Texas job growth is cooling to 1.2% as labor constraints tighten, with the Dallas Fed warning that lower oil prices and a softer stock index are weighing on the state's broader economic outlook.
Lower oil prices were cited as a drag on the Texas Leading Index, indicating bearish sentiment for crude oil.
The Texas Stock Index declined over the three months ending in August, reflecting softer economic conditions in the state.
The Dallas Fed projects Texas employment growth will decelerate to 1.2% in 2026, adding 173,600 jobs as labor supply constraints replace demand as the primary hiring bottleneck. While August saw a rebound of 18,500 jobs, the state's Leading Index remains pressured by lower oil prices and a cooling Texas Stock Index, signaling potential headwinds for commercial real estate absorption.
The slowdown is primarily attributed to labor supply constraints rather than a lack of demand, meaning the market is struggling to find workers to fill available roles.
The index is being dragged down by lower crude oil prices, reduced average weekly hours, and weakness in the Texas Stock Index.