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Comerica Bank’s California Economic Activity Index declined by 0.1 percent in February to a level of 123.5.

Comerica Bank's California Index Eases Again

May 1, 2019
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index declined by 0.1 percent in February to a level of 123.5. February’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. January’s reading was revised to 123.6.

Comerica Bank’s California Economic Activity Index declined by 0.1 percent in February, now down for the fourth consecutive month. Three of the eight index components posted gains in February including nonfarm employment, state total trade and the Dow Jones Technology Index. Five of the index components were negative for February. They were unemployment insurance (inverted), housing starts, house prices, industrial electricity demand, total trade and hotel occupancy. Our California Index continues to show sluggish economic activity heading into spring. State level labor data remains mixed. California continues to post steady monthly job gains. However, claims for unemployment insurance have ticked up after hitting a cyclical low in November. This has coincided with an increase of California’s unemployment rate from 4.1 percent in December to 4.3 percent in March. Weaker housing data has also weighed on California economic activity, but there are signs of improvement in recent months. According to the California Association of Realtors, existing homes sales rebounded in February and March to around 400,000 units per month. A tight supply of existing homes for sale, lower mortgage rates and moderating home prices will support the market for new homes. Yet, overall low housing affordability in California’s major markets and restrictions to development will limit the upside potential for new home construction in 2019.

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