Comerica Bank's Texas Index Improved

Rhea-AI Summary

Comerica Bank's Texas Economic Activity Index rose to 121.1 in October, marking a 27% increase from its historical low. The index has averaged 139.7 in 2019, with only one of the nine components turning negative in October. Key contributors included nonfarm payrolls, housing starts, and oil rig counts, which ended a 16-month decline. However, some caution is warranted as the index may cool due to rising COVID-19 cases and related restrictions. Comerica reported total assets of $83.6 billion as of September 30, 2020.

Positive

• Texas Economic Activity Index increased to 121.1 in October.
• The index is 27% above its historical low of 95.5.
• Eight of nine index components were positive, indicating robust economic activity.
• The drilling rig count improved, marking an end to a 16-month decline.

Negative

• Only one component, sales tax revenue, was negative for the month.
• Potential cooling of the index expected due to rising COVID-19 cases and social restrictions.

DALLAS, Jan. 5, 2021 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index increased in October to 121.1. October's index reading was 27 percent above the index historical low of 95.5. The index averaged 139.7 points for all of 2019, 4.4 points above the average for 2018. September's index reading was 119.0.

Our Texas Economic Activity Index improved for the fourth consecutive month in October, reflecting improving economic conditions prior to the current surge in coronavirus cases. We expect to see our state indexes cooling again in late 2020 and early 2021 as states and cities respond to critical limits on hospital capacity by tightening and extending social mitigation policies. In October, eight out of nine index components were positive including nonfarm payrolls, unemployment insurance claims (inverted), housing starts, house prices, industrial electricity demand, drilling rig count, total state trade and hotel occupancy. Only the state sales tax revenue sub-index went negative for the month. This was the third consecutive month that eight out of nine sub-indexes were positive for Texas. It is noteworthy that the rig count sub-index ended a 16 month declining streak by turning positive for October. Improving global demand helped to firm up oil prices at the end of 2020, to near $48 per barrel through December. In response, the Texas drilling rig count also firmed up through year-end. After bottoming out at 100 active rigs in mid-August, the rig count improved to 161 rigs in early January. The percentage gain in the rig count is impressive, but these are very low levels. Further, we can say that the rate of improvement in the Texas rig count eased through December. This will keep the support to the rest of the state economy from the oil industry subdued through early 2021.

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 $83.6 billion at September 30, 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 October 2020?

The Texas Economic Activity Index increased to 121.1 in October 2020.

How much did the Texas index improve compared to its historical low?

The index was 27% above its historical low of 95.5.

How many components of the Texas index were positive in October?

Eight out of nine components were positive in October.

What is the current drilling rig count in Texas?

The drilling rig count improved to 161 rigs in early January 2021.

What financial data did Comerica report as of September 30, 2020?

Comerica reported total assets of $83.6 billion as of September 30, 2020.