Southern New Mexico Economic Indicators

First Quarter 2024

Southern New Mexico’s economy grew robustly through April. Employment expanded at a stronger pace than the state and nation, while the unemployment rate ticked down to 4.3 percent. Land values for irrigated cropland and ranchland ticked up in the first quarter, and New Mexico’s output growth exceeded the nation’s in 2023. Cattle inventories continued to decline in early 2024.

Labor market

Payroll growth strong

Payrolls in Las Cruces grew an annualized 3.8 percent from December to April 2024 (1,000 jobs) (Chart 1). Employment growth in the first quarter was led by manufacturing, which grew 15.0 percent (167 jobs), followed by 10.2 percent payroll growth in government (683 jobs) and 9.8 percent in other services and information (82 jobs).

Overall, many sectors saw strong employment growth both year over year and through April. However, employment in trade, transportation and utilities, which comprises 15 percent of Las Cruces’ total employment, fell 6.0 percent through April and was flat from year-ago levels. Leisure and hospitality contracted 2.6 percent and construction and mining dropped 7.0 percent, though they account for a smaller proportion of the metro’s payrolls.

Employment growth outpaces state and nation

Employment in Las Cruces was up 2.8 percent (2,200 jobs) year over year in April, outpacing both New Mexico, up 1.5 percent, and the U.S., which grew 1.8 percent year over year in April (Chart 2). Las Cruces’ employment growth has been stronger than the state and nation through much of 2023 and into 2024.

Gross domestic product

New Mexico’s output growth outpaces U.S. in fourth quarter 2023

GDP, or the total value of final goods and services produced in an economy, is an important measure of economic strength. New Mexico’s real GDP expanded 4.2 percent in the fourth quarter (the most recent available data), exceeding the nation’s 3.4 percent increase (Chart 3). Much of New Mexico’s GDP growth can be attributed to increases in energy production and in trade, transportation and utilities services output. U.S. GDP rose 1.3 percent in the first quarter of 2024; data are not available at the state level.

Mining and government make up large share of state output

A sector breakdown of GDP illustrates which industries contribute most to an economy. In New Mexico, government and mining contributed outsized shares to fourth quarter 2023 nominal GDP compared to the nation. Federal, state and local government spending combined make up 24 percent of New Mexico’s output (Chart 4). Government spending contributes 12 percent to national output in comparison. Additionally, mining activities, which include oil and gas extraction, made up 11 percent of state GDP, far surpassing mining’s 1 percent contribution to national GDP. Leisure and hospitality also had a slightly outsized share in the state compared to the nation.

Agriculture

Ranchland values continue growing

Despite being an arid state, New Mexico still ranks among the top states for production of chile peppers, pecans, onions and milk in the latest USDA report.

In the first quarter of 2024, irrigated cropland and ranchland values ticked up while dryland values fell, according to the Eleventh District Agricultural Survey (Chart 5). Ranchland was valued at $645 per acre, up from $630 in fourth quarter 2023. Similarly, irrigated cropland rose to $7,551.80 per acre from $7,051.80 per acre. Dryland values fell from $600 per acre in fourth quarter 2023 to $587.50 per acre in the first quarter of 2024. Irrigated cropland values peaked in 2022, and dryland values peaked in 2023. Values fell and have since begun to recover. Conversely, ranchland values have climbed since 2022.

Cattle inventories decline

Cattle are the dominant livestock in New Mexico. The state ranked ninth in the nation for milk production in 2022, and of the $3.71 billion in state crop and livestock sales in 2022, $2.97 billion was from livestock products, according to the USDA.

In 2023, counties in southern New Mexico reported a decline in cattle inventories compared with 2022 (Chart 6). Heads of cattle for beef production fell 1.6 percent (3,800) in southern New Mexico from January 2022 to January 2023. Unlike beef cattle, dairy cattle in New Mexico are mostly located in the southern portion of the state. Those inventories were also down by 4.3 percent (12,000) in January 2023 compared to year-ago levels. Declines in the state are mirrored by the nation, which is also seeing a decline in herd sizes driven by drought conditions and high input costs.

More recent data are available for overall state inventories. The number of cattle in state herds continued to decline into 2024. Inventory of beef cattle in the state declined 0.9 percent (4,000) from January 2023 to January 2024, while dairy cattle declined 11 percent (31,000).