The Federal Reserve Bank of Dallas is projecting the state will add 278,400 jobs in 2026, a 1.9% gain that would lift total employment to 14.6 million by December.
The Texas Employment Forecast carries an 80% confidence band of 1.1% to 2.7%. It is based on an average of four models that factor in projected U.S. gross domestic product, oil futures prices, and leading economic indexes for Texas and the nation.
“Texas employment growth strengthened notably in December and January, contributing to an increase in the employment forecast for 2026,” said Dallas Fed senior business economist Luis Torres. “However, our expectations are for Texas employment growth in 2026 to be more in line with the lower end of the confidence band at 1.1%, given several headwinds.
“Declining immigration is constraining labor supply, higher productivity is suppressing labor demand, business activity captured by our Texas Business Outlook Surveys recently moderated, and geopolitical uncertainty is elevated. High oil prices, meanwhile, are expected to boost state economic activity only if they are sustained.”
Torres added that in January, job gains were observed across several sectors, led by construction, leisure and hospitality, education and healthcare services, and professional and business services. Meanwhile, there were job losses in government, financial services, manufacturing, and information services.
Among major Texas metros, Austin and San Antonio posted the fastest employment growth at 5.9%, followed by Dallas at 4.8%, El Paso at 4.4 %, Houston at 4.1%, and Fort Worth at 2.9%.
Statewide employment grew at a 2.3% annualized pace in January, adding 27,000 jobs, after a revised 2.2% gain in December.
Unemployment rates on a seasonally adjusted basis rose in the Austin-Round Rock and San Antonio-New Braunfels metros in January, but fell in the Brownsville-Harlingen metro. Rates held steady in Dallas-Fort Worth, El Paso, and Houston. The statewide rate remained at 4.3%.
The outlook follows uneven national trends. The U.S. labor market lost 92,000 jobs in February, pushing the unemployment rate to 4.4% from 4.3%, with health care shedding 28,000 positions amid strike activity.
Hiring rebounded in March with 178,000 jobs added, including 76,000 in health care after the strikes ended, along with gains of 26,000 in construction and 21,000 in transportation and warehousing. Federal employment declined by 18,000.
The Texas Leading Index rose over the three months ending in January. Most components increased, including the help-wanted index, the Texas stock index, and average weekly hours, while new unemployment claims and the Texas value of the dollar declined. Offsetting factors included declines in real oil prices, well permits, and the U.S. leading index.