U.S. and Texas Economic News Roundup

U.S. and Texas Economic News Roundup

We think it’s important to stay up to speed on the news that impacts us all. It’s easy to get tied up in the daily grind and not notice what’s happening in the world around us. That’s why we check the headlines every day and when we come across interesting stories, we’ll share them with you. Plus, we want to hear from you. Feel free to drop a comment below.

We hope you’ll be able to leverage this economic and trend information to your advantage. Here’s a bit of what’s happening here in Texas and the U.S right now.

U.S. Cutting Tool Consumption

Earlier this month, the U.S. Cutting Tool Institute (USCTI) and AMT — The Association for Manufacturing Technology announced cutting tool consumption in the U.S. was up 1.3 percent in April, totaling $206.3 million. The number is down 1.9 percent from March’s numbers and includes data reported by companies that participate in the Cutting Tool Market Report. The report is a good representation of cutting tool consumption, and the analysis is a leading indicator of upturns and downturns in our manufacturing industry at home. There’s reason to believe the growth rate is slowing and reduced Boeing 737 production rates and unsettled trade agreements could be to blame. According to Mark Killion, Director of U.S Industries at Oxford Economics, although numbers are remaining above last year’s, new orders decreased in April. This aligns with slowing business investments and weakness in the motor vehicle sector.

Texas Employment Trends: Oil & Gas Trend Down

Employment is ramping up and unemployment falling in Texas. That’s pretty good news. According to recent data from the Federal Reserve Bank of Dallas, the Texas employment rate has seen an increase of 2.1 percent in May, following a 3.1 percent increase in April. And gains were pretty widespread in May, but manufacturing, hospitality, and oil and gas employment did fall, and shops are beginning to cut overtime. Texas lost four rigs, bringing total rig counts to 463. This may be why we are seeing some softening in the local economy. Interestingly, the information sector has been the only one to cut jobs this year. Employment gains were also spread throughout Texas’s major metro areas with the exception of San Antonio. Austin led the charge with 7 percent growth. 

Overall, unemployment numbers are down to a new record low of 3.5 percent in May, which aligns with the U.S. unemployment rate of 3.6 percent. Let’s hope those numbers hold on long term.

Texas Population Growth

Texas has some of the fastest growing cities in the United States. According to reports in late May from the United States Census Bureau, the largest population growth regions for the state include San Antonio (20,824), Fort Worth (19,552), Austin (12,504) and Frisco (10,884). Back in 2018, San Angelo surpassed the 100,000-population mark. Texas was also one of the four states that gained more than 50,000 housing units, with a whopping 172,000 new units added between 2017 and 2018. With population growth comes industry opportunity, and we’re seeing a surge here at home, as the Permian Basin has some of the best energy resources in the nation. While the outlook remains somewhat positive overall, it’s critical to remain cautious here at home as the economical terrain is starting to become a little rocky.

Energy Outlook

Pioneer Natural Resources is a company well known for drawing oil and gas from the Permian Basin using hydraulic fracturing. Back in 2014, it was projected that Pioneer could produce a million barrels per day by 2024. Today, Scott Sheffield, CEO of the company, says those numbers are doubtful due to their loss of investors. Investors know there are large amounts of gas in the shale formations; the question is how affordably can it be extracted. The company has already spent more than budgeted in order to meet that lofty goal and is in the midst of layoffs themselves.  We don’t have a crystal ball and can’t predict the future, but this certainly gives cause for concern of the future of fracking.

Texas Manufacturing Industry News

We happened upon some interesting news in The Texas Tribune. In April 2019, Senate Bill 649 passed the Senate and aims to increase the number of Texas plastic and paper manufacturers using recyclables as industrial feedstock to produce goods. It requires the Texas Commission on Environmental Quality and the Texas Economic Development and Tourism Office to increase demand for recyclable materials in the manufacturing industry. The bill won the endorsement of over 60 businesses, even the Texas Chemical Council. There have been talks about how to increase the use of recyclables in manufacturing; one idea is to place plants right at the source of the materials. This will obviously take more discussion and the plan will likely come from a third-party administrator. We’re interested to see how this pans out.

West Texas in the News

We pay close attention to state and national economic issues, but M&M Sales & Equipment has a soft spot for our hometown of Odessa. With abundant energy resources, infrastructure and a skilled workforce, Odessa is an ideal place for machinery, metal and chemical manufacturing facilities. Just recently, we read in the online publication Manufacturing.net that Facebook is planning a massive solar farm just north of Odessa. Called the Prospero Solar project, it will be Facebook’s first direct investment in renewable energy for its data centers and will have the capacity for 379 megawatts. You may be wondering why the social media giant is investing in solar. CEO Mark Zuckerberg says, “We set a goal for all our data centers and offices to use 100% renewable energy by 2020. These new solar projects will help us reach that goal.” Shell Energy North America and Facebook plan to share the power. As always, if you have questions and need expert advice on the cutting tools and supplies you need, just ask. M&M Sales & Equipment is here to help.

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