Comerica Bank’s Michigan Index climbs again, despite GM strike

DETROIT—Comerica Bank’s Michigan Economic Activity Index increased 0.3 percentage points in July to a level of 118.0 from 117.7 in June.

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.

The index is expressed as a three-month moving average of these variables, with all data seasonally adjusted and converted to constant dollars, without inflation.

July’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 118.4 points for all of 2018, unchanged from 2017.

Comerica economists said July’s increase was the first back-to-back gain for the Michigan Index since late 2017. The five positive components for July were housing starts, house prices, light vehicle production, total state trade, and hotel occupancy. The three declining variables were unemployment insurance claims, industrial electricity demand, and state sales tax revenue.

Nonfarm employment was essentially unchanged in July and has been little changed since January, but economists said the absence of job growth in 2019 is not unique to Michigan. Several other Midwest and East Coast states are also showing little-to-no job growth this year, despite ongoing gains at the national level. Unemployment insurance claims for Michigan have steadily increased since late 2018, meaning that our unemployment insurance claims index for Michigan has steadily declined. Industrial electricity demand also remains below its peak in December 2014. Likewise, light vehicle production remains below its peak in August 2016. Adding to the drag on the Michigan economy is the UAW-GM strike, now in its second week. Comerica economists said they are seeing more reports of layoffs upstream in the supply chain from GM, so the economic impact of the strike is spreading. An extended strike would weigh on the economies of many states, including Michigan.

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