Comerica Bank's California Index Improves
Comerica Bank's California Economic Activity Index rose to 114.0 in May, a 23% increase over the historical low of 92.7 recorded in June 2020. The index has shown continuous improvement for 11 months, indicating a robust recovery in California's economy, despite some declines in industrial demand for electricity and housing starts. Risks include rising COVID-19 cases due to the Delta variant and the upcoming expiration of Federal enhanced unemployment benefits in September, which may impact household spending. As of March 31, 2021, Comerica reported total assets of $86.3 billion.
- California Economic Activity Index increased to 114.0, 23% above June 2020 lows.
- Index has improved for 11 consecutive months, indicating economic recovery.
- Majority of sub-indexes, including nonfarm employment and state revenues, showed positive growth.
- COVID-19 Delta variant poses potential risks to economic recovery.
- Nonfarm payrolls remain 1.24 million below February 2020 levels, indicating ongoing labor market challenges.
- Wind down of Federal enhanced unemployment benefits may reduce household spending in Q3.
DALLAS, July 20, 2021 /PRNewswire/ -- Comerica Bank's California Economic Activity Index increased in May to a level of 114.0. May's reading is 23 percent above the historical low of 92.7 set in June 2020. The index averaged 107.9 points in 2020, 18.9 points below the average for all of 2019. April's index reading was unrevised at 110.9.
Our California Economic Activity Index improved for the eleventh consecutive month in May. Seven of the sub-indexes increased in May including nonfarm employment, unemployment insurance claims (inverted), house prices, state total trade, hotel occupancy, enplanements and state revenues. Industrial demand for electricity and housing starts declined for the month. Recent gains in the California Index are consistent with a robust recovery for the state's economy through May. In June, California removed most pandemic restrictions. The delayed reopening puts California's recovery behind other key Comerica markets. However, California's real GDP may see above average gains in Q3 as business activity rebounds, particularly in the services sector. A major risk to the recovery is the current rise in COVID cases due to the Delta variant. Over 70 percent of California's population, 12 and older, are at least partially vaccinated. So, while a third quarter surge in cases could lead to some disruptions to activity, we do not currently expect California to move back into statewide stricter social policies. A headwind to household spending in the second half of 2021 is the wind down of Federal enhanced unemployment benefits which are set to expire in September. California nonfarm payrolls remain 1.24 million below February 2020 levels. Even as hiring improves, the labor reuptake will not be 1-for-1. This means lower incomes for thousands of California households by Q4.
The California Economic Activity Index consists of nine variables, as follows: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, total trade, hotel occupancy, enplanements and state revenues. 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 is a subsidiary of Comerica Incorporated (NYSE: CMA), a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Commercial Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of
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SOURCE Comerica Bank
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