Crude oil futures have surged this year, continuing to recover from decade-lows struck in early 2016.
Front-month West Texas Intermediate futures — the US benchmark — have surged by close to 28% from mid-February, extending the gain since February 2016 to a jaw-dropping 185%.
While US President Donald Trump is not happy about the recent surge in crude prices, it generating some positive side effects for the US economy.
Especially the labour market.
Take a look at the chart below from Macquarie Bank as evidence.
It shows the year-on-year percentage growth in US non-farm payrolls, splitting the results by oil and non-oil producing states.
Mirroring the surge in crude prices since early 2016, annual payrolls growth in oil producing states has rocketed higher, outperforming non-oil states by some margin since the second half of last year.
“The pace of payrolls gains has accelerated, largely driven by an impulse from oil dependent states,” Macquarie says.
“This illustrates the positive leverage the US economy now has to higher oil prices, a sharp contrast relative to the past several decades.”
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