By August 26, 2015 Read More →

Texas economy activity index down slightly in June

Decline of WTI prices below $40/b will weaken Texas economy in coming months

The plunge in global oil prices is affecting the Texas economy, according to Comerica Bank’s Texas Economic Activity Index, but the state has held up well considering the pressure on the energy sector.

Texas economy

Energy comprises 40% of the Texas economy.

Comerica Bank’s Texas Economic Activity Index eased in June, decreasing 0.6 per centage points to a level of 96.0. June’s reading is 23 points, or 32 per cent, above the index cyclical low of 72.9. The index averaged 105.1 points for all of 2014, four and four-fifths points above the average for full-year 2013. May’s index reading was 96.6.

“Our Texas Economic Activity Index declined moderately in June, marking the eighth straight monthly drop,” said Robert Dye, chief economist at Comerica Bank.

“While it is obvious that low oil prices are having an impact on the Texas economy, it is also noteworthy that recent labor data shows that total payroll employment in the state has so far declined in only one month this year, March. In April, May, June and July, Texas saw net job gains.”

Other components of the index are showing consistent losses, including unemployment insurance claims (inverted), rig count, sales tax and hotel occupancy, according to Dye.

“The data show the nuances in Texas. The energy sector is a major component of the Texas economy, but oil is not the whole story. The state economy has shown resiliency in the early days of the dramatic collapse of oil prices,” said Dye. 

“That said, our June index does not include the drop in oil prices to below $40 per barrel. This will undoubtedly increase the stress on the Texas energy sector, and the whole state economy.”

The Texas Economic Activity Index consists of eight variables, as follows: nonfarm payrolls, exports, hotel occupancy rates, continuing claims for unemployment insurance, housing starts, sales tax revenues, home prices, and the Baker Hughes rotary rig count.

All data are seasonally adjusted, as necessary, and indexed to a base year of 2008. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

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