The Odessa general economy began 2020 much the way it ended 2019, and that is in a state of decline. The Odessa Economic Index fell for the third straight month in January (and the sixth of the last seven months after peaking June 2019) and fell below its year-ago level for the first time in the current cycle of contraction. The index retreated to 266.6 in January down from 269.5 in December, and down 0.5% from the January 2019 OEI of 267.9.
The onset of contraction in the Odessa economy in the latter half of 2019 and moving into 2020 was the result of a slowdown in the regional oil and gas economy, which was in decline for virtually all of 2019, and does not yet begin to reflect the COVID-19 related events that led to a partial shut-down of the economy and sent oil prices crashing. Those events do suggest, of course, that the downward slide in the Odessa general economy and the Permian Basin regional oil and gas economy has now worsened dramatically, and the effects will begin to show up in the April numbers, and perhaps even in March to a limited extent.
Both general spending and employment remain in year-over-year decline through January, the essence of local economic contraction, and the unemployment rate is on the rise.Auto spending was lower as well, along with monthly building permit valuations. Hotel/motel tax collected in January (reflecting fourth quarter 2019 occupancy) was surprisingly slightly higher compared to year-ago numbers, which in turn were down by nearly 17% year-over-year.
Airport passenger enplanements remained strong through January, and the housing numbers were higher for the month both in terms of new home construction and existing home sales.
Crude oil prices were actually higher in January compared to January 2019, but that is the last time that will be the case for a while with prices going year-over-year negative in February and then sharply so in March and beyond. The rig count continued to come down, however, having fallen below 300 in December and then losing a few more rigs in January, down from the recent cyclical peak of 390 in October 2018. The rig count permit and completion data, and the production estimates are all for Railroad Commission districts 7C, 8, and 8A.
The Texas Permian Basin Petroleum Index declined for the 11thstraight month in January falling to 305.8 for the month down from 309.7 in December, and down 12.8% from the January 2019 TPBPI of 350.8. The regional oil and gas index peaked at 352.6 in October 2018 and has been in a general state of decline since then.
Of significance is the fact that both crude oil and natural gas production in the Permian continued to rise in January, though the margin of year-over-year increase is narrowing. The production estimates in the coming months will be key as the nature of production decline is central to the COVID-19 phenomenon and the resulting collapse in crude oil prices. Again, however, these numbers are unaffected by coronavirus, and March is the earliest in which that might begin to show up in the numbers.
General taxable spending per January sales tax receipts was down by over 17% compared to January of a year ago, though the January 2019 total was up by nearly 29% year-over-year. Real auto spending was in decline for most of 2019 and was down in January 2020 by 4.7% compared to January of a year ago.
Under the revised employment data benchmarks discussed last month Odessa employment actually peaked in February 2019 before entering into a slow decline for the balance of the year. Year-over-year employment turned negative in September 2019 and remains that way moving into 2020 with the January estimate down by 1.4% compared to January of a year ago. The unemployment rate has been ticking upward since mid-year 2019 and the January unemployment rate of 3.4% was up compared to the January 2019 unemployment rate of 2.7%.
The 61 new single-family residence permits issued is the second highest on record for the month of January behind the 76 permits issued in January 2018. The number of existing home sales was down compared to January of a year ago, which is the January record for home sales. The price of those sales was up by over 10% in January 2020, however, and the real (inflation-adjusted) total dollar volume of home sales set a new January record with a slight increase compared to January of a year ago.