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Comerica Bank's California Index Stalls

DALLAS, Oct. 31, 2019 /PRNewswire/ -- Comerica Bank's California Economic Activity Index was unchanged in August at a level of 124.4. August's reading was 27 points, or 27 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. July's reading was 124.4.

Comerica logo. (PRNewsFoto/Comerica Bank) (PRNewsfoto/Comerica Bank)

Comerica Bank's California Economic Activity Index went unchanged again in August. After revisions to historical data, the California Index has gone unchanged since May of this year. There were more sub-indexes down than up in August. The three positive contributors for the month included nonfarm employment, unemployment insurance and the Dow Jones Technology Index. Five factors were negative in August including housing starts, house prices, industrial electricity, total state trade and hotel occupancy. While the California Index has stalled in recent months, it has been essentially range bound since March 2018. The downturn in residential construction is weighing on the California economy. State housing starts declined 13 out of the last 18 months and were down 30 percent in August from the March 2018 peak. Governor Gavin Newsom signed 18 bills into law in October to support new home construction and to address the state's housing affordability crisis. This still may not be enough to stem the outflow of residents and businesses to more affordable areas. Trade has also been a drag on California economic activity. State total trade was down 10.6 percent in August from its February 2018 peak. The Phase 1 trade deal represents a near term cease fire in the trade war. The agreement could be signed as early as mid-November. Recent power outages due to the threat of wildfires are yet another drag for some California businesses.

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 (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..

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