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Comerica Bank’s California Economic Activity Index declined by 0.3 percent in January...

Comerica Bank’s California Index Dips

March 29, 2019
By Robert A. Dye Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index declined by 0.3 percent in January. January’s reading is 26 points, or 26 percent, above the index cyclical low of 97.8. The index averaged 124.0 points in 2018, 2.8 points above the average for all of 2017. December’s reading was revised  to 123.8.

Comerica Bank’s California Economic Activity Index declined by 0.3 percent in January. This followed a 0.4 percent decline December. The California Index saw a strong downward revision in the housing starts component for December. In January, only two of the index components were positive including nonfarm employment and hotel occupancy. The six negative index components for the month were unemployment insurance (inverted), housing starts, house prices, industrial electricity demand, total trade and the Dow Jones Tech Index. Our California Index has now posted three consecutive monthly declines. Leading the declines were tech stocks prices which were pummeled from October to December. Tech stock prices have since rebounded through March and will be a net positive for our index in the coming months. California housing data has also been sluggish in recent months. Total housing starts peaked at a 131,000 unit annual rate in March  2018. That number dropped to just a 60,000 unit annual rate in December 2018. The slowdown in housing activity has led to a dramatic downshift in home price growth across California’s major regions. According to the S&P Case-Shiller, home prices were up just 2.9 percent in Los Angeles and 1.3 percent in San Diego for the 12 months ending in January. Year-over-year home price growth in San Francisco has abruptly declined from 10.6 percent in August to 1.7 percent in January.

For a PDF version of this report, click here: Comerica Bank California Economic Activity Index.

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