Comerica Bank’s Michigan Index recovers in July

DETROIT—Comerica Bank’s Michigan Economic Activity Index increased in July to a level of 95.1.

July’s reading was 8 points or 10 percent higher than the all time low for the index, reached a month before, in June 2020. June’s index reading was revised to 86.7.

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

Moving up in July were nonfarm payrolls, unemployment insurance claims, housing starts, industrial electricity demand, light vehicle product, total state trade, hotel occupancy, and state sales tax revenue. Only the house price index was negative for the month.

Bank officials said they expect to see an “ongoing strong rebound” in figures for August, but that there’s a “significant downside risk factor” for September, as coronavirus cases spike again.

Light vehicle sales were stable in July and August, near a 15-million-unit-a-year rate, well below the peak 18.7-million-unit sales rate from August 2019. California has just announced that they will ban sales of new gasoline powered cars in 2035. This will add to the push toward electrification of the industry, which will result in a significant reduction in the amount of labor needed per vehicle assembly.

To subscribe to Comerica economic publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights.

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