Comerica Bank's Texas Index Improves

June 27, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index grew 0.1 percent in April to 137.5. April’s index reading is 42 points, or 44 percent, above the index cyclical low of 95.5. The index averaged 134.5 points for all of 2018, 5.6 points above the average for 2017. March’s index reading was revised to 137.3.

The Comerica Bank Texas Economic Activity Index improved for the fourth consecutive month in April. It has increased for 11 out of the last 13 months. The April gain of 0.1 percent is consistent with ongoing economic expansion at the start of the second quarter. For the year ending in April, the Texas Index is up by 3.2 percent, which can be considered a reasonable first guess for state real GDP growth over the 12 month period. For April, results were mixed. Five out of nine components were positive, while four were negative. The positive components were nonfarm employment, unemployment insurance claims (inverted), industrial electricity demand, hotel occupancy and state sales tax revenue. The negative components were housing starts, house prices, drilling rig count, and total state trade. Housing markets appear to be cooling nationwide and Texas will feel some drag. But steady job growth, consistent positive in-migration to the state and lower mortgage rates will help to support local housing markets. Oil prices have eased heading into early summer and that will be a dampening force on drilling activity. However, U.S. crude oil and refined product exports are increasing and that is good news for Texas. Also the consolidation we are seeing in the state’s energy sector will help to stabilize the economic impact of fluctuating oil prices. Infrastructure development in West Texas will remain on track even with slightly lower oil prices.

For a PDF version of this report, please click here: Comerica Bank’s Texas Index Improves

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 Up Again

May 29, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index grew 0.2 percent in March to 137.2. March’s index reading is 42 points, or 44 percent, above the index cyclical low of 95.5. The index averaged 134.5 points for all of 2018, 5.6 points above the average for 2017. February’s index reading was revised to 137.2.

The Comerica Bank Texas Economic Activity Index ticked up in March, registering its third consecutive monthly gain. The last time that the Texas Index declined was in July 2018. Over the last 12 months, the headline index is up 3.6 percent. The year-over-year gain appears to be on an improving trend after bottoming out in late 2018. In March, six out of nine index components were positive. They were nonfarm payrolls, house prices, industrial electricity demand, total state trade, hotel occupancy and state sales tax revenue. The negative factors were unemployment insurance claims (inverted), housing starts and the rig count. The strong performance of the Texas Index over the past two-and-a-half years indicates that the state has good momentum both in and out of the energy industry. Energy is a key economic driver for the state, but the majority of Texas economic activity is not directly related to the energy sector. We expect the state to continue to attract businesses and to attract new workers. We estimate population growth for the state to be around 1.4 percent this year, about double the national average pace. Strong demographic momentum will remain a tailwind for the state’s non-energy economy and spur growth in “people” industries. An example of that growth is seen in DFW Airport’s recent announcement that it will add a sixth terminal with 24 new gates as early as 2025.

For a PDF version of this report, click here: Comerica Bank’s Texas Index Up Again

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 Increases

May 1, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index grew 0.2 percent in February to 136.8. February’s index reading is 41 points, or 43 percent, above the index cyclical low of 95.5. The index averaged 134.5 points for all of 2018, 5.6 points above the average for 2017. January’s index reading was revised to 136.5.

The Comerica Bank Texas Economic Activity Index increased again in February after reversing a one-month slide in December. For the year ending in February, the Texas index is up by 2.9 percent, still-positive, but well below the 5.4 percent year-ago gain from last August. We expect Texas to continue to show above-average growth in 2019, but it will not be as strong as it was in 2018. In February, five out of nine index components were positive. They were nonfarm employment, house prices, industrial electricity demand, hotel occupancy and state sales tax revenues. The negatives came from unemployment insurance claims (inverted), housing starts, rig count and total state trade. The rig count was the biggest drag for the month. We expect strong crude oil prices this spring to help level out the Texas rig count. The count slid from around 535 active rigs through the second half of 2018, to 491 rigs at the end of March. Major oil companies continue to buy into the Permian Basin shale production as shown by the competition for Anadarko Petroleum by Occidental and Chevron. The larger companies will add to the stability of the region, which has undergone explosive growth due to the development of shale reservoirs. We expect economic conditions in West Texas to show consistent improvement as more infrastructure, permanent housing facilities, retail space and government offices are built to accommodate a permanent gain in the workforce.

For a PDF version of this report, click here: Comerica Bank’s Texas Index Increases

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 Improves

March 29, 2019 by Robert A. Dye, Ph. D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased by 0.4 percent in January to 136.2. January’s index reading is 41 points, or 43 percent, above the index cyclical low of 95.5. The index averaged 134.5 points for all of 2018, 5.7 points above the average for 2017. December’s  index reading was revised to 135.7.

The Comerica Bank Texas Economic Activity Index got back on track in January, increasing by 0.4 percent, after easing by 0.1 percent in December. The January 2019 index is 2.3 percent above its reading from a year ago, consistent with ongoing real state gross domestic product growth over 2018. In January, five out of nine index components were positive. They were nonfarm employment, housing starts, house prices, hotel occupancy and state sales tax revenues. The negatives for January were initial claims for unemployment insurance (inverted), industrial electricity demand, rig count and total state trade. It looks like the Texas economy cooled from strong growth through the first half of 2018, to moderate growth through the second half of the year. This is consistent with the pattern of crude oil prices, which increased to a peak of near $74 per barrel by early October, and then dropped sharply to about $46 per barrel by year-end. Drilling and production companies scaled back their activities through the end of 2018, and planned for reduced growth in capital spending in 2019 as a result of the reset in crude oil prices. With oil prices back up to near $60 per barrel, energy companies are more profitable but have remained cautious about ramping up capital spending. We expect cooler global and U.S. economic conditions in 2019 to keep Texas economic growth positive, but moderate this year.



For a PDF version of this report, click here: Comerica Bank Texas Economic Activity Index 0319.

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 Dips

February 27, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index decreased by 0.1 percent in December to 136.5. December’s index reading is 41 points, or 43 percent, above the index cyclical low of 95.5. The index averaged 134.9 points for all of 2018, 6.1 points above the average for 2017. November’s index reading was revised to 136.7.

The Comerica Bank Texas Economic Activity Index decreased slightly in December, down 0.1 percent. This ended a three-month winning streak for the Texas Index. The partial federal government shutdown over December and January is still impacting the economic data stream, so we may see larger-than-normal historical revisions in the next few months as data quality improves. In December, six out of nine index components were positive, including payroll employment, housing starts, house prices, industrial electricity demand, rig count and hotel occupancy. Only three components were negatives for December. They were unemployment insurance claims (inverted), total state trade and sales tax revenues. The volatility in the unemployment insurance claims dominated the other positive factors. We expect volatility to diminish in the months ahead, allowing the Texas index to resume its positive overall track. Crude oil prices have firmed up significantly since they fell to about $43 in late December. With WTI currently near $55 per barrel, we expect energy-related infrastructure development to continue to be a positive for the Texas economy through the first half of 2019. The large number of drilled but uncompleted wells in Texas represents excess capacity for Texas oil production. Because of the excess capacity, the overall rig count may remain flat to down in the near-term even with firmer oil prices.

For a PDF version of this report, click here: Comerica Bank’s Texas Index Dips

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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