Texas Still Set to Add Over 240,000 Jobs This Year, Fed Forecast Finds

State Employment to Climb Despite Midyear Slump; 244,600 New Jobs Expected in 2025

Texas job growth is expected to continue at a moderate pace in 2025 following a rare midyear decline, according to the Texas Employment Forecast released July 18 by the Federal Reserve Bank of Dallas. The report projects a 1.7% increase in statewide employment for the year, with a forecasted addition of 244,600 jobs, bringing the Lone Star State’s employed population to an estimated 14.5 million by the end of the year. The analysis follows a sharp drop in job creation last month and signals mounting caution about economic momentum amid mixed signals from energy, business services, and broader financial markets.

June Surprise

The most immediate story in the report is June’s unexpected reversal in job trends. Texas employment fell by an annualized 1.3% last month, marking the first such decline in over a year. The state shed 15,500 jobs, with layoffs hitting hardest in the oil and gas sector and among professional business services. In contrast, only the information, education, and health services, as well as the government sector, posted job gains in June. Notably, major metropolitan regions also suffered job losses, with the exception of San Antonio, which bucked the trend by adding positions.

“Employment fell in June for the first time in a year, with the state losing 15,500 jobs. With the slowing, job growth in the first half of 2025 now stands at 1.8 percent, just below its long-term trend of 2.0 percent,” said Jesus Cañas, Dallas Fed senior business economist. “June declines were largely broad based across sectors, led by cuts in the oil and gas and professional business services sectors. The only sectors that added jobs last month were information services, education and health, and government. Additionally, employment fell in all major Texas metros except San Antonio,” he added.

Texas Leading Index Signals Caution

The Dallas Fed’s Texas Leading Index—a metric aggregating key economic variables including oil well permits, weekly hours, real oil prices, stock market indicators, and new unemployment claims—declined over the three months through June. Most components fell, led by the U.S. leading index and the slumping Texas Stock Index. Drops in well permits, shorter average workweeks, falling oil prices, and higher layoffs all contributed to the overall negative tilt. The only bright spot was a decline in the Texas value of the dollar, which lent slightly positive momentum amid an otherwise downbeat picture.

A Blend of National and State Indicators

The Dallas Fed’s forecast utilizes four distinct models, which blend current and historical trends in U.S. gross domestic product, oil futures, and regional employment and financial data. It incorporates the latest projections and real-time indicators such as WTI oil prices, national forecasts from Blue Chip Economic Indicators, and the state’s experience during the COVID-19 pandemic. The goal is to provide stakeholders—from policymakers to private companies—with a yearly roadmap that is regularly updated as new data becomes available.

Texas Still Growing, but at a Slower Clip

Despite last month’s contraction, Texas remains on track to outpace parts of the nation, even if job growth trends have softened. For the first half of 2025, employment growth stands at 1.8%, just below the state’s long-term average of 2.0%. The Dallas Fed’s projection of 1.7% for the full year falls within an 80% confidence interval of 1.3% to 2.1%, reflecting the inherent uncertainty due to ongoing volatility in energy markets and the broader U.S. economy.

The state’s labor market, though battered in June, had posted decent gains earlier in the spring. May’s employment growth was revised down to 2.1%, underscoring the variability and challenging conditions Texas employers and workers now face.

Sectors Under Scrutiny

June’s reversal revealed weaknesses in industries long considered Texas mainstays. Oil and gas, typically a bellwether for state prosperity, saw the steepest job cuts as sliding prices and fewer drilling permits led to reduced hiring. Professional and business services—an engine of white-collar employment in major metros—also suffered, reflecting broader unease among companies about the national and state outlook.

The only clear exceptions were found in a handful of resilient fields. Information services, including technology and telecommunications, as well as education and health, which benefit from strong population growth, and the government, posted net employment rises in June. Together, these gains were not enough to offset broader losses.

Major Metros

While Houston, Dallas–Fort Worth, and Austin logged job declines, San Antonio stood out as the lone bright spot among large urban centers, recording an increase in employment even as hiring slowed across the state. The city’s resilience is attributed in part to its diversified economy and strong public sector, but experts warn that continued sluggishness at the state level could eventually dampen even the most buoyant metropolitan areas.

Forward-Looking Uncertainty

The Dallas Fed report links Texas’s employment prospects to broader national and international factors—from the pace of U.S. GDP growth to the shape of oil markets and continuing headwinds in global trade. The employment projection explicitly incorporates forecasts for U.S. economic growth and oil prices, which remain uncertain amid ongoing geopolitical tensions and shifting demand.

Analysts caution that the state’s short-term fortunes are particularly sensitive to oil, a sector known for wild swings. Recent declines in well permits, weekly hours, and real oil prices all underscore the risks ahead.

“Mixed Signals” and the Road Ahead

Despite Texas’s formidable economic reputation, the message from the Dallas Fed is one of cautious optimism. The expected addition of nearly a quarter of a million jobs—on a base of over 14 million—signals growth but not the boom years of the past.

"The Texas labor market weakened broadly in June," summarized Cañas, emphasizing the need to watch for further signs of slowing or turnaround in the second half of the year.

With the state’s leading index trending downward and most major indicators flashing caution, policymakers and businesses are bracing for potential continued volatility.

Monitoring the Jobs Engine

The Dallas Fed will release its next forecast update on August 15, 2025, with policymakers and employers alike awaiting new data for clearer signals on the trajectory heading into the fall. Upcoming releases are likely to focus on labor force participation, wage pressures, and sectoral shifts as employers adapt to changing economic conditions.

Meanwhile, the current forecast provides a grounded view of where Texas stands in 2025: still adding jobs, still a key player in the national economy, but increasingly vulnerable to both cyclical slowdowns and structural shifts that demand careful monitoring from business leaders and lawmakers alike.