"Economic Indicators of the College Station-Bryan MSA" and the College Station-Bryan Business-Cycle Index contained within are products of the Texas A&M Private Enterprise Research Center. "Economic Indicators" is sponsored by the Brazos Valley Economic Development Corporation.
The Business-Cycle Index increased from 228 in June 2023 to 229 in July.
The local unemployment rate remained unchanged at 3.3% in July 2023 compared to June.
Local nonfarm employment decreased by 0.2% from June to July.
July’s inflation-adjusted taxable sales were up by 0.6% from June.
Inflation-adjusted quarterly wage payments increased by 2% from its previous quarter.
Oil natural gas tax revenue increased by 21% from February 2020 to August 2023.
The latest Business-Cycle Index value for July 2023 rose to 229 compared to 228 in June, a 0.2% increase. This increase results from a decrease in nonfarm employment, an unchanged unemployment rate, and an increase in inflation-adjusted taxable sales. In addition, inflation-adjusted quarterly wage payments, the fourth variable used in the Economic Indicators model, was released this month and showed a relatively large 2% increase from the previous quarter. The next data release for quarterly wages will be in November.
The 0.2% increase in the CSB Business-Cycle from June 2023 to July 2023 is shown in Figure 2. The increase was driven by the unchanged unemployment rate which was the same as the previous month at 3.3%, an increase in inflation adjusted taxable sales of 0.6% and an increase in quarterly wages of 2%. Nonfarm employment fell by 290 workers from 139,476 in June 2023 to 139,186 in July. Despite this small decline in nonfarm employment, the unchanged unemployment rate, along with the increases in inflation-adjusted taxable sales and quarterly wages, led to the monthly increase in the Index.
Figure 3 shows the unemployment rates for College Station-Bryan from January 2008 to July 2023, and for Texas and the nation as a whole through August 2023. The unemployment rates in College Station-Bryan remained unchanged in July at 3.3%. For Texas, the unemployment rate in July and in August was 4.1%. At the national level, the unemployment rate increased from 3.5% in July to 3.8% in August. The metropolitan area unemployment rates for August will be available from the Bureau of Labor Statistics on September 27, 2023.
This month, we present the unemployment rates in the Texas Metropolitan Statistical Areas (MSAs) for the month of July, and track oil and gas production, taxes, prices and drilling permits. Local and national air travel are also discussed.
Figure 4 depicts the local unemployment rates for all Texas MSAs for July 2023. College Station-Bryan’s rate of 3.3% was the third lowest, behind the 2.6% rate for Midland and 3.2% rate for Amarillo. McAllen-EdinburgMission, Beaumont-Port Arthur, and Brownsville-Harlingen again had the three highest unemployment rates at 6.3%, 6.3%, and 5.8%, respectively. Austin-Round Rock had the lowest unemployment rate among the four largest MSAs at 3.5%, while the rate in Dallas-Fort Worth-Arlington was 3.8% and San Antonio-New Braunfels 3.9%. Houston-The Woodlands-Sugar Land again had the highest unemployment rate in this group at 4.4%. Of the 25 MSA’s reported here, only Waco and Texarkana had a decline in their unemployment rate compared to the prior month.
The College Station-Bryan MSA sits atop the northern section of the Eagle Ford Shale geological area, which stretches approximately 450 miles from north of Bryan/College Station to the Texas-Mexico Border near Laredo. The MSA marketplace is a location for pipeline fabrication and maintenance companies supporting the Exploration & production (E&P) sector within the oil and gas industry linked to the early stage of energy production, which generally involves searching for and extracting oil and gas.
Figure 5 tracks oil drilling permits for the state of Texas and for the College Station-Bryan MSA (Brazos, Burleson, and Robertson Counties) from January 2018 to July 2023. In the state of Texas, monthly permits averaged 870 during 2018, 783 for 2019, 422 for 2020, 577 for 2021, 746 for 2022 and the monthly permits averaged to 636 in 2023 through July. The drilling permits reached the lowest point at 173 in May 2020 when Covid-19 was near its peak and oil prices had plummeted. Since then, the numbers have increased, and most recently were 733 in July 2023. Locally, the pattern of approved drilling permits in the College Station-Bryan MSA does not follow this pattern. Before the pandemic, the average monthly permits in our local MSA averaged 13 in 2018, 10 in 2019 and dropped to 4 in 2020. This is mainly because there were no drilling permits approved between July 2020 to December 2020. From January 2021 through July 2023, approved drilling permits equaled 67 in the local MSA. Within this period, the maximum number of drilling permits were approved in June 2022 with a total of 7 permits.
Oil and gas production amounts reported by the Texas Railroad Commission for September 2019 to June 2023 are shown in Figure 6. Production levels of natural gas and oil have followed a similar path over this period with a noticeable pandemic-induced decline in April and May 2020, as well as the sharp winter storminduced decline in February 2021. Between March - May 2020, oil production fell 22% and gas production fell 12%. February’s winter storm resulted in an almost 24% drop in both oil and gas production relative to January’s level. Reported production amounts through June 2023 remain below January 2020 levels by 7%.
The price series for oil and natural gas are shown in Figure 7. Oil prices declined in the first months of 2020, and fell substantially through April 2020, the worst month of the COVID recession. From December 2019 to April 2020, the price of a barrel of oil fell from $59.82 to $16.55, a 72% decline. Since then, the price has generally trended upward. By March 2021 it reached $62.33, exceeding the December 2019 price. In June 2023, the price averaged $70.25. The price of natural gas fell from $2.64 per million Btu in November 2019 to its lowest level of $1.63 per million Btu in June 2020. In February 2021, there was a large price spike due to the severe winter storm in Texas, and natural gas prices reached $5.35 per million Btu for the month. However, the largest spikes were experienced from April 2022 to September 2022, when the prices ranged between $6.60 to $ 8.81 per million Btu. In 2023, prices to date have stayed in the range $2.15 to $3.27 per million Btu.
Texas taxes the dollar value of oil and gas production, so changes in both production levels and prices result in changes in tax collections. Figure 8 depicts the total revenue from the combination of oil and natural gas production taxes in Texas beginning in September 2019, the start of Texas fiscal year 2020, and continuing through August 2023, the end of fiscal year 2023. These taxes are an important source of state tax revenue – oil and gas production taxes made up 9.4% of Texas state tax collections in fiscal year 2019 (September 2018 - August 2019), the year prior to the pandemic. These tax collections declined substantially in fiscal year 2020, especially in the second half, as the pandemic-induced economic downturn impacted demand for oil and gas production and also led to price declines for these two commodities. By June 2020, total oil and gas tax revenues were only 19.5% of their level in January 2020. However, since June 2020 these oil and gas tax revenues trended upward and reached their peak in July 2022 with $1.2 billion dollars. Oil and gas production taxes have fallen since that recent peak in July 2022, but the August 2023 level, at $0.6 billion, remains substantially higher than in the pre-pandemic month of January 2020. For fiscal year 2023, oil and gas production taxes made up 11.3% of Texas state tax collections.
Figure 7 depicts the enplanements at Easterwood Airport on American Airlines (left axis) and the number of travelers passing through Transportation Security Administration (TSA) checkpoints (right axis) from January 2019 to June 2023. As seen in the figure, the national and local passenger counts have followed similar patterns from the beginning of 2019 to the present. National air travel was up 11% in the twelve months from June 2022 to June 2023. Locally, air travel out of Easterwood Airport on American Airlines in June 2023 was 3% lower than in June 2022