Texas Employment Forecast
November 19, 2021
Texas employment grew at a 3.8 percent annualized rate in October, while the Dallas Fed’s early benchmark for the second quarter resulted in upwardly revised job growth in the first half of 2021 from 3.3 percent to 4.1 percent. The Texas Leading Index accelerated at its fastest pace in five months, suggesting stronger growth over the next three to six months.
Using a top-down model based on national gross domestic product forecasts, Texas COVID-19 hospitalizations and oil futures prices, we estimate that employment will increase 5.1 percent in 2021, unchanged from last month’s estimate, with an 80 percent confidence band of 4.4 to 5.8 percent. Based on the forecast, 626,700 jobs will be added in the state this year, and employment in December 2021 will be 13.0 million (Chart 1).
“Even as COVID-19 hospitalizations in Texas declined in October, increased labor market tightness likely restrained job growth,” said Christopher Slijk, Dallas Fed associate economist. “Despite some slowing, job growth remained strong, with professional and business services leading growth and energy sector employment robust on elevated energy prices. Nevertheless, persistent labor market tightness continues to constrain growth, particularly in services industries such as leisure and hospitality.”
The Texas unemployment rate declined from 5.6 percent in September to 5.4 percent in October. Labor force growth continued to improve and rose at its fastest pace this year.
The Texas Leading Index grew strongly in October, with a majority of the indicators giving positive contributions (Chart 2). Among those components were oil prices, the U.S. leading index and stock prices of Texas-based companies. Labor market indicators were mostly positive contributors, including help-wanted advertising and average weekly hours worked in manufacturing. A slight increase in initial claims for unemployment and a rise in the Texas trade-weighted value of the dollar were slight drags on the index.
Next release: December 17, 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 from the IHME, and expected prices of West Texas Intermediate crude oil based on the futures curve.
For additional details, see dallasfed.org/research/forecast/