Comerica Bank's Texas Index Up Slightly

January 3, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased by 0.1 points in October to 135.8. October’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, 4.2 points above the average for 2016. September’s index reading was 135.7.

The Comerica Bank Texas Economic Activity Index increased slightly in October, following a small increase in September. The two-month gain in our headline index  for Texas reverses a slight two-month decline over July and August. In October, six out of nine sub-indexes were positive. They were non-farm payrolls, unemployment insurance claims (inverted), house prices, industrial electricity demand, state trade and sales tax revenue. The three negative sub-indexes were housing starts, rig count and hotel occupancy. Lower oil prices are weighing on oil producers’ plans for 2019. The Texas state rig count dipped from August through October. We expect to see further declines in the rig count into early 2019. Oil producers are paring back planned expenditures for 2019 and some drillers have canceled orders for new rigs. Cooler oil field activity in early 2019 will be a moderate weight on the overall state economy. The potential for cooler U.S. and international economic growth in 2019 completes the triple threat to the Texas economy this year. The good news is that Texas is still attracting new business and new people from outside the state. The momentum in the non-energy part of the Texas economy, which is by far the biggest part of the state economy, is significant and will keep the overall state economy expanding through early 2019.

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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

November 28, 2018 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased by 0.1 points in September to 135.7. September’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, 4.2 points above the average for 2016. August’s index reading was revised to 135.6.

The Comerica Bank Texas Economic Activity Index was little changed in September after dipping slightly in July and August. The three-month stall in the Texas Index over the summer is largely due to declining hotel occupancy and flat housing starts. Now as oil prices slide, the drilling rig count will likely also decline further, suppressing the headline index. Fortunately, overall job growth for the state remains positive, with October showing a strong 32,000 job gain for the month. For our September Texas Index, five factors were positive, three were negative and one was unchanged. Positives were nonfarm payrolls, unemployment insurance claims (inverted), house prices, total state trade and sales tax revenue. Negatives for the month were housing starts, rig count and hotel occupancy. Industrial electricity sales were unchanged in September after easing in August. If there is good news in the oil patch it is that natural gas prices have increased from $3 per MMBtu for most of 2018, to over $4 by mid-November. However, this will not completely offset the pain from tighter margins on oil production as West Texas Intermediate crude struggles to stay above $50 per barrel. The 5 State Index graph on this page shows recent flattening in Texas, California and Michigan, all sizeable states with key industrial sectors. This should be taken as a cautionary signal for the overall U.S. economy as we head into year end.

For a PDF version of this report, 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 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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