Comerica Bank's Texas Index Still Easing

Rhea-AI Summary

Comerica Bank's Texas Economic Activity Index fell to 106.8 in June 2020, below May's 114.2 but above the cyclical low of 95.5. The index averaged 139.1 for 2019, reflecting ongoing economic challenges due to the COVID-19 pandemic. Two of the nine sub-indexes, house prices and hotel occupancy, were positive, while the others, including nonfarm employment and unemployment insurance claims, showed deterioration. Recovery is expected, but the bank cautions against assuming a V-shaped rebound and anticipates high unemployment rates persisting into next year.

Positive

• House prices and hotel occupancy sub-indexes showed positive performance.
• Total assets reported at $84 billion as of June 30, 2020.

Negative

• Texas Economic Activity Index decreased from 114.2 in May to 106.8 in June.
• Seven out of nine sub-indexes showed negative trends, including nonfarm employment and unemployment insurance claims.
• Caution against a V-shaped recovery due to ongoing economic pressures.

DALLAS, Aug. 28, 2020 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index decreased in June to 106.8. June's index reading was 12 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. May's index reading was 114.2

Our state economic activity indexes for June showed some further deterioration in state economies. This is partially a result of smoothing techniques that we use to process the data. We expect Texas and other states to show positive overall numbers in July and August reflecting states' relaxation of their social mitigation policies. Even as we see stronger Q3 data for the U.S. and most states, we caution against assuming that this is a V-shaped economic recovery. After relaxing some social mitigation policies in late spring, many states experienced an uptick in COVID-19 cases by mid-summer requiring them to tighten policies again. Now with the school year starting, we remain cautious about the potential for increased COVID-19 cases this fall. Also, the demand destruction from the spring shutdowns is still reverberating through the economy. We expect most states, including Texas, to face a lingering high unemployment rate well into next year, and that will be a drag on overall economic activity. In June, two of the nine sub-indexes for Texas were positive. They were house prices and hotel occupancy. The seven negative sub-indexes were nonfarm employment, unemployment insurance claims (inverted), housing starts, industrial electricity demand, rig count, total state trade and state sales tax revenues. Firmer oil prices will help the rig count to stabilize and eventually improve. We expect to see an improving trend by year end.

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.

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.

View original content to download multimedia:http://www.prnewswire.com/news-releases/comerica-banks-texas-index-still-easing-301120233.html

SOURCE Comerica Bank

FAQ

What was Comerica's Texas Economic Activity Index in June 2020?

Comerica's Texas Economic Activity Index decreased to 106.8 in June 2020.

How did the Texas Economic Activity Index compare to previous months?

The index fell from 114.2 in May 2020 and is 12 points above the cyclical low.

What factors contributed to the decline in the Texas Economic Activity Index in June?

Declines in nonfarm employment, unemployment insurance claims, and other economic variables contributed to the decrease.

What are the expectations for Texas's economy in the coming months?

Expectations indicate a potential improvement in July and August, but caution remains regarding a full recovery.

What was the average Texas Economic Activity Index for 2019?

The average Texas Economic Activity Index for 2019 was 139.1.