Full text of El Paso Economic Indicators : March 2012

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Federal Reserve Bank of Dallas, El Paso Branch

March 2012

ECONOMIC UPDATE

EL PASO

El Paso Business-Cycle Index
According to the business-cycle
index produced by the Federal Reserve Bank of Dallas, economic activity in the El Paso metropolitan
economy expanded at a strong 6
percent annualized rate in January.
In addition, nonfarm employment
continues on the rise.
Given the recent pickup in the U.S.
industrial sector, employment
growth in Ciudad Juarez maquiladoras has accelerated. The expansion at Fort Bliss is now shifting

Index, January 2000 = 100
116
112
108
104
100
96
'00

'01

'02

'03

'04

'05

'06

'07

gears into population growth and
is expected to boost the local

'09

'10

'11

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economy.

Labor Market

Employment Growth

El Paso’s nonfarm employment increased sharply in January at a 7.9
percent annualized rate. Altogether in 2011, El Paso added 3,300
nonfarm jobs, representing a 1.2
percent growth rate. It is worthwhile noticing that private employment grew vigorously in 2011,
adding 6,200 jobs while government employment contracted by
2,800 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 7.3 percent, while the
national rate is 8.3 percent.

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

El Paso
Employment
Growth

Aug-11 Sep-11 Oct-11
-2.5
3.9
-4.6
(Month-over-month annualized growth
rates)
Goods producing
-7.4
-3.8
0.0
Construction, mining & natural res.
-8.5
0.0
0.0
Manufacturing
-6.6
-6.6
0.0
Services providing
-1.9
4.9
-5.1
Trade, transportation & utilities
0.0
8.7
-8.0
Information
0.0
27.4
-21.5
Financial activities
10.2
10.1
0.0
Professional & business services
4.0
12.3
3.9
Educational & health services
3.2
24.6
-6.1
Leisure & hospitality
4.2
4.1
4.1
Other services
13.4
0.0
0.0
Government
-16.2
-13.3
-8.6
Unemployment rate
10.5
10.5
10.4
Nonfarm employment

Nov-11 Dec-11
1.7
4.4
-3.8
0.0
-8.5
9.3
0.0
-6.7
2.4
5.4
4.3
10.9
-21.9
28.1
0.0
10.0
3.9
12.1
3.2
9.8
4.1
8.4
13.2
13.1
-3.6
-5.3

Jan-12
7.9
4.0
9.3
7.2
7.9
13.1
0.0
20.8
16.2
3.1
8.3
13.0
-1.8

9.8

9.8

9.6

Midland-Odessa
Nonfarm employment
Unemployment rate

4.3
5.0

1.7
5.0

5.2
4.8

-8.8
4.6

12.5
4.5

1.7
4.6

Las Cruces
Nonfarm employment
Unemployment rate

-9.9
6.5

1.8
6.2

9.1
6.3

-8.3
6.3

20.9
6.6

0.0
n.a.

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

Federal Reserve Bank of Dallas, El Paso Branch

March 2012

ECONOMIC UPDATE
Trade and Border Crossings
In January, trade flows through the
El Paso port of entry increased at a
rapid 6 percent pace. The solid
growth in trade flows is likely the
result of stronger maquiladora activity in Ciudad Juarez. As a result
of a weaker peso, which in turn
means less traffic from shoppers
from across the Rio Grande, El Paso sales tax rebates decreased in
January at a 0.7 percent rate, 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
The El Paso housing market gained
momentum in February with home
sales increasing at a 28 percent
rate on a 12-month basis. The median home price in February was
$136,000. Inventories are 7.3
months. Single-family building
permits—a leading indicator for
the housing sector—have slowed
down over the last couple of
months

é

EL PASO

El Paso Border Crossings

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.

It is likely that the El Paso housing
market will continue to do well 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.

on the rise. In addition, the Institute for Supply Management manufacturing index and its associated
new orders index (a leading indicator of industrial activity) continue
to signal solid growth in the industrial sector in recent months, after
experiencing a soft patch during
the summer of 2011. Growth in
formal manufacturing employment
in the Mexican state of Chihuahua
has accelerated since December.

Conditions in Chihuahua
and Juarez

The model indicates that Juarez
maquiladoras are now adding payrolls at a faster pace. For instance,

The U.S. industrial sector remains
2

Pesos per dollar
15

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

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

March 2012

ECONOMIC UPDATE
maquiladora jobs have posted
strong growth at an average of 13
percent annualized rate over the
last three months. In 2011, maquiladora employment increased at a
5.4 percent rate, which represents
close to 12,000 new jobs. So far in
the first couple of months in 2012,
according to our estimates, maquiladoras in Ciudad Juarez have added more than 5,000 jobs, which
represent an increase of 2.3 percent.
U.S. auto production reached 10
million units in January and February, a level not seen since the on-

EL PASO

set of the recession in early 2008.
This is good news for the local
economy because roughly half of
the maquiladoras across the Rio
Grande are auto related.

Neighboring Metro Areas
Midland–Odessa employment increased in January at a 1.7 percent
annualized rate. The unemployment rate increased slightly to 4.7
percent in January. The Permian
Basin region continues to benefit
from high energy prices.

Las Cruces, N.M., nonfarm employment remained unchanged in
January. The unemployment rate
sits at 6.6 percent.
The Midland–Odessa housing sector continues to improve, with
home sales and permits rising at
double-digit rates over the past
few months. The data suggest that
the Permian Basin housing market
may have turned a corner.

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

Juarez maquiladora employment

-20

Juarez maquiladora employment, FRB El Paso estimate

-25

U.S. industrial production index

-30
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

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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