Comerica Bank’s California Economic Activity Index was up by 0.1 points in March to 124. March’s reading is 26 points, or 27 percent, above the index cyclical low of 97.7.
While the index showed only a modest gain in March, the longer-run trends of the underlying data series remain positive and are consistent with an ongoing moderate economic expansion for California this year.
The index averaged 121.2 points in 2017, two and three-fifths points above the average for all of 2016. February’s reading was revised up to 123.9.
According to Comerica, the sub-indexes were mixed for March. Six of the eight were positive including nonfarm payroll employment, unemployment insurance claims, housing starts, house prices, industrial electricity demand and the Dow Jones Tech Stock Index. The two sub-indexes that were negative for March were state total trade and hotel occupancy.
Limiting the upside growth to state economic activity in recent months was the slowdown in the pace of hiring in February and March, Comerica said. However, the state added a net 39,200 jobs in April, building some momentum for the California economy heading in the second half of 2018. Construction is the fastest growing sector in terms of the pace of hiring, with one-in-four jobs gained in the state attributed to the sector since the start of 2018. This is consistent with other positive data on the state’s housing sector. The housing starts sub-index reading for March was the highest level since early 2007. Home prices also continue to climb, up 7.6 percent in San Diego, 8.1 percent in L.A. and 11.2 percent in San Francisco year-over-year in March.
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.
Dallas-based Comerica Bank has locations in key California markets including San Diego, San Francisco and Orange County and Los Angeles.