Texas Index Rose in May

Bill Adams

,

Waran Bhahirethan

Austin Texas

Texas Index Rose in May 

The Comerica Texas Economic Activity Index increased by 2.3% annualized in the three months through May and was up 2.8% from a year earlier.  Five of the Index’s nine components rose in the month, while four fell. Labor market data were mixed: Employment jumped by 45,800 from April, but hiring has been notably slower this year than last year. Also indicating a softer job market, continuing jobless claims rose again and were above 100,000 for a ninth consecutive month. And the unemployment rate edged up to 4.1%, nearly half a percentage point above the national rate. 

Volatile housing starts surged in May, but are down a fifth in the first five months of 2023 from the same period last year.  Housing is a drag on Texas’ economy in 2023 as soaring mortgage rates and high prices sideline many would-be homebuyers. Despite this, house prices rose in May for the second consecutive month. A rising population, employment growth, and limited housing supply are supports for Texan house prices. Seasonally-adjusted industrial electricity sales surged by 2.9% and were up 2.4% from a year earlier. Seasonally-adjusted active oil drilling rigs rose for the third consecutive month but were still 11% below last July’s peak. Despite the reduction in active drilling rigs, oil production and employment have risen recently. Hotel occupancy fell for the fourth consecutive month and was down from a year earlier. The strong dollar and the end of years of pandemic-related travel restrictions have American tourists traveling more internationally while domestic tourism is softer. Tax receipts show real consumer spending fell by a steep 5.0% in May. Nonetheless, consumer spending was up by 1.9% in the first five months of 2023 compared to the same period last year. 

The Texan economy grew a rapid 3.4% in 2022, well above the national average of 2.1%, and expanded at a solid 3.0% annualized pace in the first quarter, again well above the national average. While Texas will likely outpace the national economy in growth again this year, high inflation, high interest rates, and a cooler housing market will be persistent headwinds to Texas and are likely to weigh on economic activity in the latter half of the year.



Chart asset

For a PDF version of this publication, click here: Texas Index Rose in May(PDF, 130 KB)

The articles and opinions in this publication are for general information only, are subject to change without notice, and are not intended to provide specific investment, legal, accounting, tax or other advice or recommendations. The information and/or views contained herein reflect the thoughts and opinions of the noted authors only, and such information and/or views do not necessarily reflect the thoughts and opinions of Comerica or its management team. This publication is being provided without any warranty whatsoever. Any opinion referenced in this publication may not come to pass. We are not offering or soliciting any transaction based on this information. You should consult your attorney, accountant or tax or financial advisor with regard to your situation before taking any action that may have legal, tax or financial consequences. Although the information in this publication has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its timeliness or 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.

Comerica Economic Commentary Newsletter Sign-up

August 24, 2023
Bil Adams, Senior Vice President and Chief Economist at Comerica Bank

Bill Adams

Senior Vice President and Chief Economist
Waran Bhahirethan, Vice President and Senior Economist at Comerica Bank

Waran Bhahirethan

Vice President and Senior Economist

Related Content