Texas Employment Forecast

November 18, 2022

The Texas Employment Forecast indicates that jobs will increase 4.3 percent in 2022, with an 80 percent confidence band of 3.9 to 4.6 percent. The forecast is an average of four models that are based on projected national GDP, oil futures prices and the Texas Leading Index. This estimate is lower than last month’s projection of 4.4 percent. The forecast suggests that 556,000 jobs will be added in the state this year, and employment in December 2022 will be 13.6 million (Chart 1).

Texas employment growth decelerated to 2.9 percent in October after rebounding to 4.8 percent in September.

“Even with the slowdown in October employment, Texas year-to-date job growth is a solid 4.7 percent,” said Luis Torres, Dallas Fed senior business economist. “Strength in October was led by an increase in mining and logging, professional and business services, and leisure and hospitality employment. Employment growth was broad based; no major industries posted losses.”

The Texas Leading Index continued its decline in the three months through October (Chart 2). The index components were nearly all negative, with weakness led by a decline in help-wanted advertising. A rise in new unemployment claims, and a decline in both the U.S. leading index and the real price of West Texas Intermediate oil also dragged on the index. An increase in average weekly hours worked in manufacturing was a positive contributor. The weakness in the leading index suggests a further slowing in job growth going into 2023.

Next release: December 16, 2022

Methodology

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.

The forecast is based on the average of four models. Three models are vector autoregressions (VARs) where Texas payroll employment is regressed on West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index, respectively. The fourth model is a regression of payroll employment on expectations for U.S. GDP growth and WTI oil prices, four COVID-19 dummy variables (March–June 2020) and projected Texas COVID-19 hospitalizations from the Institute for Health and Metrics Evaluation.

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