Full text of El Paso Economic Indicators : October 2011

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Federal Reserve Bank of Dallas, El Paso Branch

October 2011

ECONOMIC UPDATE
El Paso Business-Cycle Index
The El Paso business-cycle index
contracted in September at a 2.6
percent annualized rate. Recent
government-driven job losses took
a toll on the local economy. However, the effect is expected to be
temporary.
Given the recent pickup in the U.S.
industrial sector and, most importantly, in the automotive sector,
Ciudad Juarez maquiladoras are
growing again, albeit at a slow
pace.

EL PASO

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

'01

'02

'03

'04

'05

'06

'07

On top of this, roughly 16,000
people arrived in El Paso sometime

'10

'11

during the summer because of
continued expansion at Fort Bliss.

Employment Growth

El Paso’s nonfarm employment
contracted at a 6.2 percent annualized rate in September. Job losses
were driven primarily by the government sector; private employment rose at a 5.7 percent annualized rate.

(Month-over-month annualized growth rates)

El Paso’s unemployment rate now
stands at 10.7 percent. The Texas
unemployment rate is 8.5 percent,
while the national rate is 9.1 percent.

'09

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

Labor Market

In September, private employment
growth was led by the educational
and health services, professional
and business services, financial activities, and construction, mining
and natural resources sectors.

'08

El Paso
Nonfarm employment
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

Apr-11 May-11
4.8
-0.8
-3.6
3.7
0.0
8.0
-6.7
0.0
6.0
-1.0
11.2
0.0
0.0
0.0
0.0
0.0
16.6
12.0
10.2
-6.2
0.0
-8.0
0.0
0.0
-1.7
-1.7

Jun-11
4.3
3.7
8.0
0.0
3.4
2.1
0.0
10.8
3.8
-20.4
13.3
0.0
17.1

Jul-11
5.2
7.5
16.4
0.0
5.4
6.5
0.0
10.7
7.8
25.7
13.1
13.4
-9.9

Aug-11
-2.1
-3.6
0.0
-6.8
-1.9
0.0
0.0
-9.6
0.0
3.3
4.2
0.0
-10.0

Sep-11
-6.2
3.7
7.8
-6.8
-7.4
2.1
0.0
10.7
11.8
13.7
0.0
13.2
-37.5

10.4

10.3

10.2

10.4

10.4

10.7

Nonfarm employment
Unemployment rate

-4.4
5.4

6.4
5.3

-8.5
5.4

12.3
5.5

5.5
5.4

-0.9
5.5

Las Cruces
Nonfarm employment
Unemployment rate

-6.7
7.1

-5.1
6.7

5.4
8.1

14.9
7.3

-13.0
6.5

-5.1
n.a.

Midland-Odessa

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

Federal Reserve Bank of Dallas, El Paso Branch

ECONOMIC UPDATE
Trade and Border Crossings
In August, trade flows through the
El Paso port of entry rebounded
6.3 percent month over month,
with exports and imports contributing equally to the growth in
trade activity. In the retail sector,
El Paso sales tax rebates increased
3 percent in August from the same
month a year ago.

October 2011
é

EL PASO

El Paso Border Crossings
Index, January 2006 = 100
140
Nominal exchange rate
130
Truck crossings
120

Housing Market
In September, El Paso home sales
declined 6.5 percent on a yearover-year basis. The median home
price was $131,200. Inventories
are at 7.9 months, up from 7.5 in
August.
Single-family building permits—a
leading indicator for the housing
sector—have began to show signs
of life in the local market. In August, single-family permits increased 3 percent from a year ago.
2

14

110

13

100

12

90
80
70

In spite of the peso’s strength
against the dollar during the early
part of this year, the number of
personal vehicles crossing into El
Paso from Ciudad Juarez continued
to contract in March (the latest
data available). With respect to
commercial traffic, truck crossings
have been on an upward trend. As
maquiladora activity and trade
flows between Juarez and El Paso
pick up, commercial traffic at the
international bridges is expected to
continue to expand in coming
months.

Pesos per dollar
15

Vehicle
crossings

60
50

11
10
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 experience stronger
activity 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. 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.

Conditions in Chihuahua
and Juarez
The U.S. industrial sector has
gained some momentum during
the last couple of months, though
growth remains weak. The Institute for Supply Management manufacturing index and its associated

new orders index (a leading indicator of industrial activity) continue
to signal expansion; however, recent readings border on contraction. Furthermore, formal manufacturing employment in the Mexican state of Chihuahua has decelerated over the past few months.
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.
The model indicates that Juarez
maquiladoras continued to add
jobs in September, at a 2.3 percent
annualized rate. In 2010, maquiladora employment increased at a
7.1 percent rate, which represents
15,000 new jobs. Year to date, ma-

Federal Reserve Bank of Dallas, El Paso Branch

October 2011

ECONOMIC UPDATE
quiladora payrolls in Juarez have
grown by almost 9,200 jobs, a 4.1
percent increase.
U.S. auto production jumped to 8.8
million units in September, up
from 7.8 in June, suggesting the
supply-chain disruptions created
by the Japanese earthquake and
tsunami were short-lived. This is
good news for the local economy
because roughly half of the maquiladoras across the Rio Grande are
auto related.

EL PASO

Neighboring Metro Areas

6.5 percent.

Midland–Odessa employment contracted slightly in September at a
0.9 percent annualized rate. As a
result, the unemployment rate increased to 5.5 percent in September from 5.4 percent in August.
High energy prices continue to
benefit the Midland–Odessa area.

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.

Las Cruces, N.M., nonfarm employment ticked down in September at a 5.1 percent annualized
rate. The unemployment rate was

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

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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