Comerica Bank's Texas Index Rebounds
Jun 28, 2018
DALLAS, June 28, 2018 /PRNewswire/ -- Comerica 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.
The Texas Economic Activity Index consists of nine variables, as follows: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, Texas rotary rig count, total trade, hotel occupancy and sales tax revenue. All data are seasonally adjusted. Nominal values have been converted to constant dollar values. Total index levels are expressed in terms of three-month moving averages.
Comerica Bank is a subsidiary of Comerica Incorporated (NYSE: CMA), the largest U.S. commercial bank headquartered in Texas, strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to a local banking center network throughout Dallas-Fort Worth, Houston, Austin, San Antonio and Kerrville, Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico.
SOURCE Comerica Bank
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