Comerica Bank’s Michigan Index flattens

DETROIT—Comerica Bank’s Michigan Economic Activity Index went unchanged in May at a level of 117.5.

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 also expressed as a three-month moving average.

Comerica economists noted the latest reading is a continuation of a relatively flat index since January 2018. On the bright side, they said, Michigan continues to generate new jobs, though employment was only up 0.4 percent over the past 12 months, vs. the national increase of 1.6 percent. Other factors are holding down the Michigan Index. Unemployment insurance claims have been trending up this year. Housing starts have been declining for two years. Industrial electricity demand has also eased over the last 2 years. Auto production has slipped this year as well.

In May, three of the nine index factors were positive—house prices, total state trade, and sales tax revenue. Trending negative were payroll employment, unemployment insurance claims, housing starts, industrial electric demand, auto and light truck production, and hotel occupancy.

Looking ahead, trade issues remain unsettled for the state, with a trade war with China brewing and the USMCA trade deal remaining unratified by the United States and Canada.

May’s reading is 20 points, or 20 percent, above the index cyclical low of 97.9, reached at the bottom of the last recession in 2007-09. The index averaged 118.4 points for all of 2018, 0.1 points above the index average for 2017.

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

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