Texas Employment Forecast

July 22, 2024

The Texas Employment Forecast estimates jobs will increase 1.9 percent in 2024, with an 80 percent confidence band of 1.4 to 2.4 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 266,100 jobs will be added in the state this year, and employment in December 2024 will reach 14.3 million (Chart 1). Growth for the remainder of the year is expected to be 1.5 percent.

Texas employment slightly decreased an annualized 0.2 percent in June after increasing 3.2 percent in May, which was revised upward.

"Texas employment marginally declined in June due to job losses in the service sector as the state lost around 1,900 jobs. This offset the strong job gains in the goods-producing sector, which were led by a significant increase in construction jobs," said Luis Torres, Dallas Fed senior business economist. "Texas employment growth has decelerated to 2.3 percent year to date as the labor market shows signs of cooling. Furthermore, the outlook for growth in the second half of the year dropped 0.8 percentage points compared with the first half. Slower employment growth, combined with decreases in the Texas and U.S. leading indexes lowered the forecast."

The Texas Leading Index decreased over the three months through June (Chart 2). All components declined except for the Texas Stock Index, which contributed positively. The considerable decrease in the index was due to a substantial fall in the average weekly hours worked. Decreases in the help-wanted index, oil prices, the U.S. leading index and well permits also pushed the index down. In addition, increases in the Texas value of the dollar and new unemployment claims also weighed on the index.

Next release: August 16, 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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