Comerica Bank’s Michigan Index Drops

DETROIT — Comerica Bank’s Michigan Economic Activity Index fell for a third consecutive month in August to a level of 118.1.

The index consists of nine variables: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, the house price index, industrial electricity sales, auto assemblies, total trade, hotel occupancy and sales tax revenue.

Only three out of nine index components were positive in August. They were nonfarm employment, auto production, and state sales tax revenues. The six declining components were unemployment insurance claims, housing starts, house prices, industrial electricity sales, total state trade, and hotel occupancy.

It was the first three-month consecutive decline in the index since early 2015. Overall, the index is little changed since the end of 2016, indicating the Michigan economy has lost momentum over the past two years.

Bank officials said that while auto sales bounced back, the housing sector remains sluggish, with prices stalled and residential construction activity subdued. Consumer confidence remains strong,

To create the index, all data are seasonally and converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

August’s reading was 20 points, or 21 percent, above the index cyclical low of 97.9, reached at the bottom of the last recession in 2007-09. The index averaged 118.2 points for all of 2017, one point above the index average for 2016. July’s index reading was 118.4.

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

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