Comerica Bank’s Michigan Index up again

DETROIT — Comerica Bank’s Michigan Economic Activity Index increased by 0.4 percent in November to a level of 118.3, the second straight monthly rise for the index after it stalled through most of 2017.

The Michigan Economic Activity Index consists of nine variables — nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, auto assemblies, total trade, hotel occupancy and sales tax revenue. All data are seasonally adjusted and converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

Eight of the nine factors were positive in November, including nonfarm payrolls, unemployment insurance claims (inverted), housing starts, house prices, auto production, total state trade, hotel occupancy and state sales tax revenues. Industrial electricity demand was negative for the month.

Comerica officials said Michigan nonfarm payroll growth moderated in 2017 and posted the weakest annual gain since 2010. The state’s labor market is getting less of a lift from its manufacturing sector. Total Michigan manufacturing jobs were up just one percent on average over the past two years.

U.S. auto sales finished 2017 on a positive note with help from hurricane-related replacements in Texas, Florida and elsewhere. Comerica officials said they expect to see auto sales ease in 2018, but not a steep decline — another year of above-average auto sales with solid domestic demand anchored by U.S. job creation, high consumer confidence, relatively low borrowing costs, an aging U.S. auto fleet and stimulus from tax reform. Ongoing strong auto production would sustain the state’s economy through 2018, along with an improving service sector. The NAFTA negotiations are a risk factor for the state.

November’s reading is 20 points, or 21 percent, above the index cyclical low of 97.9, reached at the bottom of the last recession. The index averaged 117.3 points for all of 2016, two points above the index average for 2015. October’s index reading was 117.8.

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