|
 But the forest of construction cranes sprouting around this
petrochemical hub tell the flip side of the story, as some of the
same forces that drove down those prices sparked tens of billions of
dollars in investment in new processing plants to take advantage of
cheap and plentiful supplies of oil and gas.
Exxon Mobil Corp <XOM.N> and Chevron Corp <CVX.N> are building
mammoth chemical crackers to process polyethylene from natural gas,
and logistics firms have created millions of new square feet of
warehouse space as they plan to ship the output to the global
plastics industry.
Rising chemicals output has contributed to record traffic at the
Houston Port Authority, and officials say the trend is expected to
continue. Throughout the Baytown area, which is on the outskirts of
Houston, an estimated $8 billion worth of projects is expected to be
finished this year and another $22 billion completed in 2017.
This has all propped up employment in Texas at an otherwise
difficult time. The positive impact on the overall U.S. economy from
the chemicals industry that this illustrates is also one of the
reasons the U.S. should avoid a downturn despite troubles elsewhere
in the world. That in turn should create the conditions for the
Federal Reserve to raise interest rates again this year.
"They are shedding jobs upstream. That's the nature of the
business," said B.J. Simon, associate executive director of the
Baytown-West Chambers County Economic Development Foundation. But
"the opportunity to build these crackers just could not be passed
up...access to cheap feedstocks changed the whole equation
downstream."
Construction workers have jobs, new schools are being built to
handle a growing local population, a new Kroger Marketplace store is
being completed, and a partially vacant shopping mall is being
overhauled.
JOBS:THE FED'S NORTH STAR
The global economy may be sputtering, with weak demand one of the
reasons that oil prices have cratered. But the U.S. keeps adding
jobs, and at a rate consistent with the outlook from Fed
policymakers who expect growing U.S. payrolls will mean enough
domestic spending to keep the economy expanding overall.
Texas "lost a lot of energy jobs," said Dallas Fed research head
Mine Yucel, but the state "has been very resilient. I was
surprised."
Across the oil patch, there's a similar pattern of positive trends
offsetting bad news. Though low prices have crippled investment in
exploration and cut drilling rigs, overall employment in Oklahoma
continues to rise in a state that has built large logistics and
defense contracting industries.
In North Dakota, ground zero for the fracking boom, overall
employment has dropped, but the unemployment rate remains a
super-low 2.7 percent compared to the national average of 4.9
percent. The number is held down by an expected adjustment: just as
workers flocked to the state when vacancies were plentiful, the
labor force has declined as the jobs disappeared and workers
returned home.
These states represent a drop in the bucket compared to Texas's $1.6
trillion, 12.5 million-job economy, a size approaching that of
Canada. Despite the oil downturn, the unemployment rate is only 4.7
percent as non-energy companies like fiber-optic manufacturer
Applied Optoelectronics <AAOI.O> expand in the state.
In a rough year for the oil business, the state as a whole added
144,000 jobs in 2015, according to the Texas Workforce Commission,
with strong gains across the trade and hospitality sectors, as well
as professional services, health and education.
ROCKY START
The Fed meets next week to take stock of the U.S. economy after a
rocky beginning to the year.
A rate hike is not expected at the March meeting but the central
bank’s post-meeting statement and fresh economic projections from
policymakers will provide important insight into how worried the Fed
is about the combined impact of cheap oil and weak global demand on
prospects for U.S. jobs, growth and investment.
In an organization that prizes consensus under Chair Janet Yellen,
clear cracks have emerged: between Vice Chair Stanley Fischer's
recent statement that inflation is "stirring," for example, and Fed
Governor Lael Brainard's continued caution about how the rest of the
world may inhibit the U.S.
[to top of second column] |
The Fed raised rates in December for the first time in a decade and
projections by its policymakers at the time showed they expected
four hikes this year. However, many investors and analysts now feel
the Fed may be stuck where it is for much of the rest of the year.
The jobs growth figures provide a counterweight to that view. The
labor recovery has been going on for seven years now, and whenever
hiring has slowed in one sector of the economy another has picked up
the slack.
The early strength in commodity-based jobs that spread across the
fracking fields of North Dakota and Oklahoma gave way over the past
two years to a surge in construction, education and health-related
positions. Even in government, where belt-tightening by local, state
and federal agencies trimmed payrolls coming out of the recession,
employment is growing again.
U.S. non-farm jobs growth has held at an average of 190,000 per
month during the recovery. That's faster than anticipated and strong
enough to both accommodate new entrants to the labor force and bring
sidelined workers back into jobs.
There have been concerns that many of the jobs being created were at
the low end of the wage spectrum, in restaurants, hotels and retail
stores. But more recent analysis of occupation and wage trends by
Goldman Sachs showed that over the past two years in particular job
gains have been strongest in higher-paying positions.
For a graph showing the composition of U.S. jobs growth in the past
few years, see http://tmsnrt.rs/1pvEZyo
In its most recent Beige Book release of anecdotal economic
information, Fed officials noted that former oilfield workers were
shifting into jobs as auto mechanics, while construction and
petrochemical companies had shortages in fields considered
complementary to the skills of frontline oil and gas workers.
"It's easier to place a welder right now than someone with a
four-year degree," said Jim Hanna, a vice president for human
resources and industrial relations with Fluor, <FLR.N> the
engineering and construction giant working on the Chevron project in
Baytown.
Fluor's workforce at the Chevron site is already up to 3,000, with
600 more to be hired over the summer.
FEWER BMWS
In the Houston metropolitan area, which compared to the rest of
Texas has traditionally been most dependent on the energy sector,
the oil crash did not prevent a net gain of 23,000 jobs last year.
That was well short of the above-average 100,000 positions that the
city had been adding in recent years as oil production surged, said
Patrick Jankowski, vice president of research at the Greater Houston
Partnership. But it is also more in line with the city's long-run
average and likely more sustainable.
While there may be some impact on wages from the loss of higher
paying positions for geologists and engineers, said Jankowski, some
of the skilled construction trade and health jobs that will replace
them also pay above average.
Fluor's Hanna said it was typical for construction workers to put in
50-hour weeks or more, with annual wages running upwards of
$100,000.
"I would not describe Houston's economy as strong, but I would never
use the word recession," Jankowski said. "We will have a year or two
of slower growth, rather than a boom...We will be selling fewer
BMWs."
(Reporting by Howard Schneider; Editing by Martin Howell)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
