Michigan Economy Cooling Off, Comerica Index Shows

DETROIT — Comerica Bank’s Michigan Economic Activity Index declined in January, falling 1.2 percentage points to a level of 126.5 from 127.6 in December.

The Michigan Economic Activity Index consists of eight variables — nonfarm payrolls, exports, hotel occupancy rates, continuing claims for unemployment insurance, housing starts, sales tax revenues, home prices, and auto production. All data are seasonally adjusted, 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.

Comerica chief economist Robert Dye said it was “the first decline since February 2015. Even though the index has not dipped over the previous year, it also has not elevated much, indicating that the Michigan economy is losing some economic momentum. This would be consistent with peaking auto production and increasing headwinds for other parts of the state’s vital manufacturing sector. In January, most index components declined, including state exports, initial claims for unemployment insurance, housing starts, auto production and hotel occupancy. Nonfarm payrolls, house prices and state sales tax revenues all increased for the month. We expect to see a pattern of modest gains to the index through the remainder of this year, driven by gains in nonmanufacturing industries in Michigan.”

January’s reading is 52 points, or 71 percent, above the index cyclical low of 74, hit at the bottom of the last recession in 2007-09.

The index averaged 124.5 points for all of 2015, seven and one-tenths points above the index average for 2014.

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