Comerica’s Michigan business index falls

DETROIT–Comerica Bank’s Michigan Economic Activity Index declined in September to a level of 118.1 from 118.3 in August.

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.

Comerica economists said four components of the index were negative and four were positive for the month. The negatives were housing starts, industrial electric demand, light vehicle production, and total state trade. The positives were unemployment claims, house prices, hotel occupancy, and state sales tax revenue.

The employment sub-index was unchanged in September, despite total employment in the state being up only 1,000 jobs since December 2018.

Housing prices have been the most consistent positive for the Michigan Index recently. According to the Case-Shiller data, Detroit area house prices were up 3.6 percent in September over the previous 12 months, ahead of the U.S. average of 3.2 percent. Declines in mortgage rates this year appear to be helping home sales. Going forward we expect mortgage rates to stabilize.

In the index, all data are seasonally adjusted, converted to constant dollar values, and expressed in terms of three-month moving averages.

September’s reading is 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, which was unchanged from the index average for 2017.

Economists said the September index data reflects uncertainty in the Michigan economy as the UAW-GM strike approached. Now that the strike has been resolved, we expect to see better performance in the November numbers, to be released later this year and early next year.
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