Texas Employment Forecast
October 16, 2020
Texas jobs grew 1.0 percent in September after increasing a revised 8.0 percent in August. Employment is down 7.4 percent since December 2019. The Texas Leading Index increased for the fifth consecutive month in September, indicating continued positive growth over the next six months. Using a top-down model based on national forecasts, COVID-19 infection rates and oil futures prices, we estimate that Texas jobs will continue to recover in the remainder of the year but not enough to fully offset the steep losses in March and April. The Texas Employment Forecast projects jobs will decline 4.2 percent this year (December/December). Based on the forecast, 539,000 jobs will be lost in the state this year, and employment in December 2020 will be 12.4 million (Chart 1).
“The Texas economy continues to recover from sharp declines earlier in the year, although a recent uptick in COVID-19 cases in North Texas and El Paso, along with a rise in hospitalizations in the state, threatens to slow the pace of recovery in the fourth quarter,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist. “Currently, we expect job growth to be about 6.1 percent in the last three months of the year. If the recent rise in COVID-19 hospitalizations continues, however, job growth will likely be weaker.”
After bouncing back in May and June, jobs in leisure and hospitality declined significantly in July. August data were revised up from a slight decrease to a mild increase, and September data show a further pickup in growth. Retail jobs continued to grow in September but at a more subdued pace than August. After declining for sixteen consecutive months, mining jobs increased slightly, suggesting that the oil and gas sector may be flattening out after a prolonged decline. Construction and manufacturing jobs increased in September.
The Texas unemployment rate increased from 6.8 percent in August to 8.3 percent in September. After declining from June to August, the number of unemployed rose sharply in September. The unemployment rate is now closer to the national rate of 7.9 percent, which is likely a reflection of the slower pace of growth in Texas since COVID-19 cases surged in the state from mid-June to mid-July.
The Texas Leading Index increased for the fifth consecutive month in September (Chart 1), although the pace of growth subsided. Four of the eight components gave positive contributions to the index, three declined and one was unchanged (Chart 2). The U.S. leading index and Texas help-wanted advertising gave the strongest positive signals, with declines in the Texas value of the dollar and new claims for unemployment insurance giving more moderately positive signals. Declines in the oil and gas indicators—permits to drill new wells and the inflation-adjusted oil price—gave negative contributions as did a decline in the stock prices of Texas companies. Average weekly hours worked in manufacturing was unchanged.
Next release: November 20, 2020
The Dallas Fed Texas Employment Forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December.
Due to the rapid onset of the COVID-19 pandemic, the forecasting model used in this release of the Dallas Fed Texas Employment Forecast differs from the model used historically. In this case, payroll employment for June to December, is estimated based on expectations for U.S. GDP growth for the remainder of 2020, an estimate of direct COVID-19 impacts in March, April, and July, and expected prices of West Texas Intermediate crude oil based on the futures curve.
For additional details see dallasfed.org/research/forecast/