The seasonally adjusted unemployment rate is better than it has been in two and a half years.
Texas added 204,500 jobs over the past year, with much of the jobs growth in the hospitality, manufacturing industries.
The biggest gains were in mining and logging, which grew by nearly 19 percent in 2011.
Lisa Givens with the Texas Workforce Commission says Houston's unemployment rate also dropped.
"Houston area's unemployment rate is down a full percentage point from last December, 2010. It was 8.3 and now you're at 7.3, so that's a move in the right direction for residents and statewide for folks looking to move to Texas."
The state and local rates of unemployment are calculated differently. State numbers are seasonally adjusted to account for jobs that peak during certain times of year. Local numbers aren't seasonally adjusted.
Givens says the state's unemployment rate has decreased for the third consecutive month and remains well below the national rate of 8.5 percent.
"It's always encouraging when we see a continuing drop in unemployment as well as jobs added. At the same time, Texas is still growing with its population, which means that people are finding jobs here in Texas. We also are beginning to see some employers start to hire again, which means that the effects of the recession are starting to decline."
In Houston, employers added 75,800 jobs over the past year, a 3 percent increase over the year before.