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Comerica Bank’s Arizona Index Rises

October 31, 2017
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Arizona Economic Activity Index rose 0.1 percent in August to a level of 110.8. August’s index reading is 11 points, or 11 percent, above the index cyclical low of 99.5. The index averaged 110.0 points for all of 2016, one point above the average for 2015. July’s index reading was 110.7.

The Comerica Bank Arizona Economic Activity Index for August 2018 increased slightly by 0.1 percent after easing in July based on revised data. The headline state index remains essentially stalled near the level first seen in November 2016. Fortunately, payroll job growth for Arizona improved in August and September, and this implies improving overall momentum for the state this fall, but the complete dataset through August still looks tepid. The August index values show four out of nine indicators improving. They were nonfarm employment, house prices, total state trade, and hotel occupancy. Five indicators declined for the month. They were unemployment insurance claims (inverted), housing starts, industrial electricity demand, state sales tax revenue and enplanements. Housing starts remain well below the late-2016 peak, showing that residential construction is simply not driving the state economy the way it has in the past. Although house prices are relatively firm, up 5.8 percent for the year ending in August for the Phoenix market according to the case-Shiller data. This is just a little below the national average increase of 6.1 percent for the year ending in August. We look for moderate positive momentum for the state through year end. An important economic risk for Arizona is how home sales hold up in a rising interest rate environment through the end of this year and into 2018.

For a PDF version of this report click here: AZ_Index_1017.

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