Comerica Bank’s California Economic Activity Index held flat for the fifth straight month in December, at a level of 99. December’s reading is 36 percent, or 26 points, above the index cyclical low of 73. The index averaged 99 points for all of 2011, compared with 91 points for 2010.
“Growth in the California economy remained subdued at the end of 2011. We continue to see strong signs from Silicon Valley and the energy sector, but overall job growth remains weak, suppressed by minimal construction activity and cutbacks in government employment,” said Robert Dye, Chief Economist at Comerica Bank. “Stronger recent data from the service sector indicates that private nonmanufacturing hiring will improve through 2012. Gains in multifamily construction will also help this year. However, the government sector remains challenged and defense industries and defense intensive regions face headwinds from expected cuts in federal spending. Slower growth in Asia through 2012 is another drag that will keep California’s economic growth in check through the first half of the year.”
As of this release, the California Economic Activity Index has been reconfigured to more accurately reflect inflection points in the business cycle. The revised California index consists of eight variables, as follows: nonfarm payrolls, exports, sales tax revenues, hotel occupancy rates, continuing claims for unemployment insurance, building permits, Baker Hughes rotary rig count and the Silicon Valley 150 Index (SV150). All data are seasonally adjusted, as necessary, and indexed to a base year of 2008. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.