Full text of El Paso Economic Indicators : March 2009

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Federal Reserve Bank of Dallas, El Paso Branch

March 2009

ECONOMIC UPDATE

EL PASO

El Paso Business-Cycle Index

Index Jan-2000=100

According to El Paso's businesscycle index, the El Paso economy
resumed growth in January at a 0.9
percent annualized rate after a
slight decline in December 2008.
However, on a 12-month basis, this
indicator continues to be down by
1.2 percent, making January the
third consecutive month that this
indicator is in negative territory.
This suggests that the El Paso
economy has finally been caught
by the economic downturn
affecting the nation and the State

116

Labor Market
El Paso non-farm employment
increased at an annual rate of 4.9
percent in January. The job gains
in January were widespread with
both the goods and services
sectors posting positive numbers.
The only sectors that contracted
during
January
were
manufacturing, information, and
educational and health services.
Over the last 12 months, however,
job growth is virtually zero. In
spite of the January added jobs,
the unemployment rate increased
to 7.8 percent from 7.4 percent in
December.

112
108
104
100
96
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Federal Reserve Bank of Dallas, El Paso Branch

of Texas. Fort Bliss continues to
support the local economy, with
$1.72 billion spent since 2006, and

40 percent
contractors.

going

to

local

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

Aug-08
0.9
Goods Producing
-3.4
Construction, Mining & Natural Resources0.0
Manufacturing
-6.0
Services Providing
1.5
Trade, Transportation & Utilities
-2.0
Information
-19.8
Financial Activities
0.0
Professional & Business Services
30.7
Educational & Health Services
3.8
Leisure & Hospitality
0.0
Other Services
0.0
Government
-5.4
Unemployment Rate
6.6

Sep-08
-3.0
-9.8
0.0
-17.1
-2.0
-5.9
0.0
0.0
-31.9
3.8
-8.4
-12.5
22.4
6.6

Oct-08
4.4
0.0
0.0
0.0
5.1
0.0
-20.1
10.3
16.8
11.6
-4.3
0.0
7.5
6.8

Nov-08 Dec-08
1.7
-1.3
7.1
-12.9
7.9
-14.1
6.5
-11.9
1.0
0.5
2.0
0.0
0.0
-20.4
0.0
0.0
3.9
12.2
0.0
-7.1
0.0
-4.4
0.0
-12.7
0.0
5.6
7.0
7.4

Jan-09
4.9
3.5
16.4
-6.2
5.0
4.1
-37.5
10.2
12.0
-7.1
36.1
0.0
1.8
7.8

Midland-Odessa
Nonfarm Employment
Unemployment Rate

5.5
3.2

5.5
3.3

2.7
3.3

1.8
3.4

0.0
3.6

-2.6
4.1

Las Cruces
Nonfarm Employment
Unemployment Rate

12.9
4.7

1.7
3.8

0.0
4.0

0.0
4.1

-3.4
4.6

-3.4
5.6

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

March 2009

ECONOMIC UPDATE

EL PASO

Trade and Border Crossings
As a result of the slowdown in
manufacturing activity in Ciudad
Juarez and the State of Chihuahua,
total trade through the El Paso
port of entry declined in December
2.3 percent on a 12-month basis.
More specifically, imports declined
7.7 percent, while exports
increased 6.8 percent. Retail sales
tax rebates in El Paso increased by
6.6 percent in January. However,
on a 12-month basis, this indicator
is down by 1.4 percent. This
decline is mostly due to slower
economic activity in El Paso as well
as a weaker peso.
In February, almost 280-thousand
vehicles crossed into El Paso from
Ciudad Juarez, representing a
decline of almost 20 percent from
the same period last year. Most
likely this reflects slower economic
activity in Ciudad Juarez, as the
maquiladora sector cools and the
peso weakens. Our estimates at
the Dallas Fed indicate that roughly
11-14 percent of all retail sales in
El Paso can be attributable to
Mexican shoppers. The 31 percent
depreciation of the peso vis-à-vis
the dollar over the last seven
months represents a significant
decline in the purchasing power of
Mexican nationals. Truck crossings
also declined sharply in February,
down 22 percent on a 12-month
basis.
2

El Paso Border Crossings
Jan-2006=100, SA

Pesos per dollar

140

15
Nominal Exchange Rate

130

14

120

Truck Crossings

13

110
100

12

90

11

80

Vehicle
Crossings

70

10

60

9
2006

2007

2008

2009

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

Housing Market
In El Paso, housing sales increased
by 1.7 percent in January (yearover-year basis).
The median
home price in January was at
$126,900. Furthermore, months of
inventory stand at 11.3 months, up
from 8 months roughly a year ago.
The number of single-family
building permits was also down 7
percent in January from a year ago,
as new construction cools along
with the existing home market.

Economic Conditions in Juarez
and Chihuahua
The U.S. industrial sector continues
to deteriorate. In February, the
industrial
production
index
contracted 11.2 percent on a 12month basis.
Similarly, formal

manufacturing employment in the
State of Chihuahua declined by
more than 21 percent in February
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. Recent estimates
indicate that Ciudad Juarez has lost
around 50,000 manufacturing jobs
since the summer of 2007.
Another indication of weakness in
Ciudad Juarez is the retail sector.
Retail sales declined in December
by 1.4 percent compared to
November. Furthermore, a recent
report indicates that auto sales in
Juarez are down roughly 40
percent.

Federal Reserve Bank of Dallas, El Paso Branch

March 2009

ECONOMIC UPDATE
Neighboring Metro Areas
Midland-Odessa continues to feel
the recent oil shock, as nonfarm
employment declined at an annual
rate of 2.6 percent in January. As a
result the unemployment rate
jumped to 4.1 percent in January
from 3.6 percent in December. Las
Cruces
nonfarm employment
posted a decline at a 3.4 percent
annual rate during January, its

EL PASO

second consecutive month of
decline. The unemployment rate
increased to 5.6 percent in January
from 4.6 percent in December. The
Midland-Odessa housing market
continues to weaken with sales
declining by more than 32 percent
on a year-over-year basis in
January. The median home price
for the Midland-Odessa area
stands at $138,000. Permits for
new homes in Midland-Odessa are

down in January by 5 percent on a
12-month basis.
Las Cruces
building permits for new homes
stand at 68 permits in January,
representing a decline of 26
percent on a 12-month basis.

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

2009

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

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