Comerica Bank’s Michigan Economic Index falls

DETROIT — Comerica Bank’s Michigan Economic Activity Index decreased by 0.2 percent in November to a level of 118.7 from October’s reading of 118.9

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. All data are seasonally adjusted and converted to constant-dollar values. The index is a three-month moving average.

Comerica officials noted that some state-level data was not available this month due to the partial federal government shutdown, so the bank provided its own estimate for housing starts and total state trade. Data for the other seven index components were collected and processed normally.

Just three out of nine index components were positive for the month — nonfarm payrolls, housing starts, and house prices. Components in negative territory were unemployment insurance claims, industrial electricity demand, vehicle production, total state trade, hotel occupancy, and sales tax revenue.

Bank officials noted that over the 12 months ending in November, the index is up only 0.3 percent, indicating the state’s economy lost momentum in the second half of the year. Looking ahead, they said the national and global economy is cooling off this year, which will hurt Michigan’s export sector, which is heavy on manufacturing. And, they said, a drop in consumer confidence in December and January is further bad news for the Michigan auto industry.

November’s reading is 21 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.

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

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