Comerica Bank's California Economic Activity Index declined in June to a level of 90.0. June's reading is a new historical low for the index. The index averaged 124.4 points in 2019, 0.5 points above the average for all of 2018. May's index reading was 96.8.
Our state economic activity indexes for June showed some further deterioration in state economies. This is partially a result of smoothing techniques that we use to process the data. However, we expect volatility in the California Index to persist in July and August as a surge in California's COVID cases resulted in stricter social mitigation policies. The California Economic Activity Index declined 7.0 percent in June, after falling 11.1 percent in May. Only three of the eight components were positive in June. They included house prices, the Dow Jones Technology Index and hotel occupancy. The five negative components for the month were nonfarm employment, unemployment insurance claims (inverted), housing starts, industrial electricity demand and state total trade. While the overall index dipped for the month of June, some key parts of the California economy saw mid-summer improvements in activity. The state's single-family housing market continued to lead the economic recovery as low mortgage rates and an exodus from some urban areas drove up demand. We expect multifamily activity to feel some drag from reduced occupancy rates, particularly in the San Francisco market. California's labor market also improved through July. However, it has recouped only 817,100 of the 2.6 million net jobs lost in March and April. A lingering high unemployment rate will be a primary characteristic of California's economic recovery, which will weigh on overall economic activity in 2020 and 2021.
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 Incorporated (NYSE: CMA) is 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 $84 billion at June 30, 2020.
