Comerica Bank's California Economic Activity Index improved in March, following four consecutive monthly declines through February. The index components were mixed in March. Three of the eight components were positive for the month. They included nonfarm employment, housing starts and Dow Jones Technology Index. Four of the eight components were negative including unemployment insurance (inverted), house prices, state total trade and hotel occupancy. Industrial electricity demand was unchanged. The California economy lost momentum in late 2018 according to our California Index. This was consistent with the official state GDP data which showed California GDP moderated from a 6.6 percent annualized rate in 2018Q2, to 1.2 percent in 2018Q3 and 2.2 percent in 2018Q4. Our index is indicating that California may see only moderate growth in early 2019 as well. Weaker housing data has weighed on our California Index in recent months. Housing starts have declined in nine of the last 12 months. House prices have also been mixed. San Francisco and Los Angeles house prices improved in February and March after sliding from November to January. San Diego house prices continued to see losses. State labor market data has also been a little softer so far this year. The pace of hiring remains positive, yet the tick up in California's unemployment rate raises a caution flag about the strength of the state's labor market in 2019.
The California Economic Activity Index consists of eight variables, as follows nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, total trade, technology stock index and hotel occupancy. All data are seasonally adjusted. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.
Comerica Bank, with locations in the key California markets of San Francisco and the East Bay, San Jose, Los Angeles, Orange County, San Diego, Fresno, Sacramento, Santa Cruz/Monterey, and the Inland Empire, is a subsidiary of Comerica Incorporated (NYSE CMA). Comerica is a financial services company headquartered in Dallas, Texas, and strategically aligned into three major business segments the Business Bank, the Retail Bank, and Wealth Management. Comerica focuses on relationships and helping businesses and people be successful..
To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http//www.comerica.com/insights.