Comerica Bank's Texas Index Edged Down in December

Rhea-AI Summary

The Comerica Texas Economic Activity Index recorded a 1.5% annualized rise in the last three months of December, up 4.6% year-over-year. Despite a solid increase in employment of 45,900, the job market shows mixed signals with unemployment claims exceeding 100,000 for the fourth month. Oil drilling rigs dropped 15% from August peaks. Housing starts declined by 9% in December, down about 22% year-on-year, affected by high mortgage rates and prices, leading to a slowdown in Texas's housing market. Conversely, Texas's GDP grew robustly by 7% annualized in Q4 2022, following an 8.2% increase in Q3. Headwinds such as high inflation and rising interest rates may keep overall growth below trend in 2023.

Positive

• Texas GDP grew 7.0% annualized in Q4 2022.
• Employment rose by 45,900 in December.

Negative

• Unemployment claims exceeded 100,000 for the fourth consecutive month.
• Oil drilling rigs fell for the fourth month, 15% below August peak.
• Housing starts down 22% year-over-year; 9% down in December.

DALLAS, April 12, 2023 /PRNewswire/ -- The Comerica Texas Economic Activity Index rose at a 1.5% annualized rate in the three months through December and was up 4.6% from a year ago.

Two of the index's nine components rose in December. Employment rose by a solid 45,900 on the month – but continuing claims for unemployment insurance also rose and was above 100,000 for the fourth consecutive month, painting a mixed picture of the state's labor market. Seasonally adjusted active oil drilling rigs fell for the fourth consecutive month at year-end and were 15% below their August peak.

Housing starts fell by 9% in December and were down roughly 22% from a year ago. Texas's housing market is set to be a big drag on the state's economy, as surging mortgage interest rates and high prices sideline would-be homebuyers. House prices declined for a sixth consecutive month in December, but the pace of declines appears to be moderating. While further price declines are probable in the Lone Star State, they are likely to be shallower than in many other states due to the state's strong economic fundamentals, such as strong population and employment growth.

Texas GDP grew robustly again by 7.0% annualized in the fourth quarter of 2022, following a 8.2% gain in the third and after lackluster growth in the first half of last year. High inflation, surging interest rates, a softening national economy, and weak economies outside the US will be persistent headwinds to Texas' economy, likely holding the state's growth below trend in 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 Michigan, California, Florida and Arizona. Additionally, Comerica has select businesses operating in Canada and Mexico. Comerica reported total assets of $85.4 billion as of Dec. 31, 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 is the recent trend in Texas GDP as reported by Comerica?

Texas GDP grew 7.0% annualized in the fourth quarter of 2022.

How did employment figures change in Texas in December 2022?

Employment rose by 45,900 in December 2022.

What were the unemployment claims trends in Texas in December 2022?

Unemployment claims were above 100,000 for the fourth consecutive month.

How did the Texas housing market perform in December 2022?

Housing starts fell by 9% in December and were down about 22% from the previous year.

What challenges does the Texas economy face in 2023?

High inflation and rising interest rates are persistent headwinds likely to hold growth below trend.