Texas expects upward momentum in the economy, though low crude oil prices will throttle the trajectory. Photo by Calin Tatu/Shutterstock
DALLAS, Aug. 24 (UPI) -- Though job growth in Texas is expected to be strong, the low price of crude oil could throttle some of the forward momentum, the Dallas Federal Reserve said.
The Dallas Federal Reserve found the state as a whole added 35,800 net jobs in July for the largest monthly gain so far in 2015.
The so-called Beige Book published by the Dallas Federal Reserve earlier this year said the low price for crude oil is hurting the state's oil sector. While most firms surveyed by the bank said they'd be able to weather the storm, the slump should continue through the year.
In its latest statement, the Dallas Fed said job growth through July was at an annualized 1.3 percent, compared with a 3.6 percent growth rate for 2014.
Keith Phillips, a senior economist with the bank, said the strength in the jobs seen in July likely won't last.
"The decline in oil prices may dampen the momentum in job growth in the months ahead," he said in a statement. "The employment forecast model predicts that the pace of growth in the final five months of the year will be similar to the average pace of growth through July."
A research report from the bank in June found major economic concerns for the state were the low price of oil and the longevity of the depressed market. The price for West Texas Intermediate, the U.S. benchmark, is off more than 50 percent from June 2014 and most analysts expect the downturn to continue.
The Texas Railroad Commission, the state's energy regulator, said crude oil production in May was around 2.4 million barrels per day. That's 13 percent higher than May 2014 and indicative of a general increase in crude oil production, despite the steady declines seen in the energy sector.
The Beige Book found most companies working in the exploration and production side of the energy sector expected their capital expenditures to fall by as much as 40 percent.
A bank report from June said lessons learned from past slumps in oil prices found challenges were more apparent in the longevity of the bear market than from the actual discount. The bank in a separate statement revised its 2015 employment forecast upward.
"The new forecast suggests 154,200 jobs will be added in the state this year, and employment in December 2015 will be 11.9 million," the bank said.