Texas led country in new jobs in 2022 as state’s unemployment rate fell below 4%

Downtown Austin in September. (Credit: Callie Richmond for The Texas Tribune)

Texas led the country in new nonfarm jobs last year, according to a Tuesday report from the Bureau of Labor Statistics.

The state’s employers added 650,100 nonfarm payroll jobs — a 5% jump — between December 2021 and December 2022, according to the report. This rise surpassed that of California and Florida, which added 621,400 and 440,000 jobs, respectively. In total, 13.7 million Texans were in nonfarm jobs at the end of 2022 compared to about 13 million at the end of 2021.

The report continues a stream of strong economic indicators for Texas. According to a previous report from the Texas Workforce Commission, the state continued a 14-month streak of record employment in December. And the state’s unemployment rate dropped to 3.9%, the first time it fell below 4% since the forced business closures at the onset of the coronavirus pandemic.

Texas employers added 29,500 nonfarm jobs in December, according to the TWC. Positions in education and health care accounted for over 40% of that figure with 12,700 positions, leading last month’s job growth. Financial services and manufacturing also added 6,300 and 5,500 jobs respectively.

“It is no surprise that Texas leads the nation for job creation, adding more jobs in 2022 and growing at a faster rate than any other state,” Gov. Greg Abbott said in a Tuesday press release. “Texas works when Texans work, and in this legislative session, we will continue expanding opportunity and ensuring Texas remains the best state to live, work, build a business, and raise a family.”

But economists at the Federal Reserve Bank of Dallas have noted since September that Texas is seeing an economic slowdown, most recently citing the softening growth in jobs, manufacturing output and inflation in the state. For comparison, the state added 40,000 jobs in September — almost 1.4 times higher than December’s figure.

“It's still good job growth, and it's more in line with our ability to fill these jobs,” said Pia Orrenius, a senior economist at the Dallas Fed.

For 2023, Orrenius expects Texas to see “significantly slower” job growth, but it would likely still be faster than the rest of the country. At the same time, she said the Dallas Fed has not yet forecast a recession in Texas for this year — though she acknowledged that the economic downturn could still come in the second half of the year or in early 2024.

Texas Comptroller Glenn Hegar has previously told The Texas Tribune that he is expecting a “relatively shallow and short” recession for the state in 2023, but he cautioned that the Federal Reserve’s effort to temper inflation nationally could heighten the recession. Inflation in Texas is coming down month over month — but the figure is still “a really high number” year over year, according to Orrenius.

“A soft landing is what we’re seeing for Texas in 2023,” she said.