Page 16 - NBIZ Magazine April 2024

Demand Expectations Improve
Texas firms’ demand expectations are more bullish so far this year than they were at year-end 2023.
More than half of companies surveyed expect demand to increase over the next six months, up from 38
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percent in November 2023 (Chart 3).
Among manufacturing firms, those in JOIN THE HEA SUCCESS.
chemicals, food, and fabricated metals were
most optimistic, while computer and electron-
ics and transportation equipment companies’
expectations receded from November levels.
In the service sector, expectations increased
most among health care, financial activities
and transportation services firms, while
lagging in retail and leisure and hospitality.
Additionally, the Bureau of Labor
Statistics Job Openings and Labor Turnover
Survey (JOLTS), a proxy for demand-driven
activity, showed job vacancies still elevated
in Texas at 781,000 in January, though the
total reflected the second consecutive monthly
decline. The January JOLTS job openings
rate of 5.3 percent significantly exceeded its
pre-pandemic average of 4.0 percent.

Texas Firms Rely on Domestic, International Migrants for Labor Needs
Labor shortages have receded among Texas firms. Labor force growth—including from domestic and
international migration—has played a significant role. About 30 percent of Texas firms have relied on
hiring workers who moved to Texas from a dif-
ferent U.S. state, while 15 percent did so with
workers who relocated from another country
over the past year, as indicated in the February
TBOS special questions.
Large firms (more than 500 employees)
tended to rely more on migrants than smaller
firms. About 42 percent of large firms
depended on domestic migrants compared
with 28 percent of small firms; 26 percent of
large firms relied on international migrants
compared with 14 percent of small firms.
Over the past year, service sector firms have
drawn more on domestic migration, while
manufacturing companies have turned to
workers from outside the U.S. (Chart 4).

Outlook Points to Above-trend Growth in 2024
The Texas economy was forecasted to slow this year to its trend job growth of about 2 percent. However,
the most recent data have surprised to the upside, and the forecast lifted to 2.5 percent in March.
Overall, Texas economic growth remains healthy and is expected to outpace the nation, as it typically
does. The risks to the outlook are mixed. High inflation at the national level may keep interest rates
high, curbing growth. Conversely, a more positive outlook among our survey contacts may portend
greater-than-expected expansion. N

Jesus Cañas is a senior business economist in the Research Department at the Federal Reserve Bank
of Dallas. Diego Morales-Burnett is a research analyst in the Research Department at the Federal
Reserve Bank of Dallas. The views expressed are those of the authors and should not be attributed to
the Federal Reserve Bank of Dallas or the Federal Reserve System.

16 NBIZ ■ APRIL 2024