Comerica Bank’s California Economic Activity Index took a slight dip in July

The index reported a decrease of 0.1 percent in July to a level of 124.4. The index averaged 124 points in 2018.

This followed four consecutive monthly increases from February to June.

The Index consists of eight variables: 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. Index levels are expressed in terms of three-month moving averages.

According to Comerica, “There were more index components down than up in July. The three positive sub-indexes for July were nonfarm employment, unemployment insurance claims (inverted) and total state trade. The four negative sub-indexes for the month were housing starts, industrial electricity demand, the Dow Jones Technology Index and hotel occupancy. The state house price index remained unchanged in July.”

On the plus side, the state’s labor market is still generating net new jobs. Year-over-year nonfarm employment reaccelerated following a slowdown in the pace of hiring at the end of 2018 and into early 2019. California unemployment insurance claims have also steadily declined from June to August, according to the index.

However, two proxies for business activity in the state appear a bit soft in recent months. Industrial demand for electricity was down in nine of the 12 months ending in July. California hotel occupancy also saw decline for the six consecutive months ending in July. Uncertainty in the technology sector is a wild card for the index heading into the end of 2019. Increased tariffs on consumer goods imported from China and the rising interest in the U.S. Congress to look into the business practices of tech companies may lead to more disruptions for the industry, Comerica said.

Dallas-based Comerica bank has locations in the key California markets, including San Diego.