Comerica Bank’s Michigan Index flat

DETROIT — Comerica Bank’s Michigan Economic Activity Index remained unchanged in January at a level of 118.3 after three straight monthly increases in October, November, and December.

The index is comprised 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.

In January, the index was split between gains and losses. Nonfarm payrolls rose, as did house prices, industrial electricity demand, total state trade, and hotel occupancy.

However, that was offset by declines in unemployment insurance claims, housing starts, auto production, and state sales tax revenue.

All data in the index are seasonally adjusted and converted to constant-dollar values, and represent three-month averages.

January’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 118.1 points for all of 2017, four-fifths of a point above the index average for 2016.

This is not the first time that the index has gone unchanged in recent history. Last year the index stalled in June and turned south from July to September as state nonfarm payrolls declined. At the same time, auto production saw an 11-month decline from November 2016 through September 2017.

Comerica officials said that while January’s stall strikes a cautionary note, there are some positives. First, Michigan continued to see monthly nonfarm payroll gains through February. The labor market remains solid as monthly unemployment insurance claims approach historical lows. Second, while the boost from post-hurricane auto sales last fall continues to dissipate, the sales rate is dropping to pre-hurricane levels slower than originally anticipated. This could be a sign that auto sales will remain stronger than expected this year. A major wildcard this year is international trade. The eighth round of NAFTA talks is tentatively set for April.

To subscribe to Comerica economic publications or for questions, email ComericaEcon@comerica.com. Archives are available at www.comerica.com/insights.

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