America’s oil, gas and mining industries continued to shed jobs in July, according to data from the Bureau of Labor Statistics, as trade groups warned that the sector may not yet have reached bottom.
Total employment in July fell to 569,100 from 576,100 jobs in June across industries spanning mining, quarrying and oil and gas extraction, according to BLS data released Friday. Despite the job losses, the unemployment rate in the sector — called NAICS 21 — fell to 15.6% from 17.8% in June, likely as prospective workers ceased looking for work in that area.
Fossil fuels companies have been hit disproportionately hard by the economic shock of the COVID-19 pandemic. Their 17.8% unemployment rate was the second-highest unemployment rate across all sectors of the U.S. economy in July, followed only by the leisure and hospitality sector with 25% unemployment, the BLS data show. Overall, the U.S. unemployment rate in July was a comparatively low 10.2%.
Not all parts of the oil, gas and mining industries were hit equally. The sector segment focused on oil and gas extraction — or NAICS 211 — in fact added jobs for the second month in a row in July, up 0.8% since June. That was likely because a number of oil and gas companies continued to bring temporarily-shuttered wells back online as oil prices returned to roughly breakeven-level prices of $40 per barrel.
Mining jobs also recorded a small gain in July, up 1.3%, although overall employment in that sector remains significantly down from the start of the year. (The BLS does not publish unemployment percent data at the sector segment level.)
That left another segment of the industry — the more peripheral services sector, whose workers perform many of the industry’s most thankless tasks, including maintenance and handling of heavy equipment — to absorb the worst of the downturn.
The “Support activities for mining” sector lost more than 10,000 jobs from June to July, with overall employment down 24.9% since January (compared with only 0.4% for the “Oil and gas extraction” segment). Meanwhile a report from the Petroleum Equipment and Services Association (PESA), using BLS data, found that employment in the oilfield services and equipment sector fell further in July than in June, dropping to roughly 665,000 in July from 675,000 in June, and significantly lower than in January.
PESA’s analysis of the data — performed in consultation with researchers from the Hobby School of Public Affairs at the University of Houston — examined a broader swath of the oil and gas world that includes the services sector and much of its value chain, including oil and gas extraction, construction and manufacturing. So its data may overlap with the BLS data reported above.
There is still uncertainty about why some parts of the oil, gas and mining industries have been hit harder than others. But one likely reason is that companies have retrenched their operations amid the collapse in demand for oil and gas, potentially farming out less activity to services companies such as Baker Hughes
Oil industry analysts are not optimistic about what the future holds for the oil services sector. On Friday a report from consultants at Rystad Energy found that, after an oil price slump in 2016, oil services companies such as Baker Hughes, Halliburton
“The downsizing expected this year will likely result in the [oilfield services] industry experiencing the lowest total headcount in over a decade.”