I thought I would update some of the employment numbers I posted before on the site. The Bureau of Labor Statistics released revised numbers for October and preliminary numbers for November. Based on these releases employment from October 2014 to November 2014 declined by 4,291. (Cue dramatic music.) Of course this is a great concern for many, and I do not fault them for that. Oil and gas extraction, and the closely related industries, were clear growth leaders for the state as a whole over the last few years. But let’s take a closer look.
There is a big deal about understanding the impacts of oil price changes on the state economy given the legislative session underway in Bismarck. I am obviously all for such efforts. To that end I have a few graphs to offer up. Let’s consider the share of the private industry component of North Dakota Gross Domestic Product (GDP). Here is a first picture to consider:
The importance of oil to recent economic performance in North Dakota is well-documented. As the biennial legislative session gets underway the price declines of the last several months are likely on everyone’s mind, and rightly so. This Wall Street Journal article details the difficult decisions facing oil companies in the relatively near future as far as capital spending, dividends, and other expenditures are concerned. This New York Times article discusses the scaling back in rigs across the country due to lower oil prices.
While there is no specific mention of North Dakota, this article from Bloomberg.com mentions the idling of rigs due to oil price drops. The price drop is one thing, the duration of the drop is another. The longer price declines last, the more likely marginal plays will be idled as the article mentions. What does this mean for North Dakota? The core oil counties accounted for significant shares of the employment increase in the last year, so it could impact the performance of the state economy. There are many other questions to be answered first, but it is obviously something worth watching.
So yesterday I looked at how the oil patch core counties (Dunn, McKenzie, Mountrail, Williams) are responsible for over 50% of the employment increase in North Dakota in the last year (posting). I thought I would look at those particular counties again and compare to the state overall. I looked at the percentage change of employment from year ago levels. This should remove a majority of the seasonal effects in the data though we can never be sure. For September the state was up 2.88% from year ago levels. Williams county was up 6.82% from a year ago, Mountrail county was up 11.54%, Mckenzie county was up 21.62% and Dunn county was up 19.04%. For comparison, the percentage changes for Burleigh, Cass, and Grand Forks counties over the same time period were 1.44%, 1.14%, and -0.99%, respectively. For McKenzie county the average percentage change from a year ago level over the last 12 months was above 20%.