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Comerica Bank’s California Economic Activity Index decreased by 0.1 points in June to 123.7.

Comerica Bank's California Index Declines

August 29, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index decreased by 0.1 points in June to 123.7. June’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. May’s reading was 123.8.

Comerica Bank’s California Economic Activity Index eased again in June. This is now the third consecutive monthly decline. However, the declines in the sub-indexes were less widespread in June than in May. Five of the eight sub-indexes were positive in June. They were nonfarm employment, unemployment insurance claims (inverted), house prices, industrial electricity demand and the Dow Jones technology stock index. The three negative sub-indexes in June were housing starts, total state trade and hotel occupancy. Uncertainty on trade is a headwind for the state economy. California saw a run-up in total trade in early 2018, as some companies and consumers tried to finalize purchases before tariffs were implemented. The dollar value of state total trade has now declined for four consecutive months and was below year-ago levels in June. The U.S. and Mexico struck a preliminary accord on trade earlier this week which is a positive sign. However, it is still uncertain how or if Canada will join the accord. Trade negotiations with China continued to deteriorate as both the Trump Administration and the Chinese government implemented tariffs on an additional $16 billion worth of goods on August 23. California’s housing sector has also slowed in recent months. Rising interest rates are adding to the state’s housing affordability problem. According to the Mortgage Bankers Association, the rate on a 30 year fixed rate mortgage was at 4.81 percent in mid-August.

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