Comerica Bank’s Michigan Index improves

DETROIT—Comerica Bank’s Michigan Economic Activity Index increased in December to a level of 117.9 from 117.4 in November.

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 nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

The December index improvement breaks a string of three consecutive monthly declines. Increased residential construction and the normalization of automobile production after the resolution of the GM/UAW strike were key factors. The five positive index components in December were nonfarm employment, housing starts, house prices, light vehicle production and hotel occupancy. The four negative components were unemployment insurance claims, industrial electricity demand, total state trade and state sales tax revenue.

Trade–related uncertainty for the Michigan economy diminished at the end of 2019 with the resolution of the Phase 1 trade with China and the USMCA trade agreement. The direct and indirect effects of the coronavirus outbreak in both Asia and Europe represents threats to supply chains in Michigan as well as to final demand for Michigan exports. We expect to see continued weak global trade data in 2020.

December’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 117.8 points for all of 2019, 0.8 points below the index average for 2018.

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