Comerica Bank's California Index Inches Higher

Rhea-AI Summary

Comerica Bank's California Economic Activity Index rose to 118.4 in August, 27.6% above the historical low of 92.8 from June 2020. This marks the fourteenth consecutive monthly gain, although the growth rate has slowed from a peak of 3.0% in May. Key components such as nonfarm employment and house prices improved, while factors like housing starts and hotel occupancy declined. The impact of COVID-19 and the end of enhanced unemployment benefits may affect future growth, with expectations for continued supply chain constraints into 2022.

Positive

• California Economic Activity Index increased by 0.1% in August.
• Index is 27.6% above the historical low of 92.8 set in June 2020.
• Four components of the index improved: nonfarm employment, unemployment insurance claims (inverted), house prices, and enplanements.

Negative

• Growth rate of the California Index has trended lower from 3.0% in May.
• Declines in housing starts, industrial electricity demand, state total trade, hotel occupancy, and state revenues.
• COVID surge leading to altered household spending and businesses delaying office returns.

DALLAS, Oct. 27, 2021 /PRNewswire/ -- Comerica Bank's California Economic Activity Index increased in August to a level of 118.4. August's reading is 27.6 percent above the historical low of 92.8 set in June 2020. The index averaged 107.9 points in 2020, 18.8 points below the average for all of 2019. July's index reading was 118.3.

Our California Economic Activity Index grew by 0.1 percent in August. This marks the fourteenth consecutive monthly gain in the California Index. Four of the index components improved for the month including nonfarm employment, unemployment insurance claims (inverted), house prices and enplanements. Housing starts, industrial electricity demand, state total trade, hotel occupancy and state revenues fell in August. The growth rate of the California Index reached a strong 3.0 percent in May but has trended lower through August. We expect to see soft data again in September as households altered spending behavior and businesses postponed a broader return to office due to the surge in COVID-D cases. The end to enhanced unemployment benefits in early-September also weighed on household incomes for the month. We look for the California Index to return to stronger growth as COVID cases continue to trend lower and labor markets improve through yearend. The rapid recovery of the overall U.S. economy is causing ongoing supply chain bottlenecks at California ports as increased demand for goods outpace capacity for storage and distribution. To address congestion issues, the Ports of Los Angeles and Long Beach announced that they will begin fining shipping companies for containers that remain at terminals for too long starting in November. We still expect supply chain constraints to persist well into 2022.

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 $94.5 billion as of September 30, 2021.

To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights. Follow us on Twitter: @Comerica_Econ.

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SOURCE Comerica Bank

FAQ

What is the latest California Economic Activity Index level reported by CMA?

The latest California Economic Activity Index level reported by CMA is 118.4 for August.

How much has the California Economic Activity Index increased since June 2020?

The California Economic Activity Index has increased by 27.6% since the historical low of 92.8 in June 2020.

What factors contributed to the August increase in the California Economic Activity Index?

Factors contributing to the increase include improvements in nonfarm employment, house prices, and enplanements.

What are the expected impacts of the ongoing COVID situation on California's economy?

The ongoing COVID situation is expected to lead to continued supply chain constraints and softened economic data.

What is the significance of the end of enhanced unemployment benefits for California's economy?

The end of enhanced unemployment benefits has weighed on household incomes, potentially impacting economic activity.