Texas factories are producing more.
Finding enough skilled workers to sustain that momentum may be the harder part.
Gov. Greg Abbott met Thursday with the Texas Jobs Council as state officials develop recommendations aimed at expanding pathways into high-demand occupations.
The meeting came just days after the Federal Reserve Bank of Dallas reported that Texas manufacturing activity accelerated sharply in September, with production, new orders, shipments, and employment all strengthening.
Abbott also signed a proclamation declaring October 2 through October 9 Manufacturing Week in Texas during Thursday’s Texas Jobs Council meeting.
The Governor’s Office said Abbott highlighted demand for electricians, pipe fitters, welders, plumbers, and truckers while arguing that Texas needs a larger pipeline of skilled employees to meet employer demand.
The challenge comes as Texas continues adding jobs and factory output accelerates, even while businesses report persistent obstacles to hiring.
Texas Factory Output Jumps
The latest numbers from the Dallas Fed show a substantial September acceleration.
The Texas Manufacturing Outlook Survey, released September 28, found that its production index jumped 13.4 points to 29.5, a reading the bank said was suggestive of a robust pace of output expansion.
Other measures strengthened as well.
The Dallas Fed results show the new-orders index increased to 30.7, the shipments index climbed to 24.8, and capacity utilization rose to 23.9.
Employment also strengthened.
The manufacturing employment index increased from 8.0 in August to 15.1 in September, according to the Dallas Fed.
The figures are diffusion indexes, not percentage growth rates. The Dallas Fed calculates them by subtracting the share of companies reporting a decrease from the share reporting an increase.
In September, 41.5% of responding manufacturers reported increased production, compared with 12% reporting a decline. About 26.5% reported increased employment, while 11.4% reported a decrease.
The Dallas Fed collected responses September 15 through September 23, with 63 of 113 surveyed Texas manufacturers responding.
Businesses Still Face Hiring Obstacles
Stronger factory activity does not mean employers have solved their workforce problems.
In July, 51.5% of Texas businesses surveyed said they were trying to hire workers, according to the Dallas Fed’s Texas Business Outlook Survey special questions.
Among businesses attempting to hire, the most commonly cited impediment was a lack of available applicants, reported by 47.5%. Nearly as many — 46.7% — said applicants were seeking more pay than employers were offering.
Another 39.3% cited a lack of technical or hard skills, while 35.2% reported applicants lacked sufficient experience.
Those figures help explain the focus of Abbott’s Texas Jobs Council.
The Governor’s Office says Abbott created the council in March to develop legislative recommendations as well as actions that could be implemented through executive or state-agency authority.
Council members have spent several months gathering input across Texas and are developing recommendations ahead of the 90th Texas Legislature.
According to the October 1 Governor’s Office announcement, early recommendations include creating clearer pathways into high-demand occupations, exposing students to career training earlier, and strengthening workforce readiness.
Not Just More Jobs — Different Jobs
The workforce issue is unfolding while technology reshapes other portions of the Texas labor market.
A September Dallas Fed analysis using millions of online job postings found early evidence that generative artificial intelligence is reducing demand for occupations whose tasks can increasingly be automated.
The same analysis reported that two-thirds of Texas firms surveyed in May were using artificial intelligence, up from 40% two years earlier.
That creates a changing labor-market picture.
Some tasks previously performed by workers can increasingly be handled by software, while employers continue seeking people for occupations that require hands-on technical skills, including many of the trades highlighted by the Jobs Council.
The Governor’s Office specifically cited demand for electricians, pipe fitters, welders, plumbers, and truckers during Thursday’s meeting.
Texas Still Adding Jobs — But Growth Has Slowed
Texas remains on track to add jobs in 2026, although employment growth has moderated.
The Dallas Fed’s September employment forecast projects Texas employment will grow 1.2% in 2026, which would translate into approximately 173,600 additional jobs and total employment of about 14.5 million by December.
Texas added approximately 18,500 jobs in August, according to the Dallas Fed.
But year-to-date job growth stood at about 1%, below the state’s long-run average of roughly 2%.
Dallas Fed senior business economist Luis Torres said first-quarter benchmark revisions lowered year-to-date employment growth to a pace more consistent with labor-supply constraints.
August job gains were broad-based and included professional and business services, construction, government, manufacturing, and leisure and hospitality, according to the Dallas Fed forecast.
Manufacturers Expect More Growth
Texas manufacturers remain broadly optimistic about future production.
The September manufacturing survey showed a future-production index of 40.3, with 48.8% of responding manufacturers expecting production to increase over the next six months and just 8.5% expecting it to decrease.
But stronger output is arriving alongside higher cost pressures.
The raw-materials price index rose to 52.2 in September, well above its historical average of 28.0, while the wages-and-benefits index climbed to 27.4, according to the Dallas Fed.
Across manufacturing and service-sector respondents, the Dallas Fed’s September special questions found Texas businesses expect wages to rise an average of 3.9% over the next 12 months and input prices to increase 4.6%.
Inflation remained businesses’ most frequently cited concern for the next six months, followed by geopolitical uncertainty and the level of demand.
Labor shortages, while still a concern for some businesses, were cited less frequently in September than in the previous survey.
Can Texas Train Workers Fast Enough?
Texas has attracted major manufacturing, energy, technology, and infrastructure investment, but additional investment creates demand for people capable of building, operating, and maintaining those projects.
The Texas Jobs Council is now tasked with developing recommendations intended to expand that labor pool.
The council’s early proposals include exposing students to career training sooner and creating clearer pathways into high-demand occupations, according to the Governor’s Office.
Those recommendations are expected to be included in a final report ahead of the next Texas legislative session.
The broader economic question is increasingly straightforward:
Can Texas develop skilled workers as quickly as employers need them?
The latest Dallas Fed numbers show manufacturing output accelerating sharply.
Whether the workforce can keep pace may help determine how long that momentum lasts.
