U.S. oilfield services jobs saw another month of job gains in June, pointing to continued improvement in the energy sector job market, while overall U.S. jobs growth moderates and the unemployment rate rises.
The U.S. oilfield services sector saw a gain of 968 jobs in June 2024, according to preliminary data from the Bureau of Labor Statistics (BLS) and analysis by the Energy Workforce & Technology Council.
June was the first time in 2024 that has experienced employment growth, outpacing 2023’s growth by almost 450 jobs, the association said in its monthly report last week.
The momentum in oilfield services jobs growth contrasts with weakening total U.S. jobs growth.
The energy services sector currently supports 647,636 jobs across the United States, the Energy Workforce & Technology Council said.
“The energy service sector’s growth is particularly notable given the broader economic context of rising unemployment rates, suggesting a targeted rebound in energy-specific job markets,” the industry association said.
Yet, U.S. drilling activity—as measured by the number of active drilling rigs for oil and gas in the United States—continues to fall. The rig count was 584 last week, compared to 675 rigs this same time last year, per Baker Hughes’ latest data.
At the same time, U.S. crude oil production rose 1 million bpd to 13.3 million bpd for the week ending July 5. Current weekly oil production in the United States, according to the EIA, is now on par with the all-time high of 13.3 million bpd.
Energy Workforce President Molly Determan commented on the association’s analysis of June’s jobs data,
“This uptick in job growth within the oilfield services sector is a positive indicator for American energy production.”
“Despite economic challenges spanning the national workforce, our sector continues to demonstrate robust growth, driven by advancements in technology and the continued global demand for American oil and gas,” Determan added.
In the national U.S. jobs market, the economy added 206,000 jobs in June, the latest data from the Bureau of Labor Statistics showed earlier this month.
However, the unemployment rate climbed to 4.1%, the highest level since October 2021. At this time last year, the U.S. jobless rate stood at 3.6% and the number of unemployed people was 6.0 million. This June, the number of unemployed people was 6.8 million.
Compared to May, employment showed little change over the month in the oil and gas extraction industry, the U.S. government data showed.
The most recent Dallas Fed Energy Survey, for the second quarter of the year, also showed just a little change in the aggregate employment index. While Q2 saw the 14th consecutive positive reading for the index, the low-single-digit result of the index suggests slow net hiring, the Dallas Fed said.
The state of the overall U.S. jobs market has cooled, and the tick-up in the unemployment rate could prompt the Fed to begin reducing interest rates in a few months, probably in September, analysts say.
The most recent labor market data sent “a pretty clear signal that the labor market conditions have cooled considerably” compared to what they were two years ago, Fed Chair Jerome Powell told Congress last week.
“This is no longer an overheated economy, it is more or less back by most measures to what it was before the pandemic,” Powell said.
U.S. inflation data from last week also strengthened the case for a start of money-loosening policies.
Lower gasoline prices helped the consumer price index drop in June by 0.1% from May—for the first time in four years, while the 12-month yearly gain of 3.0% was the smallest since June 2023.
The inflation numbers were lower than expected, which gave analysts confidence to expect that the first rate cut from the Fed could come in September.
“Growing expectations of a rate cut from the Fed along with a constructive oil balance suggest that prices will remain well supported,” ING commodities strategists Warren Patterson and Ewa Manthey wrote on Friday.
“We continue to hold onto our view that ICE Brent will average US$88/bbl in the current quarter.”
By Tsvetana Paraskova for Oilprice.com
