Texas Economic Indicators

The Texas economy expanded in February. Employment growth was solid, and sales tax revenue increased broadly. The March Texas Business Outlook Surveys showed continued expansion in wages and benefits across sectors. In mid-March, the rig count was stable, while energy prices were down from year-end 2024. Exports grew in January.

Labor market

Texas employment increases on par with trend growth

Texas employment grew an annualized 2.1 percent in February (25,000 jobs) after expanding a downwardly revised 1.7 percent in January. Year to date through February, employment rose 1.9 percent annualized, with significant job gains in oil and gas, leisure and hospitality, and construction—each growing more than 5.0 percent (Chart 1). Over the same period, U.S. payrolls rose 1.0 percent. The Dallas Fed’s Texas Employment Forecast in late March was for 1.9 percent growth in 2025 (December/December).

Payrolls rise in most major metros

In February, job gains were mixed across the major Texas metros (Chart 2). Dallas and Fort Worth led with increases of 2.4 percent and 3.3 percent, respectively. McAllen followed, rising 1.1 percent, while employment in both El Paso and San Antonio grew 0.3 percent. However, employment in Austin contracted 0.3 percent and fell 0.8 percent in Houston.

Texas Business Outlook Surveys

The Texas Business Outlook Surveys indicated modest wage growth in March (Chart 3). The manufacturing survey’s wages and benefits index was 16.0, little changed from its previous reading of 16.7. The service sector’s wages and benefits index dipped to 10.3. Both indexes were below their series averages, suggesting a continued modest pace of wage growth.

Sales tax revenue

In February, the three-month moving average of real Texas sales tax collections grew 1.8 percent (Chart 4). Moreover, sales tax collections grew in all major metros but San Antonio. The three-month moving average of sales tax collections rose strongly in Houston at 5.2 percent followed by Austin at 0.4 percent and DFW at 0.2 percent, while San Antonio’s average contracted 1.6 percent. Texas sales tax collections were up 8.3 percent in February compared with the same month last year.

Exports

In January, Texas exports grew 1.2 percent, and the three-month moving average rose 2.0 percent (Chart 5). Smoothed exports from the rest of the U.S. contracted 0.5 percent. Likewise, the three-month moving average of Texas exports to China increased 7.6 percent, while exports to the rest of Asia were up 3.2 percent. Texas exports to Mexico, the state’s largest trading partner, expanded 2.7 percent, but exports to the rest of Latin America dipped 1.0 percent.

Energy

Oil prices ticked up in mid-March after declining earlier in the year (Chart 6). As of the week ending March 21, West Texas Intermediate crude oil was $67.96 per barrel—$2.55 lower than year-end 2024. Natural gas (Henry Hub) declined $1.21 to $4.14 per million British thermal units over the same period. The number of active rigs in Texas was little changed at 280 the week ending March 28.