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Comerica Bank’s California Index Levels Out

April 26, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index was up by 0.1 points in February to 123.8. February’s reading is 26 points, or 27 percent, above the index cyclical low of 97.7. The index averaged 121.2 points in 2017, two and three-fifths points above the average for all of 2016.

Comerica Bank’s California Economic Activity Index was essentially unchanged in February. The sub-indexes were mixed for the month. Six of the eight sub-indexes were positive in February including nonfarm payroll employment, unemployment insurance claims (inverted), house prices, industrial electricity demand, state total trade and the Dow Jones Tech Stock Index. The two sub-indexes that were negative for February were housing starts and hotel occupancy. It has been seven months since our California Index last declined. In early 2018, some of the major components of our index are showing volatility. Last month we spoke about the growing volatility in tech-sector stocks. The Dow Jones Tech Stock Index remains off of March highs as of the last full week of April. Now we are seeing signs of more volatility in the key state nonfarm payrolls series. California nonfarm payrolls grew at a robust pace averaging a net 47,000 jobs per month from October through January. Since then, California gained a net 1,200 jobs in February and posted a net job loss of 7,200 jobs in March as employment weakened in the construction and retail trade sectors. This is the first net monthly job loss for California since June 2016. With the California unemployment rate currently at an all-time low of 4.3 percent, we expect to see job growth moderate somewhat as the pool of job seekers shrinks. Even with more volatility and smaller monthly gains, we expect nonfarm payrolls to be a net positive for our California Index in 2018.

For a PDF version of this report click here: CA-Index-0418.

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