Texas Economic Indicators

The Texas economy continues to expand modestly. Employment growth was sluggish in July, and initial unemployment insurance claims ticked up in early August. The August Texas Business Outlook Surveys showed a moderate pace of expansion in wages and benefits. Exports ticked down in June and retail sales flattened in July.

Labor market

Payrolls expand modestly in July

Texas employment grew an annualized 0.9 percent in July (10,358 jobs) after falling 1.6 percent in June. Year-to-date employment grew an annualized 0.9 percent, ahead of the country’s 0.6 percent growth (Chart 1). Construction and education and health grew above 2 percent, with oil and gas, manufacturing, and professional services declining. The Dallas Fed’s Texas Employment Forecast is for 1.5 percent growth in 2025 (December/December).

Unemployment insurance claims tick up

Weekly initial unemployment claims ticked up in early August yet remained significantly below January 2022 levels (Chart 2). New unemployment claims trended up to 15,040 in Texas and to 224,000 in the U.S. as of the week ending Aug. 9. The Texas unemployment rate held steady at 4.0 percent in July, while the nation’s unemployment rate ticked up to 4.2 percent.

Texas Business Outlook Surveys

The Texas Business Outlook Surveys indicated average expansion in wages in August. The Texas Manufacturing Outlook Survey wages and benefits index rose to 15.4, but remained below its series average of 21.0 (Chart 3). The Texas Service Sector Outlook Survey wages and benefits index rose to 15.7, in line with its series average of 15.6.

Exports

In June, the three-month moving average of Texas exports declined 0.6 percent, while exports from the rest of the U.S. were flat (Chart 4). The three-month moving average of Texas exports to China plummeted 7.8 percent and to Asia (excluding China) fell 4.7 percent. Exports to Mexico, the state’s largest trading partner, dipped 1.9 percent and exports to Latin America (excluding Mexico) were down 1.3 percent. Higher tariffs are partly driving the recent declines in export activity.

Consumer spending

Texas sales and use tax collections edged up 0.2 percent, reaching $5.3 billion in July (Chart 5). Statewide sales tax collection was just 0.7 percent below its May 2025 peak. Compared to a year ago, inflation-adjusted sales tax collections were up 3.6 percent, indicating growing consumer spending.