Evidence Of The Shoe Dropping
My Fox Houston reports from Texas. “As Houston prepares to welcome a new year, Houston accountant Bob Martin’s best advice for folks living in the energy capital of the world? ‘The most important thing is to pay down debt,’ he said. ‘We’re starting to see signs where housing prices are cooling and so people are proceeding a little more cautiously.’ Houston’s housing market may be cooling, but one drive around the city would have you guessing otherwise. House prices are up, while the price of fuel is down. ‘We’re in somewhat of a paradox,’ Martin said. ‘We like the low price at the pump but if you’re here in Houston, you might be getting the low price at the gas pump, but you may be out of your energy job in a few months.’”
The Star Tribune on North Dakota. “A million barrels of oil a day pump out of North Dakota’s Bakken shale. Oil that used to sell for $100 a barrel and now fetches barely half of that. Oil that pumped billions into the North Dakota economy, drove the state’s unemployment rate down to almost nothing, and turned sleepy farm communities into Wild West boom towns. And for now, the new year is still looking bright in places like Watford City.”
“There’s a new $50 million high school under construction, with plans for another grade school to accommodate all the students who overflowed the classrooms and spilled out into half a dozen portable units on school grounds. The city, which ballooned from a farm town of 1,500 to a population of 12,000 and counting in the space of five years, is finalizing plans for a $101 million event center, complete with conference and performance spaces, two hockey rinks, a 135-foot water slide and an indoor lazy river.”
“‘Nothing has changed quite yet,’ said Steve Holen, superintendent of McKenzie County Public School District No. 1. ‘There’s some nervousness, obviously. If there is a little bit of a lull, it’ll probably provide an opportunity for some of the infrastructure to get built out, and give some time for a little bit of catch-up. I don’t think anybody’s assuming that it’s just all going to go away.’”
The Financial Post in Canada. “It’s been years since David Yager has seen multiple ‘For Sale’ and ‘For Rent’ signs in Fort McMurray, the northern Alberta city that is usually crawling with workers from across Canada looking to make a buck in the oilsands boomtown. ‘There’s no question that we’re not going to need as many workers as we have,’ said Mr. Yager, national oilfield services leader for Calgary-based consultants MNP LP. ‘That’s bad for the workers, but that might take the pressure off wages.’”
“As ATB Financial’s chief economist Todd Hirsch said, employment statistics are showing the first signs of trouble. He noted that the labour force numbers for the month of November showed 11,000 jobs were shed in professional, scientific and technical occupations. ‘Those would be the engineers, those would be the geophysicists, those would be anything that an oil and gas company might contract out to a third party,’ Mr. Hirsch said. ‘That’s a very unusual drop in those occupations; that’s sort of the first statistical evidence of the shoe dropping.’”
The BBC on Australia. “After 23 years of growth, including one of the biggest mining booms in the nation’s history, tumbling iron ore and coal prices have put a brake on Australia’s economy - and mining towns are paying the price. Peter Windle is a casualty of the mining slowdown. The New South Wales mining employee has lost a well-paid job, a company car and an annual bonus that in some years was as high as A$60,000 ($48,800; £31,300). Mr Windle had to sell his investment property to keep his head above water.”
“Once part of a vast army of workers in what was Australia’s booming resources sector, Mr Windle now gets up at 5.30 am five days a week to clean and drive school buses in the small town of Muswellbrook. For decades, the town had ridden the waves of Australia’s coal boom. ‘It’s the worst I’ve seen it in 28 years in the mining industry,’ says Mr Windle. ‘Everyone is getting out. Three hundred houses are for sale in my town, three in my street, and rental prices have collapsed on older weatherboard houses from A$1,000 a week to A$200,’ he says.”
The Australian. “China’s steel industry has warned that iron ore prices will remain under pressure over the year ahead as the nation’s steel mills battle with over-capacity and weak demand. ‘The iron ore price will remain on the downward track while the coal price may stabilise or rebound slightly,’ said Yang Zunqing, deputy secretary of the China Iron and Steel Association. Mr Yang told an OECD workshop in South Africa that despite the dive in the costs of raw materials, the Chinese steel industry was still struggling to break even, with the major mills suffering a fall in sales revenue in the first nine months. Prices received by the Chinese steel industry are the lowest since January 2003.”
“Mr Yang said demand from the property sector would remain weak, with new property starts over the first nine months of the year down by 9.6 per cent from a year earlier. This is flowing through to sales of major household appliances. Washing machine sales are down 3.8 per cent while freezers are down 2.8 per cent.”
“A report by the Britain-based Commodities Research Unit said that while softening in the Chinese economy was contributing to the downturn in the market, it was not the main cause. ‘A surge of low-cost supply from Australia has been the principal driver dragging prices lower,’ CRU analyst Laura Brooks said.”
