Texas still expected to add 264K jobs this year despite worker shortages, Dallas Fed says

Texas is still on track to add more than 264,000 jobs in 2026, even as businesses face a smaller pool of available workers and hiring slows from the rapid pace seen in recent years.

A new Texas Employment Forecast released June 22 by the Federal Reserve Bank of Dallas projects the state’s job count will grow by 1.8% this year, adding about 264,300 jobs and bringing total employment to 14.6 million by December.

The forecast comes as many employers continue looking for workers in a labor market that has become more challenging than in previous years.

“Texas employment growth decelerated in May, and state year-to-date job growth remains at 1.6%, below its long-run average of 2%,” said Luis Torres, senior business economist at the Dallas Fed.

Even so, Torres said Texas has added jobs faster than economists expected.

“Texas job growth has been stronger than expected in light of immigration policies constraining labor supply and higher productivity suppressing labor demand in certain sectors,” he said.

In simple terms, there are fewer workers available in some industries, while advances in technology and productivity are allowing certain businesses to do more work without hiring as many people.

Texas employers added 14,400 jobs in May. While that was slower than earlier in the year, hiring remained positive across several major industries.

The biggest job gains came in trade and transportation, which includes warehousing, trucking and distribution businesses. Leisure and hospitality, which includes restaurants and hotels, also added jobs, along with the construction industry.

Government agencies, manufacturers and oil and gas companies reported hiring gains as well.

Not every sector grew. Professional and business services lost jobs in May after several months of growth. Education and health services, financial services and information services also reported declines.

The Dallas Fed said higher oil prices earlier this year helped support hiring in the energy industry. However, falling oil prices in recent weeks could slow some of that momentum.

The state’s leading economic index, which economists use to help predict future growth, was unchanged during the three months ending in May. Some indicators improved, including job postings and drilling permits, while others weakened, including unemployment claims and average hours worked.

Overall, the forecast suggests Texas employers will continue adding jobs through the rest of the year, although at a slower pace than the state has historically experienced.

The Dallas Fed will release its next Texas Employment Forecast on July 17.