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Comerica Bank’s Arizona Index Increases

January 3, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Arizona Economic Activity Index grew 0.3 percent in October to a level of 111.2. October’s indexreading is 12 points, or 12 percent, above the index cyclicallow of 99.5. The index averaged 110.0 points for all of 2016, one and one-tenth point above the average for2015. September’s index reading was 110.9.

The Comerica Bank Arizona Economic Activity Index for October increased again after gaining in September. The October increase was a moderately strong 0.3 percent, showing that the Arizona economy gained momentum inlate 2017 after stalling earlier in the year. Also, in October, all nine Arizona Index components increased. This was the first across-the-board gain in the index since January 2015. One cautionary note comes from nonfarm payroll gains,which were inconsistent through 2017. Still, there are positive signals from other components. Unemployment insurance claims continue to improve. Housing starts showan increasing trend through last fall. House prices are consistently climbing. Industrial electricity demand is up froma summer low. Total state trade is gradually improving. Hotel occupancy is also on an increasing trend. State sales tax receipts are up. Enplanements reversed a decliningtrend in October. We look for moderate gains in the Arizona economy through 2018, supported by a healthy U.S.economy and the ongoing retirement of baby boomers.Arizona remains an attractive low-cost retirement locationfor many baby boomers, including those from nearby high-priced California. Because Arizona’s economy has historically been fueled in large part by residential construction, the prospect of moderately increasing mortgage interestrates this year represents a downside risk for the state.

For a PDF version of this report click here: AZ_Index_1217

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