Comerica Bank's Texas Index Declined in September

Rhea-AI Summary

The Comerica Texas Economic Activity Index declined by 0.6% annualized in the three months ending September, sharply down from previous robust growth. By September, the index showed a year-over-year increase of 7.0%. Six of its nine components fell, with housing starts dropping 17.5% in Q3, impacted by high mortgage rates. Texas GDP growth slowed to 1.8% in Q2 and 0.5% in Q1, with persistent headwinds from inflation and high interest rates expected to hinder growth into 2023.

Positive

• Texas employment increased, with 600,000 more jobs than pre-pandemic levels.
• The Texas Economic Activity Index showed a year-over-year increase of 7.0% in September.

Negative

• Comerica Texas Economic Activity Index declined by 0.6% annualized in Q3.
• Housing starts fell by 17.5% in Q3 compared to Q2.
• House prices declined for the third consecutive month, indicating further potential declines ahead.
• Texas GDP growth slowed to 1.8% in Q2 and 0.5% in Q1, signaling economic deceleration.

DALLAS, Dec. 13, 2022 /PRNewswire/ -- The Comerica Texas Economic Activity Index declined at a 0.6% annualized rate in the three months through September. The index has slowed sharply after robust increases in the first half of the year. The index was up 7.0% from a year earlier in September.

Six of the index's nine components declined in September. Employment continues to rise in Texas and the number of employed is about 600,000 above the pre-pandemic level. Active oil-drilling rigs fell in the month, though, as energy prices moved lower. The energy sector could be less supportive of growth going forward.

Housing starts fell 17.5% in the third quarter compared to the second. Texas's housing market is set to be a big drag on the state's economy, as surging mortgage interest rates and high prices push would-be homebuyers to the sidelines. House prices declined for the third consecutive month in September, and further declines are likely in the coming months.

Texas GDP rose by 1.8% in the second quarter of 2022 and just 0.5% in the first quarter. The slowdown of the Comerica Texas Index shows the state's economy slowed down sharply in the third quarter following a strong second quarter. High inflation, surging interest rates, a softening national economy, and weak economies outside the US will be persistent headwinds in Texas, likely causing growth in the state to hold below trend into 2023.

The Comerica Texas Economic Activity Index is a monthly composite indicator of state economic activity. The Index provides a wholistic advance view of the state of Texas's economy, using economic data that are available about one quarter earlier than real GDP is released. The index is comprised of nine components: Nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house prices, industrial electricity sales, the Texas rotary rig count, foreign trade, hotel occupancy, and sales tax revenue. All data are seasonally adjusted with nominal values converted to constant dollar values as appropriate. To filter out month-to-month volatility in the index components, the index is calculated from the three-month moving averages of its components. Values for a minority of components are projected from the prior months' release due to the timing of data releases.

Comerica Bank is a subsidiary of Comerica Incorporated (NYSE: CMA), 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 $84.1 billion as of Sept. 30, 2022.

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

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SOURCE Comerica Bank

FAQ

What does the recent Comerica Texas Economic Activity Index report indicate about Texas's economy?

The report indicates a decline of 0.6% annualized in the Texas Economic Activity Index for the three months through September, suggesting a slowdown in economic growth.

How did housing starts in Texas change in Q3 2022?

Housing starts in Texas fell by 17.5% in Q3 2022 compared to the previous quarter.

What are the current trends in Texas GDP growth according to Comerica?

Texas GDP growth showed a decline to 1.8% in Q2 2022 and just 0.5% in Q1, reflecting a slowdown in economic activity.

What factors are impacting the Texas housing market?

High mortgage interest rates and escalating house prices are pushing potential homebuyers out of the market, contributing to a decline in house prices.