve
Bank of Dallas, El Paso Branch.
Note: Data may not match previously published numbers due to data revisions.
Questions regarding El Paso Economic Update report can be addressed to Roberto Coronado at roberto.coronado@dal.frb.org.

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