Although Oklahoma’s economy continued to expand through the first half of 2019, several growth indicators slowed, said the Kansas City Federal Reserve Bank in a study.
Job growth has stalled, unemployment claims have risen and tax receipts have declined, suggesting little, if any, overall growth, the bank said. Energy activity in particular declined significantly this year, and expectations among energy firms remain somewhat downbeat for early 2020.
Still, employment is up in several key sectors, and state unemployment remains very low, which could help Oklahoma weather current economic difficulties, the bank said.
NONFARM JOB GROWTH SLOWS
The pace of Oklahoma’s nonfarm job growth slowed steadily in 2019, and employment now is up only slightly from a year ago, the study said.
Tax revenues also slowed in 2019, the bank said. By early in the fourth quarter, total and sales tax revenues had dropped below year-ago levels for the first time in nearly three years.
However, the cities saw a modest uptick early in the fourth quarter, keeping revenues above a year-ago.
ENERGY SLOWDOWN SPREADS
The biggest drop in activity this year has been in Oklahoma’s energy sector, the bank said. Employment in oil and gas production, was down more than 4% from last year as of October, more than twice as much as any other sector.
Oil prices remained near the price that firms in the Kansas City Fed’s quarterly Energy Survey said was needed to be profitable—$55 a barrel—for most of the year, but natural gas prices generally held well below break-even of just less than $3.00 per 1,000 BTU’s, the bank said.
Firms also produced more oil and gas in recent years with fewer rigs and employees, the study said. Oklahoma’s rig count dropped much more than any of the other top eight oil- and gas-producing states, because some firms moved assets to these states.
Conditions in the state’s agriculture industry also remained difficult, which was mitigated somewhat by stable land values, the bank said. Incomes continued to decline, although at a slower pace than in recent years.
Manufacturing employment also dropped, likely affected by trade uncertainty and weaker demand from energy and agriculture. Jobs in financial, business services, leisure and hospitality, and state and local government sectors also declined.
2020 OUTLOOK
The Kansas City Fed’s September Energy Survey, showed oil and gas firms anticipated a net deterioration in drilling over the next six months, the bank said. They also indicated they expected slight reductions in jobs.
However, construction, transportation, health care, trade and federal government sectors appear to stretch 2019 growth into 2020, as do professional and business services and manufacturing in Oklahoma City and mining in Tulsa, the bank said.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at $118 to $120.50 per cwt on a live basis, with the higher prices coming on Friday, steady to up $1 from last week, and at $188 to $190 on a dressed basis, steady, with higher values also on Friday.
The USDA choice cutout Monday was up $0.79 per cwt at $217.08, while select was up $1.27 at $205.51. The choice/select spread narrowed to $11.57 from $12.05 with 67 loads of fabricated product sold into the spot market.
No new contracts were tendered for delivery against the Dec delivery month Monday. However, six steer contracts were retendered for delivery at One, and six were reclaimed at One.
The CME Feeder Cattle index for the seven days ended Friday was $144.61 per cwt, up $1.21 from the previous day. This compares with Monday’s Jan contract settlement of $145.25, down $0.42.