Full text of El Paso Economic Indicators : November 2010

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

Federal Reserve Bank of Dallas, El Paso Branch

November 2010

ECONOMIC UPDATE
El Paso Business-Cycle Index
The El Paso business-cycle index increased 2.2 percent at an annualized
rate in October. However, the local
economy recently began a deceleration heavily influenced by a contraction in government-related employment as temporary census employees
were laid off.

EL PASO

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

Furthermore, the U.S. industrial sector has begun to cool down in recent
months. As a result, Ciudad Juarez
maquiladoras’ payroll expansion came
to a halt. According to our internal
estimates, maquiladoras across the

Labor Market
After four months of contraction,
El Paso nonfarm employment rose
in October at a 3.6 percent annualized rate. Employment gains were
widespread across sectors with only the information sector posting
job losses. The manufacturing,
trade, transportation and utilities,
leisure and hospitality, and government sectors remained unchanged in October.
Given the recent softness in the El
Paso labor market, the unemployment rate jumped to 10.4 percent
in October. The Texas unemployment rate is 8.1 percent, while the
national rate is at 9.6 percent.

00

01

02

03

04

05

06

07

08

09

10

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

Rio Grande stopped hiring in September, after a year of continued
job growth. This now represents a

downside risk for the El Paso
economy.

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

May-10
6.3
Goods Producing
7.9
Construction, Mining & Natural Resources8.2
Manufacturing
7.6
Services Providing
6.1
Trade, Transportation & Utilities
-2.2
Information
0.0
Financial Activities
22.8
Professional & Business Services
3.8
Educational & Health Services
-3.3
Leisure & Hospitality
9.2
Other Services
-12.2
Government
19.2
Unemployment Rate
9.6

Jun-10
-5.5
-7.3
-7.6
-7.0
-5.3
2.2
0.0
0.0
3.7
-3.3
0.0
0.0
-19.0

Jul-10
-6.3
7.9
8.2
7.6
-8.0
2.2
0.0
0.0
0.0
3.4
-4.3
0.0
-27.6

Aug-10
-1.3
3.8
8.1
0.0
-2.0
-2.2
0.0
-9.7
3.7
0.0
9.2
0.0
-8.7

Sep-10
-5.5
-3.7
0.0
-7.0
-5.8
2.2
0.0
-9.8
-3.6
7.0
4.5
0.0
-22.9

Oct-10
3.6
3.8
8.1
0.0
3.5
0.0
-21.9
10.8
11.6
10.5
0.0
13.9
0.0

9.3

9.6

10.0

9.8

10.4

Midland-Odessa
Nonfarm Employment
Unemployment Rate

9.0
6.7

0.0
6.2

1.0
6.2

0.0
6.5

1.0
6.1

2.9
6.6

Las Cruces
Nonfarm Employment
Unemployment Rate

13.2
7.7

15.0
8.2

7.2
8.7

-8.3
8.1

0.0
7.6

n.a.
n.a.

NOTE: Seasonally adjusted data
SOURCES: Federal Reserve Bank of Dallas with data from the Bureau of Labor Statistics.

Federal Reserve Bank of Dallas, El Paso Branch

November 2010

ECONOMIC UPDATE

EL PASO

Trade and Border Crossings
Trade flows through the El Paso
port of entry continue to moderate. In September, total trade
increased at a 4 percent annualized rate. On a year-over-year basis, total trade is up 36 percent. In
the local retail sector, El Paso sales
tax rebates increased 9 percent in
September from the same month a
year ago.
On a 12-month basis, the number
of personal vehicles crossing into El
Paso from Ciudad Juarez increased
strongly at 18 percent. However,
pedestrian crossings registered a
decline of about 26 percent. With
respect to commercial traffic, truck
crossings were up 4.5 percent (12month basis). However, in recent
months, truck crossings have registered a contraction. Such trend is
in line with a slowdown in maquiladora activity in Juarez.

El Paso Border Crossings
Jan-2006=100, SA
140
130

Nominal exchange rate
Truck crossings

14

120
110

13

100
12
90
80
70
60

11
Vehicle
crossings

50

10
9

2006
2007
2008
2009
2010
SOURCES: Texas A&M International University; Texas Center for Border Economic and
Enterprise Development; Banco de Mexico.

the housing market in the coming
months. Similar to the nation, the
El Paso housing market has been
weak over the past few months
after a good performance earlier
this year. This is due to the expiration of the federal tax incentives.

Housing Market

Economic Conditions in Juarez
and Chihuahua

El Paso housing sales receded in
September by 4.5 percent from the
same month a year ago. However,
year to date, home sales have increased by 12 percent. In September, the median home price was
$137,000, while months of inventory remain unchanged at 6.9
months. Single-family building
permits—a leading indicator for
the housing sector—have been retreating over the last three
months, suggesting a slowdown in

The U.S. industrial sector continues
to cool down, posting a slight increase of 0.1 percent annualized
rate in October. The ISM manufacturing index and new orders index
(a leading indicator for the industrial sector) continue to signal expansion, albeit recent readings
suggest that the industrial sector
has slowed down in recent
months. In addition, formal employment in the manufacturing

2

Pesos per dollar
15

sector in the state of Chihuahua
has contracted over the last three
months.
We developed a model—based on
U.S. industrial production index
and Chihuahua manufacturing employment—to track Juarez maquiladora employment since 2006.
The model indicates that Juarez
maquiladoras payroll expansion
came to a halt in September, after
expanding for over a year. Maquiladora employment edged down
by a 1 percent and 6 percent (both
are annualized rates) in September
and October, respectively. Maquiladora payroll contraction intensified in October, indicating that the
recent weakness in the U.S. industrial sector is making inroads into
maquiladora plants in Juarez.
Anecdotal
evidence
provides

Federal Reserve Bank of Dallas, El Paso Branch

November 2010

ECONOMIC UPDATE

EL PASO

mixed evidence; while some contacts report that production orders
are on the rise, others are observing a drop in the demand for their
products.

percent from 6.1 percent in September. The Midland–Odessa area
continues to benefit from high and
rising oil prices, resulting in stronger regional economic activity.

Neighboring Metro Areas

Las Cruces nonfarm employment
remained flat in September, after a
significant decline in August of 8.3
percent annual rate. The unemployment rate continues to be high
and is now 8.1 percent.

The Midland–Odessa labor market
strengthened, posting a jump of
2.9 percent annualized rate in October. In spite of this, the unemployment rate increased to 6.6

The Midland–Odessa housing sector is stabilizing. Home sales are up
1.4 percent from a year ago with a
median home price of $165,000.
Permits for new homes in the Midland–Odessa area, as well as for
Las Cruces, continue to improve,
suggesting that the housing market
in both MSAs might have reached
bottom.

U.S. Manufacturing and Maquiladora Industry
Year-over-Year
Percent
20
15
10
5
0
-5
-10

U.S. IP Index

-15

Juarez Maquiladora Employment

-20

Juarez Maquiladora Employment --- FRB El
Paso Estimate

-25
-30
2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

NOTE: Seasonally Adjusted Data
SOURCES: INEGI , Federal Reserve Board, and Federal Reserve Bank of Dallas, El Paso Branch

Questions regarding El Paso Economic Update report can be addressed to Roberto Coronado at roberto.coronado@dal.frb.org

3