Texas Employment Forecast – Dallasfed.org

February 3, 2023

Texas employment projections indicate employment will increase by 1.4 percent in 2023, with an 80 percent confidence band of 0.7 to 2.2 percent. The forecast is based on the average of four models, including domestic GDP forecasts, oil futures prices, and major indexes for Texas and the United States. The forecast predicts that 193,000 jobs will be added in the state this year, bringing the payroll to 13.7 million in December 2023 (chart 1).

Texas employment increased 2.3% month over month in December, after increasing by a revised 4.3% in November. On an annual basis, job growth in Texas slowed to 3.5 percent in 2022 after increasing 6.0 percent in 2021. “Job gains were broad-based across all sectors,” said Luis Torres, senior business economist at the Dallas Fed. “The strong performance in 2022 was driven by job growth in energy, leisure, hospitality and information services.”

Despite a healthy labor market, the Texas Leading Index continued to decline in the three months through December (chart 2). Most index components were negative, with declines in major U.S. indexes and an increase in new jobless claims leading to weakness. Declines in the real price of West Texas Intermediate crude oil, the support request index and well permits also pushed down the index. A rise in the Texas stock index and a fall in the Texas dollar were positive factors, but the average weekly working hours remained unchanged and had no impact on the index.

Next release: March 10, 2023

methodology

The Dallas Fed's Texas employment forecast projects employment growth for the calendar year, estimated as the change in the number of employees over a 12-month period from December to December.

Predictions are based on the average of four models. The three models are vector autoregressions that regress salaried employment in Texas on lags of West Texas Intermediate (WTI) oil prices, the U.S. Leading Index, and the Texas Leading Index. The fourth model is an autoregressive variance with a regression of salaried employment on lagged salaried employment, current and lagged values ​​of U.S. GDP growth and WTI oil prices, and current Texas COVID-19 hospitalizations. Lug model. The model's Texas payroll employment forecast also uses as input the Dallas Fed's U.S. GDP growth forecast, WTI oil price futures, and the Institute for Health Metrics and Evaluation's hospitalization forecast. All models include four COVID-19 dummy variables (March to June 2020). The model also incorporates projections for state salaried employment benchmark revisions for the third and fourth quarters of 2022. The benchmark matches employment growth in the Payroll Survey to employment growth in the larger Quarterly Employment and Wage Survey.

For more information, see: dallasfed.org/research/forecast/.