DALLAS FED: TEXAS EMPLOYMENT FORECAST SLOWS SLIGHTLY

The following information was released by the Federal Reserve Bank of Dallas:

The Texas Employment Forecast released by the Federal Reserve Bank of Dallas indicates jobs will increase 1.8 percent in 2026, with an 80 percent confidence band of 1.2 to 2.4 percent.

The forecast is based on an average of four models that include projected national GDP, oil futures prices, and the Texas and U.S. leading indexes.

Texas employment growth slowed slightly in April, pushing down year-to-date growth to 1.5 percent, said Luis Torres, Dallas Fed senior business economist. The slower pace of job growth is more aligned with expectations that the increases in 2026 will be close to the lower end of the forecasts confidence band, around 1.2 percent. This is due to two primary headwinds: immigration constraining labor supply, and higher productivity suppressing labor demand in some sectors. Additionally, our Texas Business Outlook Surveys suggest heightened geopolitical uncertainty due to the Iran War is weighing on hiring and capital expenditure decisions. Meanwhile, high oil prices are still expected to provide a boost to state economic activity, but only to the extent they are sustained.

Job gains in April were strongest in professional and business services, followed by construction and trade and transportation services. However, leisure and hospitality, financial services and manufacturing registered the biggest job losses, Torres added.

Additional key takeaways from the latest Dallas Fed report:

The forecast suggests 253,000 jobs will be added in the state this year, and employment in December 2026 will be 14.6 million.

Texas employment grew an annualized 1.6 percent in April. March job growth was 3.4 percent, which was revised down.

In April, the unemployment rate, which takes into account changes in the total labor force along with other factors, increased in each of the major metro areas including AustinRound Rock, BrownsvilleHarlingen, DallasPlanoIrving, El Paso, Fort WorthArlington, HoustonThe WoodlandsSugar Land, and San AntonioNew Braunfels, according to seasonally adjusted numbers from the Dallas Fed.

The Texas statewide unemployment rate was unchanged at 4.3 percent in April.