Texas Employment Forecast
July 21, 2023
The Texas Employment Forecast indicates that jobs will increase 2.5 percent in 2023, with an 80 percent confidence band of 2.1 to 3.0 percent. The forecast is based on an average of four models that include projected national GDP, oil futures prices and the Texas and U.S. leading indexes. The forecast suggests that 345,400 jobs will be added in the state this year, and employment in December 2023 will be 14.0 million (Chart 1). It implies growth for the rest of the year will be an annualized 1.8 percent.
Texas employment grew at a 2.1 percent month-over-month annualized rate in June, while May growth was revised down to 3.2 percent.
“Job growth slowed in June due to a loss of momentum in the service sector as the state added around 23,500 jobs. Texas employment growth has decelerated to 3.2 percent year to date as the labor market starts to show signs of cooling,” said Luis Torres, Dallas Fed senior business economist. Strength in June was led by robust increases in construction and information services employment, and by gains in manufacturing, financial services, and education and health care services jobs. Leisure and hospitality, professional and business services, and other services reported job losses.
The Texas Leading Index decreased over the three months through June (Chart 2). The majority of the components declined. Negative contributors included higher unemployment claims and declines in the U.S. leading index, average hours worked, the Texas Stock Index, the real price of West Texas Intermediate oil, and well permits. In contrast, an increase in the help-wanted index and a decrease in the Texas value of the dollar pushed the index upward.
Next release: August 18, 2023
The Dallas Fed’s 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.
The forecast is based on the average of four models. Three models are vector autoregressions where Texas payroll employment is regressed on the lags of West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index, respectively. The fourth model is an autoregressive distributed lag model with regression of payroll employment on lags of payroll employment, current and lagged values of U.S. GDP growth and WTI oil prices, and Texas COVID-19 hospitalizations through March 2023. Forecasts of Texas payroll employment from this model also use as inputs forecasts of U.S. GDP growth from the Federal Reserve Bank of Dallas and WTI oil price futures. All models include four COVID-19 dummy variables (March–June 2020).
For additional details, see dallasfed.org/research/forecast/.
For more information about the Texas Employment Forecast, contact Luis Torres at firstname.lastname@example.org.