Comerica’s Michigan economic index improves

DETROIT — Comerica Bank’s Michigan Economic Activity Index increased by 0.2 percent in December to a level of 118.8, up from a revised November reading of 118.6.

The index is comprised of nine variables: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house prices, industrial electricity sales, auto assemblies, total trade, hotel occupancy, and sales tax revenue. The index is a three-month moving average of these figures, with all data seasonally adjusted and converted to constant-dollar values.

In December, six out of the nine components were positive – payroll employment, housing starts, house prices, industrial electricity demand, vehicle production, and state sales tax revenue. Negatives for December was a rise in unemployment insurance claims, total state trade, and hotel occupancy.

Comerica officials noted that the partial government shutdown in December and January is still having an impact on economic data collection, so there may be larger-than-usual revisions in index figures over the next few months.

They noted that the Michigan economy “clearly lost momentum in 2018, increasing in only six months of last year. The last time that the Michigan Index increased for more than three consecutive months was over late 2016 and early 2017.” They noted that consumer confidence dropped at the end of 2018, likely influenced by the government shutdown, but has bounced back since then. Other recent good news – a 6,500-job, $4.5 billion plan by Fiat Chrysler to upgrade five existing plants in Michigan, and Waymo, Google’s autonomous vehicle company, spending $13.6 million in Michigan and creating up to 400 new jobs.

December’s reading was 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 118.6 points for all of 2018, 0.2 points above the index average for 2017.

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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