Comerica Bank’s Michigan Index improves

DETROIT—Comerica Bank’s Michigan Economic Activity Index increased in June to a level of 117.7, from 117.5 in May.

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

Comerica officials say the index was lifted in June by an uptick in housing starts, although they still remain below their 2017 peak. Nonfarm employment was flat in June and has shown no momentum this year. Unemployment insurance claims have trended up gradually since late 2018. House prices are increasing, but at a reduced rate compared to earlier years. Industrial electric demand improved in June but remains below its mid-2016 peak. Auto and light truck production improved in June, but also remains well below its peak in mid-2015. Total state trade fell in June, and is down from early 2018. Hotel occupancy declined for the third consecutive month in June, and is well below its mid-2018 peak. State sales tax revenue also declined in June and remains below its August 2018 peak.

Comerica economists summed it up this way: “In short, the components of our Michigan index show that the state economy is losing momentum. Fortunately for Michigan, U.S. consumer … confidence was strong again in August as interest rates came down. This is a positive combination for auto sales.” However, they also note that “business confidence has been challenged by the recent escalation of the U.S.-China trade war.”

In the index, all data are seasonally adjusted, converted to constant-dollar values, and expressed as a three-month moving average.

June’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.

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