Comerica Bank's Texas Index Little Unchanged

October 31, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index was unchanged in August to 135.8. August’s index reading is 40 points, or 42 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, 3.9 points above the average for 2016. July’s index reading was revised to 135.8.

The Comerica Bank Texas Economic Activity Index was unchanged in August. Revised data now show a small decline in the index level in July. Over the 12 months ending in August, the Texas Index is still up by 5.9 percent, consistent with very strong state-level GDP growth for Texas over the last year. The components of the Texas Index were mixed in August. The four positive components for the month were nonfarm employment, unemployment insurance claims (inverted), housing starts and total state trade. The four negative components were house prices, industrial electricity demand, the Texas rig count and hotel occupancy. The sales tax revenue sub-index was unchanged in August. The Texas economy grew strongly through the first half of 2018. Now it looks like growth is still very good, but easing. This is consistent with the cooling seen in our Michigan and California Indexes and is consistent with the pattern of U.S. GDP growth this year. Crude oil prices have declined to about $66 per barrel at the end of October, from above $76 per barrel early in the month. We look for cooler global oil demand growth in 2019 as economic growth in the U.S., Europe and China eases. Even so, we expect oil-related investment in West Texas to continue, including infrastructure and transportation-related projects.

For a PDF version of this article, please click here: Comerica Bank's Texas Index Little Unchanged

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.
 

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Comerica Bank's Texas Index Little Changed

September 27, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index decreased 0.1 points in July to 135.9. July’s index reading is 40 points, or 42 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, 3.9 points above the average for 2016. June’s index reading was revised to 136.0.

The Comerica Bank Texas Economic Activity Index eased by just 0.1 percent in July, essentially unchanged from June. This breaks a three-month winning streak. We expect the Texas Index to return to growth very soon. Over the 12 months ending in July, the Texas Index is up 5.8 percent, consistent with strong real GDP growth for the state during this time span. In July, five out of nine index components were positive. They were nonfarm payrolls, unemployment insurance claims (inverted), housing starts, industrial electricity demand and total state trade. House prices, drilling rig count, hotel occupancy and sales tax revenues were negatives in July. Firmer oil prices in late 2018 and a strong U.S. economy will support an ongoing robust expansion for Texas. Also, the recently completed U.S. trade deal with Mexico removes some uncertainty for Texas businesses. The trade deal remains to be ratified by both countries and may eventually include Canada. Job growth for Texas ticked up this year. Through August, the state has averaged 34,000 net new jobs per month this year, well above the average of 21,000 net new jobs per month for all of 2017. For the first eight months of 2018, the entire U.S. has averaged 208,000 net new jobs per month, so roughly 1 out of every 6 new jobs in the U.S. this year was generated in Texas.

For a PDF version of this article, please click here: Comerica Bank's Texas Index Little Changed

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

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Comerica Bank's Texas Index Extends Gains

August 29, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased 1.1 points in June to 136.1. June’s index reading is 41 points, or 43 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, three and nine-tenths points above the average for 2016. May’s index reading was revised to 134.6.

The Comerica Bank Texas Economic Activity Index increased for the third consecutive month in June. The combination of a strong U.S. economy and a strong oil industry is potent for Texas. Also, the recently announced new trade deal between the U.S. and Mexico will remove some uncertainty for Texas businesses. In June, six out of nine index components were positive. They were nonfarm payrolls, unemployment insurance claims (inverted), industrial electricity demand, drilling rig count, total state trade and sales tax revenues. Housing starts and hotel occupancy were negatives in June, while house prices were neutral. The June 2018 Texas Index is 6.5 percent above the June 2017 level, indicating strong state-level GDP growth over the 12 month interval. We anticipate that Texas will show substantially greater than the U.S. real GDP growth rate of 2.9 percent from 2017Q2 through 2018Q2. Conditions look promising for the rest of the year. The price for West Texas Intermediate crude oil has stabilized in the range of $65-$70 per barrel since May. We anticipate a year-end price of about $75 per barrel as Iranian oil production falters due to U.S. sanctions. Even in the absence of near-term price gains, the Texas oil industry is set to flourish. Numerous pipeline and related projects are underway to move newly invigorated West Texas production to markets. The Midland-Odessa area remains in the grip of dramatic economic expansion fueled by oil.

For a PDF version of this article, please click here: Comerica Bank's Texas Index Extends Gains

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

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Comerica Bank's Texas Index Climbs Further

August 1, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased 0.7 points in May to 134.7. May’s index reading is 39 points, or 41 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, three and nine-tenths points above the average for 2016. April’s index reading was revised to 133.7.

The Comerica Bank Texas Economic Activity Index increased again in May. State economic activity is expanding strongly after stalling through most of 2015 and 2016. A vigorous U.S. economy, favorable oil prices and ongoing in-migration to Texas will keep the Texas economy growing through the rest of this year. Eight out of nine index components increased in May, including nonfarm employment, initial claims for unemployment insurance (inverted), housing starts, industrial electricity demand, rig count, state trade, hotel occupancy and sales tax revenues. Only the house price index eased in May. Housing markets nationwide appear to be cooling this summer. However, with strong economic and population growth in Texas, we expect that housing markets in the major Texas metro areas will remain tight, supporting ongoing price gains. According to the Case-Shiller data, Dallas area house prices increased by 0.2 percent in May, after seasonal adjustment, and are up 5.6 percent over the previous 12 months. Texas job growth has stepped up after sagging in 2015 and 2016. Through the first six months of this year, Texas has generated a healthy average of 37,000 net new jobs per month. Uncertainty about international trade is an important risk factor for the state economy. Mexican President-elect Andres Manuel Lopez Obrador has indicated that he would like to see a swift conclusion to the ongoing NAFTA negotiations.

For a PDF version of this article, please click here: Comerica Bank's Texas Index Climbs Further

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

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Comerica Bank's Texas Index Rebounds | June 2018

June 27, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Index ReboundsComerica Bank’s Texas Economic Activity Index increased 0.8 points in April to 133.6. April’s index reading is 38 points, or 40 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, three and nine-tenths points above the average for 2016. March’s index reading was revised to 132.6.

The Comerica Bank Texas Economic Activity Index increased in April after falling through February and March. Six of the nine index components were positive in April, including nonfarm payrolls, unemployment insurance claims (inverted), house prices, drilling rig count, total state trade and state sales tax revenues. Housing starts, industrial electricity demand and hotel occupancy were negatives in April. The Houston area is still recovering from the widespread flooding caused by Hurricane Harvey last summer. Cleanup and repair progressed quickly. However, there are signs of stress in Houston housing markets that will have longer-term consequences. Mortgage delinquency rates have increased sharply in areas most impacted by flooding. This will weigh on property valuations and property tax revenues, potentially cooling investor appetite for municipal utility district bonds. West Texas is again booming as higher oil prices incentivize drilling and production activity. The drilling rig count for Texas has been steadily increasing since late 2017. The dark cloud behind the silver lining is the coincident large increase in the number of drilled but not completed wells (DUCs). This could eventually weigh on new drilling activity. The increased cost of steel due to new import tariffs is a drag on energy sector profitability. This will lift the break-even oil price for drillers. Another trade-war drag may come from China if they reduce LNG imports from Texas.

For a PDF version of this report, click here: Texas Index June 2018

The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations.  The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team.  We are not offering or soliciting any transaction based on this information.  We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation.  Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed.  Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.

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