The US oil and gas sector bled away more jobs last month as sustained low oil prices forced energy producers to reduce spending, suggesting that further pain may be ahead for the struggling industry.
A roughly 50% drop in oil prices since June has pummelled the US oil sector, prompting a quick drop in activity. The number of oil rigs active in the US has fallen 40% since October.
The mining sector of the workforce, which includes oil and gas workers, fell by 9300 to 844,500 last month, according to the Labour Department’s February payrolls report on Friday, driven by a fall in oil and gas drilling activity.
The losses added to a 5800 drop in January, Reuters reported.
Jobs in the oil-extraction sub-sector, which includes rig workers, dropped 1100 to 198,300, adding to a 1800 drop in January. Support activities for mining, which includes oil and gas workers, fell 7400.
That made the energy sector a rare black mark in the jobs report, which showed non-farm payrolls soaring 295,000 last month, beating expectations, and the jobless rate falling to a more than 6-1/2-year low of 5.5%.
Job losses in the oil and gas sector have been relatively modest since June, in part due to the lag between falling crude prices and job cuts. But the last two months suggest the speed of the cuts may be increasing as prices remain depressed.
Past slowdowns suggest it takes time for job cuts to materialise. In 2008, during the financial crisis, jobs in the oil and gas extraction sector did not begin to fall until December, five months into the oil price slide. But once the rout started, it lasted for a year, wiping out over 50,000 jobs.
The signs are bleak. Oil drilling firms including Schlumberger, Halliburton and Baker Hughes already have announced plans to lay off ten of thousands of workers worldwide this year.