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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Comerica Bank's Texas Index Climbs

January 31, 2019 by Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Texas Economic Activity Index increased by 0.4 percent in November to 136.5. November’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, 4.2 points above the average for 2016. October’s revised index reading was 135.9.

The Comerica Bank Texas Economic Activity Index increased in November for the third consecutive month. Some state-level data was not available this month due to the partial federal government shutdown. We included our own estimates for housing starts and for total state trade for the month of November so that we could publish our headline index this month. Data for the other seven index components was collected and processed normally. In November eight out of nine index components were positive. They were nonfarm payrolls, unemployment insurance claims (inverted), house prices, industrial electricity demand, rig count, total trade, hotel occupancy and sales tax revenues. Housing starts declined in November. We expect that the dip in crude oil prices through 2018Q4 will result in some drag on the Texas economy, but not as much drag as we saw in 2015, when our Texas Index declined through the year. Drillers and producers have scaled back capital spending plans for 2019 and employment growth in the oil patch looks like it is slowing. A cooler U.S. and global economy this year will have an impact on Texas beyond the drag from lower oil prices. The now-ended partial federal government shutdown will not have a significant impact on the Texas Index for January. However, a noticeable drop in Consumer Confidence through December and January is bad news for the two auto production plants in Texas.

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

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 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.

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

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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