Texas Employment Forecast

The Texas Employment Forecast indicates jobs will increase 1.5 percent in 2025, with an 80 percent confidence band of 1.1 to 1.9 percent. The forecast is based on an average of four models that include projected U.S. gross domestic product, oil futures prices and the Texas and U.S. leading indexes. The forecast implies 208,300 jobs will be added in Texas this year, and employment in December 2025 will be 14.4 million (Chart 1). Growth for the remainder of the year is expected to be 1.3 percent.

Texas employment grew at an annualized 0.9 percent rate in July, adding 10,500 jobs. Additionally, June employment growth was revised downward to negative 1.6 percent.

“Employment growth seems to be softening and is on a slower trajectory for the second half of the year. With employment growth decelerating, year-to-date job growth is 1.6 percent, below its long-term trend of 2.0 percent,” said Luis Torres, Dallas Fed senior business economist. “Manufacturing and oil and gas employment are leading the slowdown in state employment after registering two straight months of contraction. Employment in education and health services, which had been growing at a solid pace, reversed course and fell in July. The remaining sectors recorded job gains. San Antonio led the pack among major Texas metro areas, while employment in Houston declined for a third straight month,” he added.

The Texas Leading Index increased over the three months through July (Chart 2). Changes in the components were mixed; decreases in the Texas value of the dollar and new unemployment claims and increases in average weekly hours and the help-wanted index were positive contributors. Declines in the U.S. leading index, Texas stock index, well permits and the real oil price dragged on the index.

Next release: September 19, 2025

Methodology

The Dallas Fed’s Texas Employment Forecast projects job growth for the calendar year and is estimated as the 12-month change in payroll employment from December to December.

The forecast is based on the average of four models. Three models are vector autoregressions for which Texas payroll employment is regressed on the lags of West Texas Intermediate (WTI) oil prices, the U.S. leading index and the Texas Leading Index. The fourth model is an autoregressive distributed lag model with regression of payroll employment on lags of payroll employment, current and lagged values of U.S. GDP growth and WTI oil prices, and Texas COVID-19 hospitalizations through March 2023. Forecasts of Texas payroll employment from this model also use forecasts of U.S. GDP growth from Blue Chip Economic Indicators and WTI oil price futures as inputs. All models include four COVID-19 dummy variables (March–June 2020).

For additional details, see dallasfed.org/research/forecast/.