Comerica Bank's Texas Index Increases

Rhea-AI Summary

The Texas Economic Activity Index from Comerica Bank rose to 126.7 in December, marking an 18% increase from its June low of 107.4. This is the sixth consecutive month of improvement, with eight of nine sub-indexes, including nonfarm payroll and housing starts, showing gains. However, the Texas economy faced challenges from severe winter weather in February, leading to significant damages. Despite this, the state is expected to recover quickly, bolstered by sustainable payrolls and insurance coverage.

Positive

• Texas Economic Activity Index increased to 126.7 in December.
• 18% rise from June's low of 107.4 demonstrates strong growth.
• Eight out of nine sub-indexes improved, indicating broad economic activity.

Negative

• Severe winter weather in February caused significant economic disruption.
• Challenges include electric grid issues and water shortages.

DALLAS, Feb. 24, 2021 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index increased in December to 126.7. December's index reading was 18 percent above the recent low of 107.4 set in June 2020. The index averaged 124.3 points for all of 2020, 15.4 points below the average for 2019. November's index reading was 123.8.

Our Texas Economic Activity Index improved for the sixth consecutive month in December, showing the strongest monthly gain since last August. Eight out of nine sub-indexes increased in December. They were nonfarm payroll, unemployment insurance claims, housing starts, house prices, industrial electricity demand, drilling rig count, total state trade and state sales tax revenues. The sole declining component was hotel occupancy. There is a lot to unpack about the Texas economy this winter. First, oil prices began increasing in November and still appear to be trending up, supporting increased drilling activity. We look for ongoing firmer oil prices, but we do not subscribe to the oil market super-cycle theory looking for substantially higher prices for an extended period. Second, we are seeing a bifurcation between manufacturing-related economic data, which is generally strengthening, and services-related economic data, which may not be strengthening, at the regional, U.S. and international levels. So, a positive headline reading for any state this winter does not necessarily mean that conditions are improving for all industries in that state. In February, the Texas economy was shocked by extremely cold temperatures, electric grid problems, localized water shortages and loss of life. We expect the total damages from the weather event to be significant. We also expect the state to recover quickly since most payrolls were maintained and most property was insured.

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 $88 billion as of Dec. 31, 2020.

To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights. Follow us on Twitter: @Comerica_Econ.

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SOURCE Comerica Bank

FAQ

What was the Texas Economic Activity Index in December 2020?

The Texas Economic Activity Index was 126.7 in December 2020.

How much did the Texas Economic Activity Index increase from its June low?

It increased by 18% from June's low of 107.4.

Which sub-indexes contributed to the growth of the Texas Economic Activity Index?

Eight out of nine sub-indexes contributed, including nonfarm payroll and housing starts.

What challenges did the Texas economy face in February 2021?

The Texas economy faced severe winter weather, electric grid problems, and localized water shortages.

What are the economic projections for Texas following the February weather events?

The state is expected to recover quickly, as most payrolls were maintained and property was insured.