June 22 (UPI) -- Despite the recent downturn in crude oil prices, a report from the Federal Reserve Bank of Dallas said the state economy is growing at a moderate pace.
"The manufacturing and energy sectors saw continued job gains in May, as oil prices stabilized and the effect of the strong dollar on exports abated somewhat," the bank's latest report read. "The energy sector continues to make significant employment gains since fourth quarter 2016, after losing one in three jobs from its previous peak in fourth quarter 2014."
In late December, Federal Reserve Bank of Dallas economist Keith Phillips said weakness in the state economy that started in 2016 gave way to a sense of stability in the energy and manufacturing sectors. The outlook for expansion in 2017 was "slightly better," he said.
Recovery has been slow for Texas. On the employment front, the Dallas Fed said the retail sector was behind gains elsewhere in the state economy. In parallel to the issues behind the last recession, meanwhile, the bank said delinquency rates for subprime loans for automobiles was on the rise. Between 2014 and the first quarter of this year, the bank said subprime loans in serious delinquency increased from 12.9 percent to 15 percent, against a decline from 0.6 percent to 0.4 percent for other loans under the same period.
Looking at May data, Phillips said last week that job growth has been robust and state economists expected a "good pace of growth" for the rest of the year because of what was considered sustained recovery in the energy and manufacturing sectors.
West Texas Intermediate, the U.S. benchmark for the price of oil, started May at around $53 per barrel. The price was near $43 per barrel in early Thursday trading. Energy companies are still invested in exploration and production activity, however. Oilfield services company Baker Hughes reported last week there were 460 rigs in service in Texas, against the 191 reported for the same period last year.
"Downside risks are sharply declining oil prices, continued strength in the dollar and uncertainty regarding both U.S. trade and tax policy," the Dallas Fed warned.