The Gist: The O&G labor market is clearly weakening. If the trends continue, production will follow.
As I was preparing to discuss the U.S. oil and gas labor markets and last month’s spike in layoff rates, the latest BLS JOLTs data was released and shifted the narrative from the chart below which is as of the December report.
The latest JOLTS data revealed a different picture with the preliminary January numbers. The irony! Note these numbers are subject to several revisions.
However, layoffs are only part of the story. Energy companies don’t necessarily need to conduct layoffs if employees are quitting on their own—which appeared to be the case in January.
The hiring rate remained week in the month as well.
If we subtract the separation rate from the hiring rate (blue line below), we get a leading indicator for U.S. oil production growth (orange line), as shown in the chart below.
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