Full text of El Paso Economic Indicators : September 2009

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Federal Reserve Bank of Dallas, El Paso Branch

September 2009

ECONOMIC UPDATE
El Paso Business-Cycle Index
El Paso’s economic contraction has
intensified in recent months. In
August, El Paso’s business-cycle
index reported a decline of 7.8
percent annualized rate, up from
the average decline of 3.4 percent
annualized rate during the previous
12-months. This suggests that the
national recessionary pressures
continue to impact El Paso. The
business-cycle index has been in
the negative territory since early
2008. Due to heavy government
expenditures taking place both

Labor Market
El Paso non-farm employment
declined significantly in August at a
9.6 percent annualized rate.
August was the month with the
biggest job losses since the current
recession began. Year to date, the
El Paso labor market has
contracted by 4,700 jobs or 1.7
percent decline. Job losses in
August were widespread across all
sectors, both goods and services
producing. As a result of the
deterioration of the labor market,
the unemployment rate in El Paso
continues on the rise. In August
the unemployment rate was at 9.5,
up from 8.3 percent six months
ago. El Paso’s unemployment rate
is above the State’s level of 8
percent but is below the national
rate of 9.7 percent.

EL PASO

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

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: Federal Reserve Bank of Dallas, El Paso Branch

inside and outside Ft. Bliss, the
local economy has been partially
insulated.
However,
such

expenditure cushion has not been
enough to offset the economic
downturn.

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

Mar-09 Apr-09 May-09
0.0
-1.7
-1.3
-13.1
-10.1
-13.4

Construction, Mining & Natural Resources-7.4

Jun-09
1.3
-10.3

Jul-09
-8.3
-10.4

Aug-09
-9.6
-10.5

-7.5

-14.5

-7.6

-14.8

-7.8

-17.6
2.0
0.0
-21.2
-9.4
0.0
3.7
-4.3
0.0
11.5
8.3

-12.3
-0.5
-4.0
0.0
10.4
-11.2
7.5
9.2
0.0
-1.8
8.0

-12.4
0.5
-4.0
0.0
10.3
0.0
0.0
0.0
14.0
1.8
8.7

-12.5
3.0
-7.8
-21.5
-9.3
-3.9
0.0
-4.3
0.0
28.3
8.8

-6.5
-8.1
-4.0
27.4
0.0
0.0
7.5
4.5
0.0
-28.8
9.1

-12.7
-9.5
-6.0
-21.5
0.0
-14.8
0.0
-4.3
-12.3
-16.7
9.5

Midland-Odessa
Nonfarm Employment
Unemployment Rate

-1.8
5.5

-2.6
6.0

-2.6
6.7

-4.4
6.9

-0.9
7.1

-5.2
7.3

Las Cruces
Nonfarm Employment
Unemployment Rate

-5.1
6.1

-5.1
5.8

-1.7
6.5

-1.7
7.3

-8.4
7.4

3.6
n.a.

Manufacturing
Services Providing
Trade, Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Educational & Health Services
Leisure & Hospitality
Other Services
Government
Unemployment Rate

Notes: Sea s ona l l y Adjus ted Da ta
Source: Federa l Res erve Ba nk of Da l l a s wi th da ta from the Burea u of La bor Sta ti s ti cs

Federal Reserve Bank of Dallas, El Paso Branch

September 2009

ECONOMIC UPDATE

EL PASO

Trade and Border Crossings
Total trade through El Paso
continues to diminish but at a
slower rate. In July, total trade
declined 17.5 percent from a year
ago, down from 21 percent in June
and 26 percent in May. Imports
declined 20 percent while exports
declined 13 percent. At the retail
level, El Paso sales tax rebates
decreased 9 percent in July (12month basis).
The recent
slowdown in the local retail
industry is the result of a slow
economic activity in El Paso
combined with a weak peso.
In July, 316-thousand vehicles
crossed into El Paso from Ciudad
Juarez, representing a decline of
just 1.7 percent from the same
period last year. At the wholesale
level, truck crossings are down 17
percent. The recent increase in
personal vehicle crossings, as
shown in the chart nearby, is
probably the result of the peso
gaining ground against the dollar in
recent months. Since its peak back
in March at almost 15 pesos per
dollar, the nominal exchange rate
now stands at around 13 pesos per
dollar.
In
addition,
the
maquiladora sector in Juarez
seems to be bottoming down and
this will probably boost retail sales
in El Paso in the near future.

Housing Market
El Paso housing sales decreased 4.8
2

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

Pesos per dollar
15
Nominal Exchange Rate

130

14
Truck Crossings

120

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 Border Economic and Enterprise
Development and Banco de Mexico.

percent in July (year-over-year
basis). The median home price
was $135,200 while months of
inventory continue to decline to
9.1 months, the lowest level since
February 2008.
Single-family
building permits, a leading
indicator for the housing sector,
increased in July to almost 300
permits up from 233 in June.
However, on a year-over-year basis
single-family permits are down by
9 percent.

Economic Conditions in Juarez
and Chihuahua
The wheel has turned for the U.S.
industrial sector, posting increases
over the last two months averaging
11 percent annualized rate. On a
year-over-year basis, growth rates
have begun to improve as well but

are still in the negative territory.
Formal employment in the
manufacturing sector in the State
of Chihuahua has also showed
improvements in recent months.
Given the strong correlation that
exists between these two series
and the maquiladora activity in
Ciudad Juarez, we developed a
model based on these indicators
that tracks Juarez maquiladora
employment post-2006.
The
model
indicates
that
the
maquiladora sector posted job
gains in August for the first time in
22-months. Our internal estimates
indicate that Ciudad Juarez has lost
around 50,300 maquiladora jobs
since late 2007.
Anecdotal
evidence corroborates this uptick
in maquiladora employment, as
many
plants
are
reporting
increases in production orders.

Federal Reserve Bank of Dallas, El Paso Branch

September 2009

ECONOMIC UPDATE
This is mostly tied to the increase
in U.S. auto sales as a result of the
“Cash-for-Clunkers” program. The
downside is that this program was
temporary, so it is too soon to tell
whether the maquiladoras will
continue to grow in the coming
months. In spite of the recent
improvement in maquiladoras,
Ciudad Juarez retail sales continue
to decline in June at a 7.3 percent
(year-over-year).

Neighboring Metro Areas
The

Midland-Odessa

area

EL PASO

continues to be affected by the
recent oil shock as nonfarm
employment continued to decline
in August at a 5.2 percent
annualized rate. Given the job
losses over the recent months, the
unemployment rate jumped to 7.3
percent. On the other hand, Las
Cruces nonfarm employment
posted an increase of 3.6 percent
at annual rate during August. As
reported in the table above, the
Las Cruces labor market has been
weak over the last six months.
Thus, the unemployment rate has

increased to 7.4 percent in July.
The
Midland-Odessa
housing
market continues to be weak with
sales in July declining by 18
percent on a year-over-year basis.
The median home price for the
Midland-Odessa area stands at
$157,000. Permits for new homes
in Midland-Odessa are down in
July by 37 percent on a 12-month
basis. Las Cruces building permits
for new homes stand at 77 permits
in July, representing a decline of 19
percent from a year ago.

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

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

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