Comerica Bank's Texas Index Extends Gains

DALLAS, Aug. 31, 2018 /PRNewswire/ -- Comerica Bank's Texas Economic Activity Index increased 1.1 points in June to 136.1. June's index reading is 41 points, or 43 percent, above the index cyclical low of 95.5. The index averaged 128.5 points for all of 2017, three and nine-tenths points above the average for 2016. May's index reading was revised to 134.6.

The Comerica Bank Texas Economic Activity Index increased for the third consecutive month in June. The combination of a strong U.S. economy and a strong oil industry is potent for Texas. Also, the recently announced new trade deal between the U.S. and Mexico will remove some uncertainty for Texas businesses. In June, six out of nine index components were positive. They were nonfarm payrolls, unemployment insurance claims (inverted), industrial electricity demand, drilling rig count, total state trade and sales tax revenues. Housing starts and hotel occupancy were negatives in June, while house prices were neutral. The June 2018 Texas Index is 6.5 percent above the June 2017 level, indicating strong state-level GDP growth over the 12 month interval. We anticipate that Texas will show substantially greater than the U.S. real GDP growth rate of 2.9 percent from 2017Q2 through 2018Q2. Conditions look promising for the rest of the year. The price for West Texas Intermediate crude oil has stabilized in the range of $65-$70 per barrel since May. We anticipate a year-end price of about $75 per barrel as Iranian oil production falters due to U.S. sanctions. Even in the absence of near-term price gains, the Texas oil industry is set to flourish. Numerous pipeline and related projects are underway to move newly invigorated West Texas production to markets. The Midland-Odessa area remains in the grip of dramatic economic expansion fueled by oil.

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 Bank is a subsidiary of Comerica Incorporated (NYSE: CMA), the largest U.S. commercial bank headquartered in Texas, strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to a local banking center network throughout Dallas-Fort Worth, Houston, Austin, San Antonio and Kerrville, 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.

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