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Comerica Bank’s California Index Improves

February 28, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index grew by 0.5 percent in December to 122.9. December’s reading is 25 points, or 26 percent, above the index cyclical low of 97.8. The index averaged 121.0 points in 2017, two and two-fifths points above the average for all of 2016. November’s index reading was revised to 122.3. 

Comerica Bank’s California Economic Activity Index ticked up again in December, posting its fourth consecutive monthly gain. The improvement in economic activity at the end of 2017 was spread across most sectors. Six of the eight components were positive in December, including nonfarm payroll employment, housing starts, house prices, total state trade, the Dow Jones Tech Stock Index and hotel occupancy. The two negative components were unemployment insurance claims (inverted) and industrial electricity consumption in December. The recent improved performance of the California economy was driven by strong nonfarm payroll gains, up 2.1 percent or 342,000 jobs in 2017. This is faster average job growth than the U.S. as a whole, which saw nonfarm payrolls grow by just 1.5 percent last year. Solid job gains are leading to tighter labor markets across most of the state’s major metro areas. This has pushed the overall California unemployment rate to an all-time low at 4.5 percent as of December. Job growth is also pushing up demand for California housing. The supply of single-family homes throughout the state has been tight since the end of the recession. While single-family housing starts have been growing since 2012, it has not been enough to keep up with demand. This will keep upward pressure on single-family house prices and makes declining housing affordability an ongoing issue for the state.

For a PDF version of this report click here: CA_Index_0218

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