Wyoming unemployment rises on bearish oil

Wyoming has continued to shed jobs in the midst of a bearish oil market, according to unemployment figures published by the U.S. Bureau of Labor Statistics (BLS) June 22.

Wyoming and North Dakota are the only two states in the U.S. that saw unemployment numbers increase over the year, according to the BLS' figures. Wyoming's unemployment numbers increased by 1.5 points, from 4.2 in June 2015 to 5.7 in June of this year. Wyoming also had an increase in unemployment from May 2016 until June 2016, increasing from 5.6 percent to 5.7 over the month.

The national average for unemployment is 4.9, according to BLS figures.

Neighboring states also perform much better than Wyoming, with South Dakota having the lowest rate in the nation at 2.7 percent; Nebraska at 3.0 percent; Idaho and Colorado at 3.7 percent unemployment rate, and Utah at 4.0 percent. Alaska's 6.7 percent unemployment rate is the highest in the nation.

According to a report issued by the Economic Analysis Division (EAD) at the Wyoming Department of Administration and Information, the state's growing unemployment numbers are attributed to the soft markets for oil, gas and coal.

The EAD estimated that between April 2015 and 2016, gas production in the state fell 4.3 percent and oil production in the state was down 14.1 percent over the year. Coal production from May 2015 to May 2016 declined by 32.6 percent, the EAD said in its report.

In that report, the EAD said it was still to be determined whether increases in oil prices that were evident earlier in the summer would mean an overall improvement for conditions in Wyoming.

As it turns out, those price increases were short-lived.

After a brief rally in oil and gas prices over the summer that saw oil prices reach $51.23 in June-nearly double the 12-year low price seen in February, oil prices have again begun to sink, with crude closing at $42.14 on Monday, the lowest price since April, according to Bloomberg Analytics.

The continuing fall in oil prices is because of high inventories on hand in the U.S., according to data provided by the U.S. Energy Information Administration (EIA). EIA's data shows a steady increase in inventories of crude oil and refined fuels, a fact that reflects shrinking demand and a glut in production.

The market for oil, gas and coal that has caused high levels of unemployment has also created a drop in revenues for the state, according to the EAD, who said in its report that sales and use tax collections dropped by nearly 21 percent, with 11 out of 12 industry sectors tracked by the agency showing declines in tax revenues paid. The state's revenues from collection of taxes on mineral extraction, the severance tax, decreased by 34 percent for the 2016 fiscal year over the previous year, the report said.

The bad news for Wyoming comes at a time when regulators have signaled a possible interest rate increase could be on the horizon.

Last week, the Federal Reserve Bank Federal Open Markets Committee (FOMC) issued a report that seemed to suggest that the U.S., as a whole, was entering a state full employment.

Full employment is somewhere between 4.7 to 5.0 percent, according to most policymakers at the Fed, and reflects the "natural" unemployment rate due to seasonality and frictional unemployment caused by job switching.

While not saying explicitly that the nation was at full employment, the FOMC's report suggested that labor underutilization had ceased to be an issue, and that the FOMC was even seeing some evidence of a continually tightening job market.

This could be bad news for Wyoming consumers, since unemployment numbers are a key data point considered by the FOMC when deciding whether or not to increase interest rates, which could increase borrowing costs for Wyoming residents and businesses already hurting from unemployment and massive state government budget cuts.

The next meeting of the FOMC will be held in September, and unemployment figures for the month of July will be released Aug 5.