Texas Employment Forecast
February 3, 2022
Texas employment grew at a 3.1 percent annualized pace in December after increasing a revised 7.9 percent in November. Following a 4.5 percent decline in total employment in 2020, Texas jobs rose 5.1 percent in 2021, nearly regaining all jobs lost through the pandemic. The Texas Leading Index increased for the fourth consecutive month in December, indicating continued positive job growth over the next six months.
Using a top-down model based on national forecasts, COVID-19 hospitalizations in Texas and oil futures prices, we estimate that jobs will increase 3.0 percent in 2022, with an 80 percent confidence band of 2.0 to 4.0 percent. Based on the forecast, 389,300 jobs will be added in the state this year, and employment in December 2022 will be 13.4 million (Chart 1).
“December job growth slowed as COVID-19 cases surged on the spread of the omicron variant,” said Christopher Slijk, Dallas Fed associate economist. “January data from the Texas Business Outlook Surveys also suggest worsened hiring difficulties in a tight labor market and surging absenteeism due to omicron. However, a recent decline in COVID-19 hospitalizations suggests a peak may have occurred in the second half of January. A continued decline in new infections and hospitalizations would likely result in improved job growth through the remainder of the first quarter.”
The Texas Leading Index increased at a strong pace in December, with five of the eight components contributing positively to the index (Chart 2). Labor market indicators—including a strong increase in help-wanted advertising, declines in initial claims for unemployment insurance and a slight increase in average weekly hours worked in manufacturing—buoyed overall growth in the index. The U.S. leading index and stock prices of Texas-based companies gave moderately positive signals, while declines in well permits and oil prices and a strengthening of the Texas trade-weighted value of the dollar were drags on the Texas index.
Next release: March 11, 2022
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 Institute for Health and Metrics Evaluation, and expected prices of West Texas Intermediate crude oil based on the futures curve.
For additional details, see dallasfed.org/research/forecast/
For more information about the Texas Employment Forecast, contact Christopher Slijk at email@example.com.