Texas’ high-tech sector grew modestly in second quarter 2006. According to the data released by the Texas Workforce Commission and seasonally adjusted by the Dallas Fed, overall high-tech employment rose by 1,100 jobs (1.5 percent annualized growth) in the second quarter (see table). Year-to-date, employment in the sector is up by 2,400 jobs—a 1.6 percent annualized increase. Moreover, high-tech venture capital investment increased sharply during the second quarter.

High-tech manufacturing in Texas continued to contract in the second quarter (Chart 1). The sector lost 800 jobs between March and June as employment gains in communications equipment manufacturing (300) were outpaced by job losses in computer and peripheral equipment manufacturing (-200) and semiconductor manufacturing (-900) (Chart 2). Despite the overall job decline, anecdotal reports suggest that Texas high-tech output continues to grow, and demand for most devices is strong.

Chart 1

Chart 2

Texas high-tech service firms performed better during the quarter, posting a gain of 1,900 jobs (Chart 3). Employment in computer systems design services—the second largest industry in Texas’ high-tech sector—grew strongly, adding 4,300 jobs. The telecommunications sector, which was the hardest hit during the tech downturn, reduced payrolls by 1,400 jobs, and Internet service provider and data processing employment fell by 1,000 jobs.

Chart 3

—Laila M. Assanie

Note All data are seasonally adjusted by the Federal Reserve Bank of Dallas. For more information on the necessity of seasonally adjusting economic data, see DataBasics, “Seasonally Adjusting Data.”