Fiona Sigalla

English

Research Papers in Economics

RegionalUpdate
exas’ unemployment rate has hovered
around 5 percent since the start of the year—
the lowest reading since the state fell into
recession in 2001. Labor force growth has
been relatively strong, but enough new jobs
have been created to absorb the increase in
workers. 
Since Texas’ recession ended in July
2003, state job growth has exceeded the
nation’s as a whole by 0.8 percentage point a
year. The gap breaks down this way: 0.7 per-
centage point comes from Texas firms
expanding faster than their U.S. counterparts,
and 0.1 percentage point owes to Texas’
slightly larger share of fast-growing industries.
Overall, job growth numbers don’t seem
to show a strengthening labor market. Initial
reports indicate Texas employment rose at an
annualized rate of 1.8 percent for the first five
months—weaker than last year’s 3.1 percent
rate.
Anecdotal reports, however, suggest the
2006 data have understated job growth, mak-
ing it likely that the figure will be revised
upward. During periods of recovery, initial
employment estimates are generally revised
up. For example, for the five quarters ending
in fourth quarter 2005, the average upward
revision has been 1.2 percentage points.
Forecasts indicate Texas job growth for
2006 is likely to come in around 3 percent. 
Additional evidence of the state’s eco-
nomic health can be found in the Dallas Fed’s
Texas Leading Index, which continues to sig-
nal expansion. The index’s recent rise has
been the result of increases in average week-
ly hours worked, the help-wanted index and
oil prices, as well as a drop in new unem-
ployment claims. 
Construction activity is still strong.
Homebuilding remains at high levels.
Existing-home sales are healthy, despite a
cooling in the Dallas–Fort Worth area, partic-
ularly for lower-priced homes. 
Nonresidential construction picked up in
recent months. In April, nearly half of Beige
Book contacts reported they had started or
planned to start major construction projects in
2006. Most firms said this year’s construction
spending was higher than last year’s.
Texas Still Enjoying Economic Health
T
FEDERAL RESERVE BANK OF DALLAS • MAY/JUNE 2006             SouthwestEconomy 15
Capacity constraints are limiting growth
in a few industries. The energy sector, for
example, has been robust, but it faces short-
ages of rigs, equipment and skilled labor. Oil
service firms report growing backlogs of
unfinished work, and they are turning down
jobs they can’t schedule.
In addition, some manufacturing and
service sectors are being crimped by short-
ages of skilled labor. Some contacts report dif-
ficulties in finding entry-level workers who
meet basic qualifications, such as background
checks and drug tests.
Some Texans may be facing financial
strain. Gasoline prices have jumped sharply
this year, driven up by rising crude oil prices
and new regulatory requirements. Beige
Book contacts in April and June reported that
retail sales have been weakest among low-
income consumers, who are spending a larg-
er share of their disposable income on high
utility and gasoline bills.
—Fiona Sigalla
2006 dollars per gallon
Real Gasoline Prices Approach All-Time Highs 
Texas Unemployment Rate at Post-Recession Low
Percent*
Net Contributions to Changes in Texas Leading Index
Percent*
Texas Usually Outpaces U.S. Employment Growth 
Texas
U.S.
*Total nonfarm employment, December-over-December, seasonally adjusted, annualized rate.
  2006 figure is year-to-date, annualized.
*Seasonally adjusted.
February–April 2006 
–2
–1
0
1
2
3
4
5
’06 ’05 ’04 ’03 ’02 ’01 ’00 ’99 ’98 ’97 ’96 ’95 ’94 ’93 ’92 ’91 ’90
3.5
4
4.5
5
5.5
6
6.5
7
7.5
8
Texas
U.S.
’06 ’05 ’04 ’03   ’02 ’01 ’00 ’99 ’98 ’97 ’96 ’95 ’94 ’93 ’92 ’91 ’90
1
1.2
1.4
1.6
1.8
2
2.2
2.4
2.6
2.8
3
3.2
’06 ’03 ’00 ’97 ’94 ’91 ’88 ’85 ’82 ’79 Percent 
–.5 –.25 0 .25 .5
Average weekly hours
Help-wanted index
Texas Stock Index
New unemployment claims
Well permits
Real oil price
U.S. leading index
Texas value of the dollar
Net change in leading index .44
.13
.15
.28
.11
.18
–.33
–.05
–.03

Regional update : Texas still enjoying economic health

http://dallasfed.org/assets/documents/research/swe/2006/swe0603g.pdf

Regional update : Texas still enjoying economic health

Abstract

Similar works

Full text

Available Versions

Research Papers in Economics