Texas Employment Forecast
April 16, 2021
Texas employment surged 11.3 percent annualized in March after declining a revised 1.4 percent in February. The Texas Leading Index increased for the eleventh consecutive month, suggesting continued growth over the next three to six months.
Using a top-down model based on national forecasts, COVID-19 hospitalizations and oil futures prices, we estimate that job growth will increase by 6.6 percent in 2021, with an 80 percent confidence band of 5.6 to 7.6 percent. Based on the forecast, 816,400 jobs will be added in the state this year, and employment in December 2021 will be 13.2 million (Chart 1). Due mostly to the stronger than expected growth in March, the forecast improved moderately from the 6.0 percent estimated with the release of the February data.
“Jobs rebounded strongly in March as COVID-19 cases and hospitalizations fell sharply and mobility increased,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist. “Job gains were broad-based across industries with particular strength in construction, leisure and hospitality and oil and gas jobs.
“Continued strong demand for new single-family homes and for home repair from Winter Storm Uri drove construction jobs, while dropping COVID-19 cases and gains in the number of people vaccinated likely drove the demand for restaurants, hotels and other leisure and hospitality industries. The improvement in energy-sector jobs is consistent with the rise in oil prices this year and increased optimism expressed in the first-quarter Dallas Fed Energy Survey.“High-frequency data for April suggest continued strength in jobs. As long as COVID-19 cases and hospitalizations continue to decline, we should see further strengthening of job growth going forward.”
The Texas unemployment rate held constant at 6.9 percent in February and March. A moderate gain in the labor force offset a rise in household employment.
The Texas Leading Index increased for the eleventh consecutive month in March (Chart 1). A majority of the eight components gave positive contributions to the index (Chart 2). An increase in the stock prices of Texas-based companies led the positive contributions, followed by gains in help-wanted advertising, permits to drill oil and gas wells, average weekly hours worked in manufacturing, the oil price and the U.S. leading index. A moderate gain in the Texas export-weighted value of the dollar and a significant rise in initial claims for unemployment insurance offset some of the increase in the leading index.
Next release: May 21, 2021
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 is estimated based on expectations for U.S. GDP growth for 2021, an estimate of direct COVID-19 impacts from March to May 2020, projected hospitalizations in Texas for COVID-19, and expected prices of West Texas Intermediate crude oil based on the futures curve.
For additional details see dallasfed.org/research/forecast/