The Texas economy is expected gain more momentum this year and add hundreds of thousands of jobs as the energy and manufacturing sectors rebound amid higher oil prices, according to a forecast by the Federal Reserve Bank of Dallas.
The forecast, released Tuesday, coincided with another jump in crude prices to nearly $63 a barrel amid growing optimism in energy markets that supplies are tightening after a three-year oil glut. The Energy Department, meanwhile, predicted that U.S. oil production, centered in West Texas, will soon exceed 10 million barrels a day for the first time ever as energy demand reaches record levels.
“The Texas economy is firing on all cylinders going into 2018,” said Dallas Fed senior economist Keith Phillips.
The state’s economy is forecast to grow 3 percent this year, accelerating from 2.5 percent in 2017, and add some 366,000 jobs, up from an estimated 306,000 jobs in 2017, according to the Dallas Fed. In Houston, economic growth also is expected to accelerate, with the metropolitan area projected to add some 75,000 jobs in 2018 if crude prices stay above $60 a barrel.
The state and local economies have picked up speed in recent months as the region began rebuilding from Hurricane Harvey and oil prices climbed toward $60 a barrel from their June low of about $43 a barrel. The state unemployment rate fell to a record low of 3.8 percent in November; in Houston, unemployment slid to 4.3 percent, down nearly a percentage point from the 5.2 percent the previous year, according to the Labor Department.
The key factor in the state’s improving outlook has been the recovery of its most important industry, energy, after the brutal oil bust that began more than three years ago. Texas drillers have steadily put more rigs into operation over the past year, increasing the state’s rig count by nearly 40 percent to 454, according to the Houston oil field services company Baker Hughes.