Texas Employment Forecast

The Texas Employment Forecast indicates jobs will increase 3.2 percent in 2023, with an 80 percent confidence band of 3.0 to 3.4 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 434,700 jobs will be added in the state this year, and employment in December 2023 will be 14.1 million (Chart 1). It implies growth for the rest of the year will be an annualized 2.2 percent.

Texas added 13,700 jobs in October, as employment growth slowed notably from 5.8 percent annualized in September to 1.2 percent in October.

“Job growth slowed sharply in October, suggesting the labor market may be finally cooling off after registering such strong growth in the past two years,” said Luis Torres, Dallas Fed senior business economist. “Three sectors reported job losses: construction, manufacturing and other services. Small job gains were evident in education and health, leisure and hospitality, and financial services. Meanwhile, information, oil and gas, professional business services and trade and transportation reported solid job gains.”

The Texas Leading Index decreased over the three months through October (Chart 2).  The majority of the components declined. Negative contributors to the index included decreases in the help-wanted index, the U.S. leading index, the Texas stock index, well permits and increases in new unemployment claims and in the Texas value of the dollar. In contrast, an increase in the real price of West Texas Intermediate oil and average hours worked pushed the index upward.

Next release: December 22, 2023

Methodology

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 Blue Chip Economic Indicators and WTI oil price futures. All models include four COVID-19 dummy variables (March–June 2020).

For additional details, see dallasfed.org/research/forecast/.