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Comerica Bank’s California Economic Activity Index was unchanged in December.



Comerica Bank's California Index Flattens

February 27, 2019
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s California Economic Activity Index was unchanged in December. December’s reading is 27 points, or 27 percent, above the index cyclical low of 97.7. The index averaged 124.0 points in 2018, 2.9 points above the average for all of 2017. November’s reading was revised to 124.3.

Comerica Bank’s California Economic Activity Index was unchanged in December following a slight decline in November. California’s economy has weakened in recent months. This is consistent with the rise in uncertainty seen nationally amongst consumers and businesses at the end of 2018. There were three positive index components in December including nonfarm employment, industrial electricity demand and hotel occupancy. The five negative components for the month include unemployment insurance (inverted), housing starts, house prices, total trade and the Dow Jones Tech Index. California labor data remains generally positive. The state continued to see net job growth through the end of 2018. However, the rise in unemployment insurance claims in December and January are a cautionary sign pointing to a loss of momentum in the state’s labor market. In particular, the Los Angeles metropolitan area saw a moderation in hiring in 2018. Los Angeles also saw a gradual increase in its unemployment rate to 4.3 percent over 7 consecutive months ending in December. California housing data weakened at year-end. Our housing starts index was down 7 out of 12 months in 2018. Moderating house price growth and slightly lower mortgage rates will help ease some of the affordability issues. However, a number of headwinds for housing remain, including a cooler global economy, trade policy and increasing outmigration from California.

For a PDF version of this report, click here: Comerica Bank’s California Index Flattens

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