Texas Employment Forecast

The Texas Employment Forecast indicates that jobs will increase 3.3 percent in 2023, with an 80 percent confidence band of 3.1 to 3.5 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 453,200 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 2.5 percent.

Texas employment rose sharply in September, adding 61,300 jobs and increasing an annualized 5.4 percent month over month. August job growth was revised up to 1.3 percent.

“Texas labor market strength continues to surprise to the upside,” said Luis Torres, Dallas Fed senior business economist. “September’s upturn in employment was led by the goods-producing sector, which includes oil and gas, manufacturing and construction. In the service sector, education and health, professional business services, and trade and transportation recorded strong job growth after losing jobs the previous month. Other services and information were the only sectors that reported job losses. Metropolitan areas, particularly Dallas, San Antonio, Austin and Houston, registered very strong job gains.”

The Texas Leading Index increased over the three months through September (Chart 2). Significant positive contributors were decreases in new unemployment claims and increases in the real price of West Texas Intermediate oil, average hours worked, the Texas stock index and well permits. In contrast, an increase in the Texas value of the dollar and decreases in the U.S. leading index and the help-wanted index dragged on the index.

Next release: November 17, 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/.