OKLAHOMA Economic Indicators - April 2021
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OKLAHOMA
Economic Indicators
April 2021
OKLAHOMA
ECONOMIC INDICATORS
Oklahoma Employment Security Commission
Shelley Zumwalt, Executive Director
Economic Research and Analysis Division
Lynn Gray, Director & Chief Economist
Prepared by
Monty Evans, Senior Economist
Will Rogers Memorial Office Building
Labor Market Information Unit, 5th Floor N
P.O. Box 52003
Oklahoma City, OK 73152-2003
Phone: (405) 557-5369
Fax: (405) 525-0139
E-mail: lmi1@oesc.state.ok.us
April 2021
This publication is issued and is part of the activities of the Oklahoma Employment Security Commission
as authorized by the Oklahoma Employment Security Act. An electronic copy has been deposited
with the Publishing Clearinghouse of the Oklahoma Department of Libraries.
Equal Opportunity Employer/Program
Auxiliary aids and services are available upon request for individuals with disabilities
TABLE OF CONTENTS SPECIAL REPORT: Oklahoma Short-Term Industry and Occupational Employment Projections: 2020 to 2022 ................................................................................................... 2 U.S. Real Gross Domestic Product and Quarterly Change .................................................. 6 Oklahoma Real Gross Domestic Product and Quarterly Change........................................ 8 Industry Share of Oklahoma’s Economy ............................................................................. 9 Metropolitan Area Contribution to State Real GDP ......................................................... 10 Leading Index for Oklahoma ............................................................................................. 11 U.S. and Oklahoma Unemployment Rates ....................................................................... 12 Oklahoma Initial Claims for Unemployment Insurance.................................................... 12 U.S. and Oklahoma Nonfarm Payroll Employment .......................................................... 14 Oklahoma Employment Change by Industry. ................................................................... 15 U.S. and Oklahoma Manufacturing Employment ............................................................. 16 Purchasing Managers’ Index (Manufacturing) ................................................................. 17 Oklahoma Active Rotary Rigs and Cushing, OK WTI Spot Price ........................................ 19 Oklahoma Active Rotary Rigs and Henry Hub Natural Gas Spot Price ............................. 21 U.S. Total Residential Building Permits ............................................................................. 23 Oklahoma Total Residential Building Permits................................................................... 24 U.S. and Oklahoma Real Personal Income........................................................................ 25 Industry Contribution to Oklahoma Personal Income ...................................................... 26 U.S. Adjusted Retail Sales ................................................................................................. 27 Oklahoma Total Adjusted Retail Sales .............................................................................. 28 April 2021 Page 1
SPECIAL REPORT: Oklahoma Short-Term Industry and Occupational Employment Projections: 2020 to 2022 Every year, the Oklahoma Employment Security Commission produces the state’s short-term employment projections. These projections use historical and current industry employment and occupational survey data to project how employment will change over a two-year period. The short-term projection results reflect short-term business cycle activity, such as periods of recession or rapid growth. Consequently, the short-term employment projections are helpful for those looking for immediate employment, whether temporary, part-time or full-time. The 2020-2022 short-term employment projections were based on Oklahoma historical data from the 1st quarter of 1996 through the 1st quarter of 2020. The primary data sources used were our Quarterly Census of Employment and Wages (QCEW) and our Occupational Employment Statistics (OES) survey. Chart 1 Industry Projections For our 2020 to 2022 short-term industry employment forecast for Oklahoma, we expect total payroll employment to grow approximately 0.4 percent, adding 7,589 jobs to the state's economy (see Table 1, next page). Six out of 11 of Oklahoma's industry supersectors are anticipated to gain employment in the 2020-22 forecast period (see Chart 1). In the goods-producing industries, construction is expected to lead employment growth, adding 1,370 jobs (1.70 percent) with specialty trade contractors (+1,630 jobs) accounting for all of the job growth. Employment growth in natural resources and mining is expected to contract by 3,560 jobs (-6.46 percent), while manufacturing employment is forecast to decline by 2,610 jobs (-1.88 percent). April 2021 Page 2
Table 1 Oklahoma Short-Term Industry Employment Projections, 2020-2022 Supersector¹ 2020 2022 Change % Change Total, All Industries 1,792,400 1,799,990 7,590 0.42 Natural Resources and Mining 55,050 51,490 -3,560 -6.46 Construction 80,300 81,660 1,370 1.70 Manufacturing 139,180 136,570 -2,610 -1.88 Trade, Transportation, and Utilities 303,580 304,910 1,340 0.44 Information 19,620 19,600 -20 -0.11 Financial Activities 77,770 77,360 -410 -0.52 Professional and Business Services 192,840 194,160 1,320 0.69 Education and Health Services 401,000 408,290 7,290 1.82 Leisure and Hospitality 191,220 193,860 2,650 1.38 Other Services (Except Government) 68,030 67,390 -640 -0.94 Government 175,270 177,100 1,840 1.05 ¹Includes Self-Employed and Unpaid Family Workers Source: Employment Projections Program, Oklahoma Employment Security Commission, Research & Analysis Division In the services-providing industries, employment in education & health services is forecast to provide the largest job gains adding 7,290 jobs (1.82 percent). Within the education & health services supersector, employment in health care and social assistance supports the most job growth adding 5,880 jobs (2.50 percent) and educational services adding 1,400 jobs (0.85 percent). Leisure & hospitality employment is expected to grow by 2,650 jobs (1.38 percent) from 2020 to 2022. Accommodation & food services is projected to add 1,640 jobs (1.07 percent) and arts, entertainment, and recreation is forecast to add 1,010 jobs (2.70 percent). Government employment is projected to grow 1.05 percent adding 1,840 jobs during the 2020- 2022 period with the most growth in local government which is expected to add 2,500 jobs (2.78 percent). State government employment is forecast to decline by 1.290 jobs (-3.68 percent), while federal government employment is expected to increase by 630 jobs (1.25 percent) The broad trade, transportation & utilities sector is forecast to add 1,340 jobs (0.44 percent) between 2020 and 2022. Most of the employment growth for this sector is projected in wholesale trade, adding 570 jobs (0.98 percent). Transportation & warehousing is expected to add 430 jobs (0.72 percent), while employment in utilities is forecast to grow 2.02 percent adding 190 jobs. Retail trade employment is expected to have relatively flat growth. Professional & business services employment was projected to increase by 1,320 jobs (0.69 percent) from 2020 to 2022. Within this sector, professional, scientific, and technical services is projected to grow the most, adding 1,400 jobs (1.85 percent), while administrative and support & waste management and remediation services is forecast to shed 740 jobs (-0.77 percent). The financial activities supersector is projected to decline by 410 jobs (-0.52 percent) in the 2020-22 timeframe with insurance carriers and related activities employment decreasing by 280 (-1.37 percent). Other services (except government) was forecast to lose 640 jobs (-0.94 percent) over the two- year projection period. Information employment is expected to remain relatively flat, losing 20 jobs (-0.11 percent). April 2021 Page 3
Chart 2 Occupational Projections Turning to occupational projections, seven of the ten major occupational groups are expected to have positive job growth during the 2020-2022 projection round (see Chart 2, above). An estimated 370,760 total job openings are forecast for the 2020-22 period or about 185,380 total openings annually. Approximately 75,270 job openings are expected to be added each year due to exits, plus an estimated 106,320 job openings due to transfers and 3,790 job openings due to projected growth (see Table 2, next page). Service occupations are expected to see the largest gain in employment adding approximately 6,150 jobs (1.7 percent) along with an estimated 52,200 total annual openings due to exits and transfers. Within the service occupations, food preparation & serving related occupations are projected to add 2,360 jobs (1.46 percent) with another 26,850 total annual openings from exits and transfers. Healthcare support occupations are expected to add 2,090 jobs (3.17 percent) along with 8,160 total annual openings. Farming, fishing, and forestry occupations was the fastest-growing major occupational group for the 2020 to 2022 period, growing at an annual rate of 1.8 percent, adding an estimated 1,550 new jobs each year during the two-year period in addition to 14,460 annual job openings due to exits and transfers. The office and administrative support occupational group was projected to have the largest decline in jobs, shedding 3,380 jobs (-1.4 percent) over the 2020-2022 period, as employment for secretaries & administrative assistants is projected to decline by 890 jobs (-1.77 percent) but projected to gain 9,250 annual openings from exits and transfers or about 4,620 total annual openings. April 2021 Page 4
Table 2
Oklahoma Occupational Employment Projections by Major Group, 2020-2022
Annual
Numeric Percent Total
Occupational Division 2020 2022 Change Change Openings
Total, All Occupations 1,792,400 1,799,990 7,590 0.42 185,380
1
Management, Business, and Financial Occupations 191,870 192,420 550 0.29 15,020
2
Professional and Related Occupations 371,050 365,850 4,640 1.25 28,040
Service Occupations3 364,150 370,300 6,150 1.69 52,200
Sales and Related Occupations 177,740 177,040 -700 -0.39 21,580
Office and Administrative Support Occupations 248,590 245,210 -3,380 -1.36 23,910
Farming, Fishing, and Forestry Occupations 9,590 9,760 170 1.79 1,470
Construction and Extraction Occupations 95,940 96,440 490 0.51 9,580
Installation, Maintenance, and Repair Occupations 81,430 82,200 760 0.94 7,410
Production Occupations 111,040 109,370 -1,660 -1.50 10,070
Transportation and Material Moving Occupations 141,000 142,020 1,020 0.72 16,100
Notes:
1) Major occupational groups 11-0000 through 13-0000 in the 2010 Standard Occupational Classification (SOC).
2) Major occupational groups 15-0000 through 29-0000 in the 2010 Standard Occupational Classification (SOC).
3) Major occupational groups 31-0000 through 39-0000 in the 2010 Standard Occupational Classification (SOC).
Source: Employment Projections program, Oklahoma Employment Security Commission
The other major occupational groups forecast to decline in employment during the 2020-22
projection round were production occupations, projected to lose about 1,660 jobs (-1.50
percent) and sales & related occupations, forecast to decline by 700 jobs (-0.39 percent).
More Information
Detailed industry and occupational forecast tables are available at:
https://oklahoma.gov/oesc/labor-market/wage-occupation-and-industry-reports.html
There you will find industry and occupational projections for the 2020-2022 round as well as the
2018-2028 long-term industry and occupational projections along with past rounds of long-term
and short-term projections.
April 2021 Page 5Definition & Importance Gross Domestic Product (GDP)—the output of goods and services produced by labor and property located in the United States—is the broadest measure of economic activity. It is also the measure that is most indicative of whether the economy is in recession. In the post-World War II period, there has been no recession in which GDP did not decrease in at least two quarters, (the exceptions being during the recessions of 1960-61 and 2001). The Bureau of Economic Analysis (BEA), U.S. Department of Commerce releases GDP data on a quarterly basis, usually during the fourth week of the month. Data are for the prior quarter, so data released in April are for the 1st quarter. Each quarter's data are revised in each of the following two months after the initial release. Background There are four major components to GDP: 1. Personal consumption expenditures: Individuals purchase durable goods (such as furniture and cars), nondurable goods (such as clothing and food) and services (such as banking, education, and transportation). 2. Investment: Private housing purchases are classified as residential investment. Businesses invest in nonresidential structures, durable equipment, and computer software. Inventories at all stages of production are counted as investment. Only inventory changes, not levels, are added to GDP. 3. Net exports: Equal the sum of exports less imports. Exports are the purchases by foreigners of goods and services produced in the United States. Imports represent domestic purchases of foreign-produced goods and services and are deducted from the calculation of GDP. 4. Government: Government purchases of goods and services are the compensation of government employees and purchases from businesses and abroad. Data show the portion attributed to consumption and investment. Government outlays for transfer payments or interest payments are not included in GDP. April 2021 Page 6
The four major categories of GDP—personal consumption expenditures, investment, net exports and government—all reveal important information about the economy and should be monitored separately. This allows one to determine the strengths and weaknesses of the economy. Current Developments The pace of U.S. economic growth in the last three months of 2020 was slightly faster than previously estimated, reflecting stronger inventory restocking by businesses. Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the 4th quarter of 2020, according to the "third" estimate released by the Bureau of Economic Analysis (BEA). The increase was 0.2 percentage point higher than the "second" estimate released in February. In the 3rd quarter, real GDP increased 33.4 percent. Real GDP shrank 3.5 percent in 2020, the largest annual decline since an 11.6 percent drop in 1946 as the U.S. demobilized after World War II. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 2.3 percent rate, slightly lower than the 2.4 percent gain previously estimated. Outlays on durable goods, such as automobiles, dipped 1.1 percent rather than 0.6 percent. Spending on nondurable goods, such as clothing, declined 1.6 percent instead of the 1.1 decline earlier reported. Outlays on services, such as health services, slowed to a 4.3 percent pace after climbing 38.0 percent in the 3rd quarter. Personal consumption expenditures (PCE) added 1.58 percentage points to 4th quarter GDP growth after boosting 3rd quarter growth 25.44 percentage points. Business investment spending continued to help drive the economy in the 4th quarter, increasing at a robust 18.6 percent pace. Investment in equipment climbed 25.4 percent, while outlays on intellectual property products, such as computer software, increased 10.5 percent. Spending on structures, which are tied to the oil and gas sector and commercial real estate, fell 6.2 percent, marking five straight declining quarters. Nonresidential fixed investment added 1.65 percentage points to 4th quarter GDP, down from 3.20 percentage points reported in the 3rd quarter. The level of businesses inventories expanded more than estimated earlier to a $65.8 billion annual rate in the 4th quarter, reflecting increases in manufacturing and wholesale trade inventory restocking. Inventory investment raised GDP growth by 1.37 percentage points in the October-December quarter after adding 6.57 percentage points to GDP in the 3rd quarter. Housing construction continued to perform strongly in the 4th quarter, reflecting record-low mortgage rates and a rising demand for more household space. Residential fixed investment rose at a 36.6 percent pace in the 4th quarter, up from the previously reported 35.8 percent rate. Residential fixed investment added 1.39 percentage points to 4th quarter GDP. Imports outpaced exports again in the 4th quarter, leading to a larger trade deficit. Imports, which are a subtraction from GDP, climbed to a 29.8 percent rate while exports grew 22.3 percent. Net exports of goods and services subtracted 1.53 percentage points from 4th quarter GDP, following a subtraction of 3.21 percentage points in the 3rd quarter. Government spending in the 4th quarter declined less than previously estimated falling 0.8 percent, as state and local governments have started resorting to layoffs in dealing with falling tax revenues during the recession. Federal government spending fell 0.9 percent in the 4th quarter, as nondefense spending dropped 8.9 percent while national defense spending increased 4.8 percent. Consumption outlays by state and local governments fell 0.8 percent in the 4th quarter, less than the previous estimate of -1.2 percent. Government consumption expenditures and investment subtracted 0.14 percentage point from 4th quarter GDP after a 0.75 percentage point deduction reported in the 3rd quarter. April 2021 Page 7
Definition & Importance The U.S. Bureau of Economic Analysis (BEA) recently began producing statistics of quarterly gross domestic product (GDP) by state dating back to 2005. These statistics provide a more complete picture of economic growth across states that can be used with other regional data to gain a better understanding of regional economies as they evolve from quarter to quarter. The new data provide a fuller description of the accelerations, decelerations, and turning points in economic growth at the state level, including key information about changes in the distribution of industrial infrastructure across states. Current Developments Real gross domestic product (GDP) by state—a measure of nationwide growth calculated as the sum of GDP of all states and the District of Columbia—increased in all 50 states and the District of Columbia in the 4th quarter of 2020, as real GDP for the nation increased at an annual rate of 4.3 percent, according to the Bureau of Economic Analysis (BEA). The percent change in real GDP in the 4th quarter ranged from 9.9 percent in South Dakota to 1.2 percent in the District of Columbia. Finance and insurance; healthcare and social assistance; and administrative and support and waste management and remediation services were the leading contributors to the increase in real GDP nationally in the 4th quarter, according to the BEA. The increases in 4th-quarter GDP by state reflect both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. Oklahoma’s real GDP decelerated to a 3.5 percent rate in the 3rd quarter of 2020, following a 24.2 percent jump in the 3rd quarter, ranking Oklahoma 38th among all other states and the District of Columbia. Statewide current-dollar GDP was at a level of $190.8 billion (in constant 2012 dollars) in the 4th quarter, up $3.9 billion from the 3rd quarter level of $186.9 billion. April 2021 Page 8
Finance and insurance increased 12.9 percent nationally and contributed to the increases in all 50 states and the District of Columbia. This industry was the leading contributor to the increases in 25 states in the 4th quarter. In Oklahoma, this industry was the second-largest contributor, adding 0.74 percentage point to 4th quarter GDP. Healthcare and social assistance increased 8.3 percent nationally and contributed to the increases in all 50 states and the District of Columbia. In Oklahoma, healthcare and social assistance was the third-leading contributor to the increase in 4th quarter GDP, adding 0.66 percentage point. Administrative and support and waste management and remediation services increased 21.1 percent nationally and contributed to the increases in all 50 states and the District of Columbia. In Oklahoma, this industry added 0.38 percentage point to 4th quarter GDP growth. In Oklahoma, nondurable goods manufacturing was the leading contributor to 4th quarter GDP, adding 0.92 percentage point. Accommodation and food services decreased 7.1 percent nationally. This industry moderated increases in real GDP in 38 states in the 4th quarter. However, in Oklahoma accommodation and food services contributed 0.32 percentage point to 4th quarter GDP. Annually, real GDP decreased in all 50 states and the District of Columbia in 2020. The percent change in real GDP ranged from –0.1 percent in Utah to –8.0 percent in Hawaii. In Oklahoma, real GDP decreased 6.1 percent in 2020, ranking the state 48th. BEA noted that ‘the annual 2020 estimates of GDP by state reflect the rapid shifts in activity, as business and schools switched to remote work, consumers and businesses canceled, restricted, or redirected their spending, governments issued and lifted "stay-at-home" orders and government pandemic assistance payments were distributed to households and businesses. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP by state estimates because the impacts are generally embedded in source data and cannot be separately identified.’ April 2021 Page 9
Definition & Importance Metropolitan Statistical Areas (MSA) are county-based definitions developed by the Office of Management and Budget for federal statistical purposes. A metropolitan area is defined as a geographic area consisting of a large population nucleus together with adjacent communities having a high degree of economic and social integration with the nucleus. GDP by metropolitan area is the sub-state counterpart of the Nation's gross domestic product (GDP), the BEA's featured and most comprehensive measure of U.S. economic activity. GDP by metropolitan area is derived as the sum of the GDP originating in all the industries in the metropolitan area. Nationally, metropolitan statistical areas represent approximately 90 percent of total GDP. In Oklahoma, the four MSAs of Oklahoma City, Tulsa, Lawton and Enid accounted for 71.4 percent of total state GDP in 2019. Current Developments Real gross domestic product (GDP) increased in 344 out of 384 metropolitan areas in 2019, according to the U.S. Bureau of Economic Analysis (BEA). The percent change in real GDP by metropolitan area ranged from 18.7 percent in Midland, TX to -18.9 percent in Rocky Mount, NC. Real GDP for U.S. metropolitan areas increased 2.1 percent in 2019, led by growth in mining, quarrying, and oil and gas extraction; information; and professional and business services. In 2019, all of Oklahoma’s four metropolitan areas experienced positive growth. Agriculture, forestry, fishing, and hunting was the leading contributor to growth in Enid MSA adding 0.9 percent, ranking it 324th among 384 metro areas in 2019. Government and government enterprises was the leading contributor to GDP growth in Lawton MSA adding 1.06 percent in 2019 and ranked 260th among U.S. metro areas. Oklahoma City MSA grew 1.2 percent to $79.3 billion and ranked 262nd, lifted by professional, scientific, and technical services and educational services, health care, and social assistance. Tulsa MSA’s GDP grew 3.1 percent to a level of $54.2 and ranked 95th in 2019, boosted by mining, quarrying, and oil and gas extraction. April 2021 Page 10
Definition & Importance The Federal Reserve Bank of Philadelphia produces leading indexes for each of the 50 states. The indexes are calculated monthly and are usually released a week after the release of the coincident indexes. The Bank issues a release each month describing the current and future economic situation of the 50 states with special coverage of the Third District: Pennsylvania, New Jersey, and Delaware. The leading index for each state predicts the six-month growth rate of the state's coincident index. In addition to the coincident index, the models include other variables that lead the economy: state-level residential housing permits (1 to 4 units), state initial unemployment insurance claims, delivery times from the Institute for Supply Management (ISM) manufacturing survey, and the interest rate spread between the 10-year Treasury bond and the 3-month Treasury bill. Current Developments The Federal Reserve Bank of Philadelphia has released the leading indexes for the 50 states for February 2020. Forty-nine state coincident indexes, including Oklahoma’s, were projected to grow over the next six months, while one was expected to decrease. For comparison purposes, the Philadelphia Fed has also developed a similar leading index for its U.S. coincident index, which is projected to grow 1.7 percent over the next six months. Oklahoma’s leading index rose for a third straight month in February to a level of 1.79 percent. The Philadelphia Fed noted that the February 2020 release of the state leading indexes was based on data from the time period largely unaffected by the COVID-19 outbreak. Given the extreme impact on initial unemployment claims in recent weeks, their standard approach for estimating the six-month change in coincident indexes may not be reliable in coming months. Therefore, they expect to suspend the release of upcoming state leading indexes until further notice. April 2021 Page 11
Definition & Importance The Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) program produces monthly estimates of total employment and unemployment from a national survey of 60,000 households. The unemployment rate measures the percentage of people who are without work and is calculated by dividing the estimated number of unemployed people by the civilian labor force. The result expresses unemployment as a percentage of the labor force. The unemployment rate is a lagging indicator of economic activity. During a recession many people leave the labor force entirely. As a result, the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis and reveals the degree to which labor resources are utilized in the economy. Current Developments The U.S. unemployment rate declined again in March, although it continues to be understated by people misclassifying themselves as being “employed but absent from work.” The unemployment rate edged down to 6.0 percent in March, according to the Bureau of Labor Statistics (BLS). The rate is down considerably from its recent high in April 2020 but is 2.5 percentage points higher than its pre-pandemic level in February 2020. Oklahoma’s seasonally adjusted unemployment rate held steady at 4.4 percent in February, after January’s 4.3 percent rate was revised upward. Over the year, Oklahoma’s seasonally adjusted unemployment rate was 1.3 percentage points higher than February 2020. In January, Latimer County posted Oklahoma's highest county unemployment rate of 9.3 percent, while Cimarron County posted the lowest county unemployment rate of 1.9 percent. April 2021 Page 12
Definition & Importance Initial unemployment claims are compiled weekly by the U.S. Department of Labor, Employment and Training Administration and show the number of individuals who filed for unemployment insurance benefits for the first time. This particular variable is useful because it gives a timely assessment of the overall economy. Initial claims are a leading indicator because they point to changes in labor market conditions. An increasing trend signals that layoffs are occurring. Conversely, a decreasing trend suggests an improving labor market. The four-week moving average of initial claims smooths out weekly volatility and gives a better perspective on the underlying trend. Current Developments The number of Americans filing for first-time state unemployment claims rose in the last week of March, as many employers are still cutting jobs even as more businesses reopen. In the week ending March 27, the advance figure for seasonally adjusted initial claims was 719,000, an increase of 61,000 from the previous week's revised level of 658,000, according to the Department of Labor (DOL). The less volatile 4-week moving average was 719,000, a decrease of 10,500 from the previous week's revised average of 729,500. This is the lowest level for this average since March 14, 2020 when it was 225,500. Initial claims for jobless benefits in Oklahoma moved up in March, as initial claims reached the highest level since last July. For the file week ending March 27, unadjusted initial claims totaled 10,357, an increase of 2,216 from the previous week's level of 8,141. For the same file week, the less volatile initial claims 4-week moving average was 8,499 an increase of 791 from the previous week's revised average of 7,708. For the file week ending March 27, the unadjusted number of continued claims totaled 32,368, a decrease of 1,175 from the previous week’s level of 33,543. For the same file week, the less volatile continued claims 4-week moving average was 33,240, a decrease of 757 from the previous week's revised average of 32,624. April 2021 Page 13
Definition & Importance Nonfarm payroll employment data is produced by the Current Employment Statistics (CES) program of the Bureau of Labor Statistics (BLS). The CES Survey is a monthly survey of approximately 145,000 businesses and government agencies representing approximately 697,000 worksites throughout the United States. The CES program has provided estimates of employment, hours, and earnings data by industry for the nation as a whole, all States, and most major metropolitan areas since 1939. In order to account for the size disparity between of U.S. and Oklahoma employment levels, we have indexed the data with January 2001 as the start value. Payroll employment is one of the most current and reliable indicators of economic conditions and recessionary trends. Increases in nonfarm payrolls translate into earnings that workers will spend on goods and services in the economy. The greater the increases in employment, the faster the total economic growth. Current Developments U.S. payroll employment growth surged by the most in seven months in March, as more Americans got vaccinated, government stimulus checks flowed through the economy and businesses continued to reopen. Total nonfarm payroll employment increased by 916,000 in March but is down by 8.4 million, or 5.5 percent, from its pre-pandemic peak in February 2020, according to the Bureau of Labor Statistics (BLS). Job growth in March was widespread, with the largest gains occurring in leisure and hospitality (280,000 jobs), public and private education (126,00 jobs and 64,000 jobs respectively), and construction (110,000 jobs). Oklahoma’s seasonally adjusted nonfarm employment shed jobs in February, dropping 10,700 jobs (-0.7 percent), to a level of 1,609,800 while January’s estimate was downwardly revised to 1,620,500. In February, two of Oklahoma’s supersectors added jobs as leisure and hospitality (700 jobs) posted the largest monthly gain followed by manufacturing (400 jobs). Construction (-3,100 jobs) saw the largest over-the-month job losses. April 2021 Page 14
Definition & Importance Employment growth by industry identifies the types of jobs being created in the state. Conversely, industries with a declining employment trend indicate those which are becoming less important in the state’s economy. There may also be industries which behave more cyclically, growing during expansion and decreasing in times of economic slowdown or contraction. These changes are crucial in that they help to recognize the types of jobs being lost by individuals. Anticipating what will happen in recovery helps identify whether those jobs will return or what types of new jobs will be created. Consequently, key information for planning re- employment, retraining, and other workforce and economic development programs is contained within these data. For this analysis, we are using CES non-seasonally adjusted annual averages to compare year-over-year employment changes. Current Developments Oklahoma’s annual average nonfarm employment plunged in 2020, with job losses in both the goods-producing and services-providing industries. Total nonfarm employment shed a non- seasonally adjusted 83,700 jobs (-4.9 percent) in 2020. For comparison, in 2019, 15,900 jobs were gained for a 0.9 percent increase. In 2020, all 11 of Oklahoma’s supersectors recorded job losses. Leisure and hospitality saw the largest losses dropping 17,700 jobs (-10.2 percent) as accommodation and food services accounted for the bulk of the job losses (-15,200 jobs). Mining and logging shed a non-seasonally adjusted 17,200 jobs (-36.0 percent) as support activities for mining dropped 13,600 jobs over the year. Professional and business services employment fell by 12,400 jobs (6.3 percent) as administrative and support and waste management and remediation services lost 9,100 jobs. Manufacturing shed 9,800 jobs (-6.9 percent) with durable goods manufacturing (-9,200 jobs) accounting for almost all the job losses. Education and health services employment fell 4,900 jobs (-2.0 percent) with most of the losses in healthcare and social assistance (-4,100 jobs). Other declining sectors were other services (-4,500 jobs); construction (-3,900 jobs); financial activities (-2,700 jobs); trade, transportation, and utilities (-1,700 jobs): and information (-1,400 jobs). Government employment declined by 7,400 jobs (-2.1 percent). April 2021 Page 15
Definition & Importance Manufacturing employment data is also produced by the Bureau of Labor Statistics’ Current Employment Statistics (CES) program. Manufacturing and production are still important parts of both the U.S. and Oklahoma economies. According to the 2018 County Business Patterns, the manufacturing sector was the 5th-largest employer, employing 11.9 million workers in the United States in 2018—and the top 10 average annual employee payroll at $60,260. In Oklahoma, manufacturing accounts for one of the largest shares of private output and employment in the state. In addition, many manufacturing jobs are among the highest paying jobs in the state. In order to account for the size disparity between the U.S. and Oklahoma employment levels, we have indexed the data with January 2001 as the starting value. Current Developments U.S. manufacturers added the highest number of new factory jobs in six months in March, as surging demand for goods has pushed production. Manufacturing employment rose by 53,000 in March, according to the Bureau of Labor Statistics (BLS). Within the industry, job gains occurred in both durable goods (30,000 jobs) and nondurable goods (23,000 jobs). Employment in manufacturing is down by 515,000 since February 2020. Oklahoma manufacturing employment added a seasonally adjusted 400 jobs (0.3 percent) over the month in February to a level of 128,900. In February, durable goods manufacturing added 200 jobs (0.2 percent), while non-durable goods manufacturing employment gained another 200 jobs (0.5 percent). Over the year, statewide manufacturing employment contracted by a seasonally adjusted 9,900 jobs (-7.1 percent) in February, as 9,800 jobs (-10.4 percent) were lost in durable goods manufacturing while non-durable goods manufacturing shed 100 jobs (-0.2 percent). April 2021 Page 16
Definition & Importance Economists consider the Institute for Supply Management’s Purchasing Managers’ Index (PMI™) a key economic indicator. The Institute for Supply Management (ISM®) surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. The ISM® manufacturing index is constructed so that any level at 50 or above signifies growth in the manufacturing sector, which accounts for about 12 percent of the U.S. economy. A level above 43 or so, but below 50, indicates that the U.S. economy is still growing even though the manufacturing sector is contracting. Any level below 43 indicates that the economy is in recession. For the region, since 1994, the Creighton Economic Forecasting Group at Creighton University has conducted a monthly survey of supply managers in nine states (including Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota), to produce leading economic indicators for the Mid-America economy using the same methodology as the national survey by the ISM®. Current Developments U.S. factory activity in the U.S. manufacturing sector grew at its strongest pace since 1983 in March, reflecting a rebound from February, when harsh winter storms disrupted supply chains and delivery. The March Manufacturing PMI® registered 64.7 percent, an increase of 3.9 percentage points from the February reading of 60.8 percent, according to the latest ISM Manufacturing Report On Business®. ISM noted that demand expanded in February, as the New Orders Index climbed to a reading of 68.0 percent from 64.8 in the previous month. Consumption, measured by the Production and Employment Indexes, contributed positively for a combined 10.1-percentage point increase, as the gauge of production rose 4.9 points to 68.1 percent while the measure of employment rose 5.2 percentage points to 59.6 percent. Inputs, (expressed as supplier deliveries, inventories, and imports), continued to indicate input-driven constraints to further production expansion, at higher rates compared to February, contributing 5.7 percentage points to the PMI® calculation. April 2021 Page 17
For a 10th straight month, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for a nine-state region stretching from North Dakota to Arkansas, remained above the growth neutral level. In April of last year, COVID-19 pushed the overall index to its lowest level in 11 years. Since April, the overall index has climbed above growth neutral 50.0 for 10 of the past 11 months. The March Business Conditions Index, which ranges between 0 and 100, slipped to 68.9 from February’s very strong 69.6. “Since bottoming out in April, the region has regained almost 60,000 of the manufacturing jobs lost to COVID-19. Creighton’s monthly survey results indicate that the region is adding jobs and economic activity at a healthy pace, and that growth will remain healthy well into the second half of 2021,” said Ernie Goss, Ph.D., director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business. Oklahoma’s Business Conditions Index remained above growth neutral in March. The overall index fell to 63.0 from 67.1 in February. Components of the overall March index were: new orders at 68.1, production or sales at 66.7, delivery lead time at 71.4, inventories at 50.1, and employment at 58.8. “Compared to pre-COVID-19 levels, according to U.S. Bureau of Labor Statistics, Oklahoma manufacturing employment is down 9,900 jobs, or 7.1 percent, while average hourly manufacturing wages are 6.3 percent higher,” said Goss. April 2021 Page 18
Definition & Importance Crude oil is an important commodity in the global market. Prices fluctuate depending on supply and demand conditions in the world. Since oil is such an important part of the economy, it can also help determine the direction of inflation. In the U.S. consumer prices have moderated whenever oil prices have fallen but have accelerated when oil prices have risen. The U.S. Energy Information Administration (EIA) provides weekly information on petroleum inventories in the U.S., whether produced here or abroad. The Baker Hughes rig count is an important indicator for the energy industry and Oklahoma. When drilling rigs are active, they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for products used in drilling, completing, producing, and processing hydrocarbons. West Texas Intermediate (WTI-Cushing) is a light crude oil produced in Texas and southern Oklahoma which serves as a reference or "marker" for pricing a number of other crude streams and which is traded in the domestic spot market at Cushing, Oklahoma. Background The discovery of oil transformed Oklahoma's economy. By the time Oklahoma became a state in 1907, it was the largest oil producer in the nation. Excluding federal offshore areas, Oklahoma was the 4th-largest crude oil producer among the states in 2019, accounting for nearly 5 percent of the nation's crude oil production (at 211,808,000 barrels). Crude oil wells and gathering pipeline systems are concentrated in central Oklahoma. One of the 100 largest oil fields in the United States, the Sho-Vel-Tum field, is in Oklahoma and has continuously produced crude oil since its discovery in 1905. The city of Cushing, in central Oklahoma, is a major crude oil trading hub connecting Gulf Coast producers to Midwest refining markets. In addition to Oklahoma crude oil, the Cushing hub receives supply from several major pipelines that originate in Texas. Traditionally, the Cushing Hub has pushed Gulf Coast and Mid-Continent crude oil supply north to Midwest refining markets. However, production from those regions is in decline, and an underused crude oil April 2021 Page 19
pipeline system has been reversed to deliver rapidly expanding heavy crude oil supply produced in Alberta, Canada to Cushing, where it can access Gulf Coast refining markets. For this reason, Cushing is the designated delivery point for the New York Mercantile Exchange (NYMEX) crude oil futures contracts. Crude oil supplies from Cushing that are not delivered to the Midwest are fed to Oklahoma’s five refineries. As of January 2018, those refineries had a combined distillation capacity of more than 522,000 barrels per day—roughly 3.0 percent of the total U.S. refining capacity. Current Developments According to the U.S. Energy Information Administration’s (EIA) Gasoline and Diesel Fuel Update, U.S. regular retail gasoline prices averaged $2.85 per gallon (gal) on Monday, March 29. U.S. gasoline prices have generally increased since reaching a multiyear low of $1.77/gal in late April 2020, primarily because of higher crude oil prices and higher wholesale gasoline margins. Prior to that week’s small decline, U.S. gasoline prices increased for 17 consecutive weeks in EIA’s survey, marking the longest consecutive streak of price increases since 1994. In Oklahoma, average regular gasoline prices have risen to $2.65/gal (as of March 31, 2021), from $1.54/gal a year ago, according to the AAA Gas Prices website. EIA noted that crude oil prices have been steadily increasing since reaching multiyear lows in 2020. International benchmark Brent crude oil prices averaged $43 per barrel (bbl) in November 2020 and have since increased to an average of $67/bbl in March, based on data through March 22. Because a barrel contains 42 gallons, the price of petroleum products changes by 2.4 cents per gallon when the price of crude oil changes by a dollar per barrel, all else remaining equal. Oklahoma crude production dipped in January for the second month, as production remains well below levels prior to the economic slowdown caused by the COVID-19 pandemic. Statewide field production of crude oil for January 2021 was at a preliminary level of 13,202,000 bbl, 337,000 bbl (-2.5 percent) less than the December level of 13,539,000 bbl, according to data reported by the EIA. Compared to a year ago, Oklahoma crude production was down 3,223,000 bbl (-19.6 percent) from the January 2020 production level of 16,425,000 bbl. West Texas Intermediate (WTI-Cushing) crude oil spot prices averaged $62.57 per barrel ($/bbl) in March (based on data through March 29), up $3.53/bbl from the February average of $59.04/bbl and up more than $46/bbl from the multiyear low monthly average price of $16.55/bbl in April 2020. Across all of 2020, the price for WTI averaged $39/bbl, the lowest in nominal terms since 2003. According to oil field services company Baker Hughes, oil-directed rig counts in the United States, which reflect crude oil drilling activity, rose by 6 rigs to 324 for the week ending March 26, while the nation’s total rig count also increased by 6 to 417 rigs. Compared to a year ago, the nation’s total rig count was 311 less than 728 rigs reported on March 27, 2020. For the week ending March 26, the state’s active rig count was up 1 from the previous week at 17 and unchanged from a month earlier, according to Baker Hughes. Oil-directed rigs accounted for 100 percent of total rig activity in the last week of March. Over the year, Oklahoma’s active rig count was down 22 from 39 active rigs reported operating March 27, 2020. April 2021 Page 20
Definition & Importance The U.S. Energy Information Administration (EIA) provides weekly information on natural gas stocks in underground storage for the U.S., and three regions of the country. The level of inventories helps determine prices for natural gas products. Natural gas product prices are determined by supply and demand—like any other good or service. During periods of strong economic growth, one would expect demand to be robust. If inventories are low, this will lead to increases in natural gas prices. If inventories are high and rising in a period of strong demand, prices may not need to increase at all, or as much. However, during a period of sluggish economic activity, demand for natural gas may not be as strong. If inventories are rising, this may push down oil prices. The Henry Hub in Erath, Louisiana is a key benchmark location for natural gas pricing throughout the United States. The Henry Hub is the largest centralized point for natural gas spot and futures trading in the United States. The New York Mercantile Exchange (NYMEX) uses the Henry Hub as the point of delivery for its natural gas futures contract. Henry Hub “spot gas” represents natural gas sales contracted for next day delivery and title transfer at the Henry Hub. The settlement prices at the Henry Hub are used as benchmarks for the entire North American natural gas market. Approximately 49 percent of U.S. wellhead production either occurs near the Henry Hub or passes close to the Henry Hub as it moves to downstream consumption markets. Background Oklahoma's proved natural gas reserves are the 3rd-largest in the nation, after Texas and Pennsylvania. The state has 8 percent of the nation's total proved reserves and contains all or part of 14 of the 100 largest U.S. natural gas fields, as measured by proved reserves. Annual natural gas production was at an all-time high of almost 3.2 trillion cubic feet in 2019. Most natural gas in Oklahoma is consumed by the electricity generation and industrial sectors. About half of Oklahoma households use natural gas as their primary energy source for home heating. Nevertheless, only about one-seventh of Oklahoma’s natural gas output is consumed April 2021 Page 21
within the state. The remaining supply is sent via pipeline to northern and eastern markets through Kansas, Texas, and Arkansas. Current Developments Oklahoma natural gas production slipped in January, following two months of gains. Statewide natural gas gross withdrawals were at a preliminary level of 224,024 million cubic feet (MMcf) in January, down 3,969 MMcf (-1.7 percent) from the upwardly revised December level of 227,993 MMcf. Over the year, statewide natural gas production was down 39,710 MMcf (-15.1 percent) from the January 2020 level of 263,734 MMcf. After three straight years of increasing annual production levels, statewide natural gas production slipped 389,802 MMcf (-12.9 percent) to 2,785,207 MMcf in 2020. Henry Hub spot prices fell in March, as heating demand declined, and dry natural gas production reached the highest level since the first week of January. In March, the Henry Hub natural gas spot price averaged $2.62 per million British thermal units (MMBtu), half the February average of $5.35/MMBtu. According to Baker Hughes, for the week ending March 26, the national natural gas rig count was unchanged at 92 over the week and was down 10 rigs over the year. For the fifth consecutive month, Oklahoma drillers reported no natural gas-directed rig activity. For the week ending March 26, there were no rigs exploring for natural gas in Oklahoma, according to Baker Hughes. Over the year, statewide gas-directed rig activity was down one rig for the week ending March 27, 2020. April 2021 Page 22
Definition & Importance The U.S. Census Bureau and the Department of Housing and Urban Development jointly provide monthly national and regional data on the number of new housing units authorized by building permits; authorized, but not started; started; under construction; and completed. The data are for new, privately-owned housing units (single and multifamily), excluding "HUD-code" manufactured homes. Because permits precede construction, they are considered a leading indicator for the residential construction industry and the overall economy. Most of the construction begins the same month the permit is issued. The remainder usually begins construction during the following three months; therefore, we also use a three-month moving average. While home construction represents a small portion of the housing market, it has an outsize impact on the economy. Each home built creates an average of three jobs for a year and about $90,000 in taxes, according to the National Association of Home Builders. Overall, homebuilding fell to its lowest levels in 50 years in 2009, when builders began work on just 554,000 homes. Current Developments U.S. applications to build, a sign of future residential construction activity, dropped sharply in February as severe winter weather in much of the country pushed down homebuilding activity. Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,682,000, 10.8 percent below the revised January rate of 1,886,000, but 17.0 percent above the February 2020 rate of 1,438,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Single-family housing building permits sank 10.0 percent to a rate of 1,143,000 units in February. Permits for the construction of apartments dropped 11.6 percent to a rate of 495,000 units in February. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) moved down to 82 in March, following a reading of 84 in February. April 2021 Page 23
Definition & Importance The data services of the Federal Reserve Bank of St. Louis produce a seasonally adjusted series including monthly state level data on the number of new housing units authorized by building permits. These adjustments are made using the X-12 Procedure of SAS to remove the seasonal component of the series so that non-seasonal trends can be analyzed. This procedure is based on the U.S. Bureau of the Census X-12-ARIMA Seasonal Adjustment Program. Current Developments Statewide residential permitting slipped in February, but homebuilding activity remains at a healthy level. Total residential permitting was at a seasonally adjusted level of 1,201 in February, down 162 permits (-11.9 percent) from the revised January level of 1,363, but 236 (24.4 percent) more than the February 2020 level of 965 permits, according to figures from the U.S. Census Bureau and the Federal Reserve Bank of St. Louis. In February, permits for single-family homes were at a seasonally adjusted level of 1,049, down 200 permits (-16.0 percent) from a level of 1,249 in January. Multi-family permitting was at a seasonally adjusted level of 151 permits in February, up 38 (33.3 percent) from the previous month’s level of 113 permits. Single-family permitting accounted for 87.4 percent of total residential permitting activity in February while the more volatile multi-family permitting accounted for 12.6 percent. Statewide residential construction in 2020 rose to the highest level since 2014. Oklahoma total residential permitting for 2020 was at a revised seasonally adjusted level of 13,699 permits. This is 1,747 permits (14.6 percent) more than the 11,952 total permits issued during 2019. April 2021 Page 24
Definition & Importance Personal income is a broad measure of economic activity and one for which relatively current data are available. Personal income includes earnings, property income such as dividends, interest, and rent and transfer payments, such as retirement, unemployment insurance, and various other benefit payments. It is a measure of income that is available for spending and is seen as an indicator of the economic well-being of the residents of a state. Earnings and wages make up the largest portion of personal income. To show the vastly different levels of total personal income for the U.S. and Oklahoma on the same chart, these data have been converted to index numbers. This chart shows a comparison of Oklahoma and U.S. growth in real personal income with 1st quarter 2000 as the base year. Current Developments U.S. household income and spending tumbled in February by the most in 10 months, as a cold snap gripped many parts of the country and income was depressed by a decrease in government transfers. Personal income decreased $1,516.6 billion (-7.1 percent) in February, according to estimates released the Bureau of Economic Analysis (BEA). Disposable personal income (DPI) decreased $1,532.3 billion (-8.0 percent) and personal consumption expenditures (PCE) decreased $149.0 billion (-1.0 percent). Real DPI decreased 8.2 percent in February and Real PCE decreased 1.2 percent; goods decreased 3.3 percent and services decreased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index also increased 0.1 percent. Spending on durable goods such as new motor vehicles and appliances plunged 8.0 percent in January following a revised 11.4 percent jump in January. Purchases of nondurable goods such as clothing and footwear declined 2.0 percent while outlays on services, such as restaurant meals and utilities edged up 0.1 percent. The personal savings rate—personal saving as a percentage of disposable personal income—fell to a still-high 13.6 percent in February, down from a revised 19.8 percent rate in January. April 2021 Page 25
Definition & Importance Quarterly estimates of state personal income are seasonally adjusted at annual rates by the Bureau of Economic Analysis (BEA). Quarterly personal income estimates are revised on a regular schedule to reflect more complete information than the data that were available when the estimates were initially prepared and to incorporate updated seasonal factors. Current Developments State personal income—a measure of nationwide income calculated as the sum of personal income of all states and the District of Columbia—decreased 6.8 percent at an annual rate in the 4th quarter of 2020 after decreasing 11.3 percent in the 3rd quarter, according to estimates by the Bureau of Economic Analysis (BEA). Increases in earnings and property income were more than offset by decreases in transfer receipts. The percent change in personal income across all states ranged from 16.7 percent in South Dakota to –16.1 percent in Rhode Island and Pennsylvania. Oklahoma’s personal income declined at a 0.9 percent rate in the 4th quarter of 2020, to a level of $192.8 billion, ranking the state 19th among all states. For the 3rd quarter of 2020, Oklahoma’s personal income was revised downward to $193.2 billion (-26.8 percent) from the previous estimate of $195.2 billion (-23.6 percent). Farm earnings were the leading contributor to increases in personal income in South Dakota and seven other fast-growing states in the 4th quarter. In Oklahoma, farm earnings were the major contributor to earnings in the 4th quarter, adding 1.67 percentage points. The increase in farm earnings followed increases in payments to farmers from the Coronavirus Food Assistance Program provided by the CARES Act. The decrease in transfer receipts in the 4th quarter of 2020 reflected a decrease in benefits from several other CARES Act programs including the expiration of the temporary $600 per week increase in state unemployment insurance compensation. In Oklahoma, transfer receipts decreased $3,488 million (-26.6 percent) in the 4th quarter of 2020. April 2021 Page 26
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