Texas Employment Forecast

October 18, 2024

The Texas Employment Forecast estimates jobs will increase 2.5 percent in 2024, with an 80 percent confidence band of 2.3 to 2.7 percent. The forecast is based on an average of four models that include projected national gross domestic product, oil futures prices and the Texas and U.S. leading indexes. The forecast suggests 348,900 jobs will be added in the state this year, and employment in December 2024 will reach 14.4 million jobs (Chart 1). Growth for the remainder of the year is expected to be 3.0 percent.

Texas employment increased an annualized 2.9 percent in September, and August was revised up to 7.7 percent. "Texas employment growth was strong again in September, adding 33,800 jobs. Employment growth has normalized to a rate more consistent with trend growth. This comes after a summer of volatile data characterized by storms that disrupted labor markets in large parts of the state," said Jesus Cañas, Dallas Fed senior business economist. "Gains in September were led by construction, education and health services, and professional and business services. Employment fell in information, financial activities and government. Employment growth in the major metropolitan areas was led by Austin followed by Dallas and Houston."

The Texas Leading Index increased over the three months through September (Chart 2). Changes in the index components were mixed; increases in average hours worked and the help-wanted index, and the decrease in new claims for unemployment, were positive contributors. In contrast, the index was dragged down by the increase in the Texas value of the dollar and decreases in the U.S. leading index, well permits and the real price of West Texas Intermediate oil.

Next release: November 15, 2024

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 for which 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. 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 forecasts of U.S. GDP growth from Blue Chip Economic Indicators and WTI oil price futures as inputs. All models include four COVID-19 dummy variables (March-June 2020).

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

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