Comerica Bank’s Michigan Index dips again

DETROIT–Comerica Bank’s Michigan Economic Activity Index declined in October to a level of 117.8 from a revised September index of 118.

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 officials said the effects of the UAW strike against General Motors impacted some of the variables. In October, only two of the nine components were positive: housing starts and state sales tax revenue. Residential construction rose in many areas late in 2019 as the Federal Reserve cut key interest rates.

Housing prices and hotel occupancy, meanwhile, were unchanged in October, while nonfarm employment, unemployment insurance claims, industrial electricity demand, light vehicle production and total state trade all declined during the month. All declining components were weighed down by the six-week UAW strike. Even though striking workers are not eligible for unemployment insurance benefits, the production shutdown at GM backed up their supply chain, resulting in temporary layoffs of non-striking workers. Many of those workers were eligible for unemployment insurance benefits.

The index is seasonally adjusted, converted to constant-dollar values, and expressed as a three-month moving average.

October’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 118.6 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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