Comerica Bank’s Michigan Index ticks higher

DETROIT—The Michigan Economic Activity Index compiled by economists at Comerica Bank increased in March to a level of 104.9.

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 as a three-month moving average.

It was the fourth straight rise for the index, as six out of the nine variables were positive for the month: nonfarm payrolls, unemployment insurance claims, housing starts, house prices, industrial electricity demand, and hotel occupancy. The three negative components for March were light vehicle production, total state trade, and state sales tax revenues. All those components share a common cause: constrained vehicle production this spring, caused by supply chain issues, especially of the computer chips now used in auto production.

Nevertheless, Comerica economists said the state’s economy is gaining momentum, particularly in services and construction, as pandemic business restrictions are eased. Bars and restaurants should continue to hire. And as the computer chip shortage eases, manufacturing employment should improve through the summer.

March’s reading was 23 percent higher than the historical low reached in June 2020. The index averaged 99.9 points for all of 2020, 9.2 points below the index average for 2019. February’s index reading was revised to 104.1.

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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