\n Stronger Texas Factory Activity Meets A Slower Statewide Job Market | Image by Canva <\/p>\n
Texas factories are producing more.<\/p>\n
Finding enough skilled workers to sustain that momentum may be the harder part.<\/p>\n
Gov. Greg Abbott met Thursday with the Texas Jobs Council as state officials develop recommendations aimed at expanding pathways into high-demand occupations.<\/p>\n
The meeting came just days after the Federal Reserve Bank of Dallas reported that Texas manufacturing activity accelerated<\/a> sharply in September, with production, new orders, shipments, and employment all strengthening.<\/p>\n Abbott also signed a proclamation declaring<\/a> October 2 through October 9 Manufacturing Week in Texas during Thursday\u2019s Texas Jobs Council meeting.<\/p>\n The Governor\u2019s 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.<\/p>\n The challenge comes as Texas continues adding jobs and factory output accelerates, even while businesses report persistent obstacles to hiring.<\/p>\n Texas Factory Output Jumps<\/p>\n The latest numbers from the Dallas Fed show a substantial September acceleration.<\/p>\n The Texas Manufacturing Outlook Survey, released September 28, found<\/a> 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.<\/p>\n Other measures strengthened as well.<\/p>\n The Dallas Fed results show<\/a> the new-orders index increased to 30.7, the shipments index climbed to 24.8, and capacity utilization rose to 23.9.<\/p>\n Employment also strengthened.<\/p>\n The manufacturing employment index increased<\/a> from 8.0 in August to 15.1 in September, according to the Dallas Fed.<\/p>\n 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.<\/p>\n 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.<\/p>\n The Dallas Fed collected responses September 15 through September 23, with 63 of 113 surveyed Texas manufacturers responding.<\/p>\n Businesses Still Face Hiring Obstacles<\/p>\n Stronger factory activity does not mean employers have solved their workforce problems.<\/p>\n In July, 51.5%<\/a> of Texas businesses surveyed said they were trying to hire workers, according to the Dallas Fed\u2019s Texas Business Outlook Survey special questions.<\/p>\n Among businesses attempting to hire, the most commonly cited impediment was a lack of available applicants, reported by 47.5%. Nearly as many \u2014 46.7% \u2014 said applicants were seeking more pay than employers were offering.<\/p>\n Another 39.3% cited a lack of technical or hard skills, while 35.2% reported applicants lacked sufficient experience.<\/p>\n Those figures help explain the focus of Abbott\u2019s Texas Jobs Council.<\/p>\n The Governor\u2019s Office says Abbott created<\/a> the council in March to develop legislative recommendations as well as actions that could be implemented through executive or state-agency authority.<\/p>\n Council members have spent several months gathering input across Texas and are developing recommendations ahead of the 90th Texas Legislature.<\/p>\n According to the October 1 Governor\u2019s Office announcement<\/a>, early recommendations include creating clearer pathways into high-demand occupations, exposing students to career training earlier, and strengthening workforce readiness.<\/p>\n Not Just More Jobs \u2014 Different Jobs<\/p>\n The workforce issue is unfolding while technology reshapes other portions of the Texas labor market.<\/p>\n A September Dallas Fed analysis<\/a> using millions of online job postings found early evidence that generative artificial intelligence is reducing demand for occupations whose tasks can increasingly be automated.<\/p>\n The same analysis reported that two-thirds of Texas firms surveyed in May were using artificial intelligence, up from 40% two years earlier.<\/p>\n That creates a changing labor-market picture.<\/p>\n 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.<\/p>\n The Governor\u2019s Office specifically cited<\/a> demand for electricians, pipe fitters, welders, plumbers, and truckers during Thursday\u2019s meeting.<\/p>\n Texas Still Adding Jobs \u2014 But Growth Has Slowed<\/p>\n Texas remains on track to add jobs in 2026, although employment growth has moderated.<\/p>\n The Dallas Fed\u2019s September employment forecast<\/a> 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.<\/p>\n Texas added approximately 18,500 jobs in August, according to the Dallas Fed.<\/p>\n But year-to-date job growth stood at about 1%, below the state\u2019s long-run average of roughly 2%.<\/p>\n 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.<\/p>\n August job gains were broad-based and included<\/a> professional and business services, construction, government, manufacturing, and leisure and hospitality, according to the Dallas Fed forecast.<\/p>\n Manufacturers Expect More Growth<\/p>\n Texas manufacturers remain broadly optimistic about future production.<\/p>\n The September manufacturing survey showed<\/a> 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.<\/p>\n But stronger output is arriving alongside higher cost pressures.<\/p>\n The raw-materials price index rose<\/a> 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.<\/p>\n Across manufacturing and service-sector respondents, the Dallas Fed\u2019s September special questions found Texas businesses expect wages to rise<\/a> an average of 3.9% over the next 12 months and input prices to increase 4.6%.<\/p>\n Inflation remained businesses\u2019 most frequently cited concern for the next six months, followed by geopolitical uncertainty and the level of demand.<\/p>\n Labor shortages, while still a concern for some businesses, were cited less frequently in September than in the previous survey.<\/p>\n Can Texas Train Workers Fast Enough?<\/p>\n 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.<\/p>\n The Texas Jobs Council is now tasked with developing recommendations intended to expand that labor pool.<\/p>\n