Texas poised for slower job growth this year, Dallas Fed says

Texas is likely to add jobs at a slower pace in 2024 after years of robust employment growth, according to a new report from the Federal Reserve Bank of Dallas.

The state will add nearly 284,000 jobs this year, a 2% increase from 2023, the Dallas Fed said Friday — a pace that’s in line with the state’s job growth rate before COVID-19 hit and the state’s economy kicked into overdrive. By year’s end, Texas employment will hit 14.4 million jobs.

By contrast, Texas added about 427,000 jobs in 2023 at a pace of 3.1% — the result of a rapidly growing labor force fueled by strong domestic and international migration.

“We’re cleared for landing, landing back to our long-runtrend rate of growth,” said Pia Orrenius, Dallas Fed vice president and senior economist.

Still, Texas outpaced the nation as a whole in job growth last year and ranked fifth among U.S. states in the number of jobs added behind Wyoming, Idaho, South Dakota and Nevada. Each of the state’s 25 metropolitan areas saw economic growth. Tech, hit with widespread layoffs last year, was the only sector that saw job losses in the state.

“Texas’ 2023 job growth exceeded expectations, pointing to the resiliency of the labor market,” said Luis Torres, Dallas Fed senior business economist.

There are other bright spots in the state’s economy, according to the Fed. Texas oil and gas production surpassed pre-pandemic peaks in 2023, Orrenius said, and the sector continues to add jobs.

Despite high interest rates, single-family home construction remained above pre-pandemic levels in 2023 — though building permits for single-family homes fell by more than 5%. Homebuilders are constructing smaller homes in order to keep costs down and ultimately provide less expensive buying options to homebuyers, Orrenius said.

Growth in apartment rents slowed in 2023 after years of significant increases in asking rents in the state’s major metros, Orrenius said — the result of an apartment building boom in the pandemic era. Rents fell last year in places such as Austin and the Dallas-fort Worth region that previously saw a surge in rents.