DALLAS, July 29, 2020 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index decreased in May to 114.2. May's index reading was 18.7 points above the index cyclical low of 95.5. The index averaged 139.1 points for all of 2019, 3.8 points above the average for 2018. April's index reading was revised to 127.4.
Our state economic activity indexes for May show the historic decline in economic activity this spring due to the coronavirus pandemic. In addition to the effects of the epidemic-fighting social restrictions, Texas endured a collapse in crude oil prices which sent drillers into hibernation and sapped revenue streams for many industries. We expect the Texas Index to improve in the months ahead, reflecting the state's economic reopening. However, the recent surge in coronavirus infections has caused the state to suspend and even reverse some reopening plans. We view the remainder of this year as a period of heightened economic uncertainty for the U.S. and Texas economies. Eight out of nine index components declined in May for Texas. They were nonfarm employment, unemployment insurance claims (inverted), housing starts, industrial electricity demand, drilling rig count, total state trade, hotel occupancy and state sales tax revenues. As in April, the only index component to improve was house prices. Stabilization of oil prices, to near $40 per barrel in June and July has been better news for the state's energy sector, after a disastrous April. Most recently, the drilling rig count for the state has leveled out near 100 active rigs at the end of July. This is down sharply from the recent peak of 540 rigs from October 2018. The state economy will benefit from Tesla's plan to build a $1 billion facility on a 2,100 acre site near Austin. The Tesla plant will eventually employ about 5,000 workers.
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 Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Commercial Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to 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. Comerica reported total assets of $84 billion at June 30, 2020 and celebrated its 170th anniversary in August 2019.
SOURCE Comerica Bank