Dallas Fed: Employment forecast calls for 5.2 percent decline in 2020

State & Regional

Employment forecast calls for 5.2 percent decline in 2020

(Photo provided by the Federal Reserve Bank of Dallas)

DALLAS (NEWS RELEASE) — The following is a news release from the Federal Reserve Bank of Dallas:

Texas added 24,700 jobs in July, according to seasonally adjusted and benchmarked payroll employment numbers released [Friday] by the Federal Reserve Bank of Dallas. The state unemployment rate fell from a revised 8.4 percent in June to 8.0 percent in July.

Using a top-down model based on national forecasts, COVID-19 infection rates and oil futures prices, the Texas Employment Forecast projects jobs will decline 5.2 percent this year (December/December). Based on the forecast, 672,000 jobs will be lost in the state this year, and employment in December 2020 will be 12.2 million. The forecast weakened slightly from a projected decline of 4.8 percent in June.

“After a strong bounce back in May and slower but still strong growth in June, job growth slowed sharply in July after a resurgence of new COVID-19 cases began in mid-June. High-frequency data had suggested a sharp slowing in July, and while this same data suggest some improvement in early August, further declines in COVID-19 cases will likely be necessary for a significant acceleration of jobs,” said Keith R. Phillips, Dallas Fed assistant vice president and senior economist. “Currently, we expect job growth to be about 2.1 percent in the last five months of the year. If the virus stalls out and fails to decline, job growth may be weaker, but if new cases drop sharply, job growth would likely be stronger.”

Additional key takeaways from the latest Dallas Fed report:

  • Texas jobs rose 2.5 percent (annualized) in July after increasing a revised 14.7 percent (annualized) in June. Employment is down 10.4 percent year to date.
  • Forecast uncertainty remains elevated as daily new COVID-19 infections in Texas peaked in mid-July but have declined at only a gradual pace, according to Phillips.
  • Government jobs surged in July due to a large increase in public school employment. Meanwhile, private sector jobs fell 1.1 percent, led by losses in leisure and hospitality, trade, construction and manufacturing. 
  • Job growth was positive but significantly weaker across the state’s large metro areas with the exception of Houston and San Antonio, where jobs declined. 
  • Unemployment rates fell in seven of nine major Texas metro areas in July, according to seasonally adjusted numbers from the Dallas Fed.

New indicator to provide early insights on Texas employment: In this environment where economic conditions change very quickly and can reverse with the spread of the virus, tracking the Texas economy requires a timelier indicator than standard quarterly and monthly economic measures. To meet this challenge, the Dallas Fed has developed the new Texas Weekly Employment Estimate, which will appear each Friday and reflect workforce changes during the prior week. Read more on Dallas Fed Economics.

Additional information about the Texas Employment Forecast, plus seasonally adjusted and benchmarked Texas jobs data and metro unemployment rates may be found on DallasFed.org.

(News release from the Federal Reserve Bank of Dallas)

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