December 4, 2008

The Texas Workforce Commission (TWC) recently published second quarter 2008 Covered Employment and Wages data (CEW) along with updates to the first quarter. The CEW data are the basis for benchmarking the payroll employment data. TWC releases rebenchmarked payroll figures once per year, with the next update not scheduled until March 2009. For several years the Dallas Fed has estimated more up-to-date payroll employment figures by incorporating CEW data as they are released quarterly by TWC.

Benchmark Results
With the inclusion of the new CEW information, second quarter 2008 Texas payroll employment growth was revised down from an annual rate of 2.4 percent to 1.4 percent. The FRB Dallas benchmarking program has resulted in an average upward revision of 1.1 percentage points over the past 15 quarters. However, the pattern of consistent upward revisions, which became common during the long employment expansion, may have been broken. We have now seen the second consecutive downward revision. First-quarter growth was revised down from 2.6 percent to 1.8 percent. The only previous downward revision that occurred during the past 15 quarters was in third quarter 2007, although even then, private employment growth was revised up.

Texas employment growth in earlier quarters was revised only slightly. The FRB Dallas estimate of total Texas payroll employment growth for 2007 is 3.2 percent. The corresponding TWC figure is 2.5 percent, which, as we have pointed out, has not yet incorporated the latest CEW data. There will be little or no revision to pre-2008 growth rates until TWC’s official rebenchmarking is published in March 2009. If the past is any guide, the final official growth pattern will be similar to our early benchmarking efforts.

Recent Employment Performance
Texas payroll employment grew an annualized 1.5 percent during third quarter 2008. This compares with a decline of 1.4 percent in U.S. employment over the same period. Recalling that the Texas figure is still subject to benchmark revision, it is uncertain whether true employment growth over this period is likely to be higher or lower. The long spell of upward revisions has been broken. There is no guarantee that the next revision will also be negative, but the chances of that happening appear greater. When third quarter 2008 CEW data are published, most likely in February 2009, we will have a better sense of recent Texas employment performance.

—Franklin D. Berger