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Oil economy of Texas shows mixed success

Weakness in oil prices still presents obstacles to state economic growth.

By
Daniel J. Graeber
A report from the Dallas Federal Reserve finds oil-price pressures remain, though construction and other parts of the state economy are showing signs of recovery. File photo by Stephen Shaver/UPI
A report from the Dallas Federal Reserve finds oil-price pressures remain, though construction and other parts of the state economy are showing signs of recovery. File photo by Stephen Shaver/UPI | License Photo

DALLAS, March 29 (UPI) -- Construction tied to the natural gas and renewable energy sectors helped add to contract values in Texas, a report from the Dallas Federal Reserve found.

A report last week from the bank suggested the oil-rich economy in Texas was facing headwinds because of pressure from lower crude oil prices.

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"Declines in energy prices early this year and continued strength in the dollar loom large on recent and future growth in the Texas economy," Keith Phillips, Dallas Fed assistant vice president and senior economist, said in a statement. "Over the past three months there was a broad-based decrease in the leading index components suggesting weakness in the Texas economy going forward."

Labor markets, the Dallas Fed said, continued to face pressure as 12 percent of the firms surveyed said they were hiring, against 22 percent reporting net layoffs. Nevertheless, Phillips said the overall outlook for job growth in Texas was "slightly positive."

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Many energy companies working in the United States have their headquarters in Texas. Oil field services company Halliburton, which is based in Houston, in February said it was cutting its workforce by about 5,000 because of "ongoing market conditions."

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In a snapshot of manufacturing and construction, however, the Dallas Federal Reserve was more optimistic. A five-month average of contract values for construction activity in all of Texas increased 12.8 percent in February to $6.5 billion, though the figure was still nearly 25 percent below last year's level.

"The increase was driven by growth in total non-building, which rose primarily due to the start of a new liquefied natural gas export facility in Freeport, Texas, and several solar and wind projects in the state," the bank said.

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Freeport LNG Development is to build the Texas plant capable of processing 1.8 billion cubic feet of natural gas per day for exports to countries with and without free-trade agreements with the United States. Though Texas is the No. 1 oil producer in the nation, its manufacturing sector is among the largest in the country and the state is a leader in terms of renewable energy developments.

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