What is OKC's employment outlook for 2023?

Editor's note: This is an excerpt from the recently released 2023 Greater Oklahoma City Economic Outlook. 

READ THE FULL 2023 GREATER OKLAHOMA CITY OUTLOOK 

READ THE 2023 GREATER OKLAHOMA CITY OUTLOOK OVERVIEW

LOOK BACK AT 2022'S BIGGEST RELOCATIONS AND EXPANSIONS

Oklahoma City Employment Outlook

Oklahoma City’s economic identity has shifted away from manufacturing over the last twenty-five years. Employment in the industry peaked at more than 55,000 jobs in 1999.

Firm exits and a persistent shift to capital instead of labor in manufacturing have decreased the city’s reliance on manufacturing. Before the onset of the pandemic, manufacturing employment was 34,500. As the pandemic set in, manufacturing employment declined as production was disrupted. Oklahoma City is on pace to regain its pre-pandemic level of manufacturing employment by the end of 2022, with 4.7% growth from the year before.

Current projections see 0.8% gains in 2023, with considerable downside risk to that expectation. We expect it to be a challenge to add to this level and falling consumption and economic weakness will move into the economy in 2023. In the longer run, we see considerable opportunities in the sector as onshoring supply chain activities from abroad will increase demand from the domestic sector.

While strength will be more challenging in 2023, it will most likely be found in the city’s services sectors. Population gains, in-migration, and income gains in the recovery of the pandemic will support demand for healthcare services even as the economy weakens. Discretionary healthcare consumption may yield economic weakness, but overall, we expect gains in the sector and a continuing challenge for providers in finding skilled applicants for job postings. Healthcare employment will end in 2022, up 5.5% from the year-end of 2021. While the pace of growth will slow through 2023, it will remain relatively strong, with 2.6% growth in 2023 and 2.5% growth in 2024 on a Q4/Q4 basis.

In contrast to the healthcare sector, we do not expect the leisure and hospitality sector to carry 2022 strength into the outlook period. Households emerged from the pandemic f lush with cash and balance sheets supported by wealth gains. Combined with a relative lack of leisure opportunities during the pandemic, pent-up demand was released, and firms scrambled to staff back up to meet demand. Oklahoma City leisure and hospitality employment will post 3.9% gains in 2022 over the fourth quarter of 2021.

These gains will nearly return employment in the sector to pre-pandemic levels. Much of the industry’s spending is discretionary and will be challenging to support in 2023. We anticipate a difficult year, particularly in the food services and recreation categories, in 2023, leading to a mostly flat year in 2023.

If the economy can regain its footing heading into 2024, we expect upside gains over the flat growth scenario presented in the outlook. Like the healthcare sector, leisure and hospitality services will grow with population and income growth.

Oklahoma City trade, transportation, and utilities employment have experienced strong growth in recent years, particularly from the utilities and wholesale trade categories. Strength in wholesale trade has subsided, while strength in transportation and utilities will carry through 2023 and into 2024. The largest category remains retail employment which will follow usual seasonal patterns but with lower peaks in 2023 as households constrain spending in the face of persistent inflation and falling savings. We expect strong growth in 2022 of 3.9% to soften in 2023 with Q4/Q4 growth of 1.2%. Record credit card debt and much higher interest costs will limit consumers’ ability to support consumption through credit.