Comerica Bank's Michigan Index Eases

DETROIT — Comerica Bank’s Michigan Economic Activity Index fell 0.4 percentage points in July to a level of 129.4.

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.

Said Comerica Chief Economist Robert Dye: “We have seen an overall upward trend in the index, with a back-and-forth monthly pattern since late 2015. Job growth in Michigan is looking choppy. State payroll employment was up by 2.4 percent in July over the previous 12 months, but the month-to-month pattern has been jarred by net job losses in May and August. Ford Motor Company announced that they will move all small car production to Mexico over the next two-to-three years. They will use Michigan capacity for higher margin vehicles. Over time, we expect to see an overall decline in auto production from Michigan. Manufacturing employment in Michigan has leveled out this year. We look for growth in the service sector to sustain the state’s economic expansion through the remainder of this year.”

July’s reading is 55 points, or 75 percent, above the index cyclical low of 74.1, reached at the bottom of the last recession in 2007-09. The index averaged 123.6 points for all of 2015, five and four-fifths points above the index average for 2014. June’s index reading was 129.8.

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