Texas Employment Forecast

The Texas Employment Forecast indicates that jobs will increase 3.0 percent in 2023, with an 80 percent confidence band of 2.6 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 404,100 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 2.5 percent.

Texas employment grew an annualized 2.9 percent month over month in July, while June growth was revised up to 2.5 percent.

“Job growth accelerated in July as the labor market remains resilient, with the state adding around 33,500 jobs,” said Luis Torres, Dallas Fed senior business economist. “Strength in July was led by robust increases in leisure and hospitality and construction employment, and by gains in manufacturing and education and health. Information services, oil and gas, and professional and business services reported job losses.”

The Texas Leading Index increased over the three months through July (Chart 2). Changes in the index components were mixed; significant positive contributors were increases in the help-wanted index, well permits and the Texas stock index and a decrease in the Texas value of the dollar. In contrast, higher new unemployment claims and declines in the U.S. leading index, average hours worked and the real price of West Texas Intermediate oil dragged on the index.

Next release: September 15, 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/.