Comerica Bank’s Michigan Index rises

DETROIT—Comerica Bank’s Michigan Economic Activity Index increased in April to a level of 105.9.

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

Six out of nine components were positive for the month, including nonfarm payrolls, unemployment insurance claims, house prices, industrial electricity demand, hotel occupancy and state sales tax revenue. The two negative components for April were housing starts and light vehicle production. The state trade sub-index was unchanged for the month.

Comerica economists noted that Michigan is clearly participating in the reflation story for the U.S. economy. Michigan’s rebound would be even stronger if vehicle production was not impaired by the global computer chip shortage. The good news is that the latest data for U.S. vehicle assemblies for the month of May showed an improvement over April’s low 8.83 million unit annual rate, to a 9.85 million unit annual rate. Likewise, manufacturing employment in Michigan improved in May, gaining 4,600 jobs, after falling by 7,900 jobs in April. A recent surge in COVID-19 cases in Taiwan has hurt production in chip plants there and delayed normalization in the global chip market. This and other supply chain bottlenecks are expected to keep global auto production throttled back through the second half of this year.

April’s reading was 23.4 percent higher than the historical low reached in June 2020. The index averaged 100 points for all of 2020, 9.1 points below the index average for 2019. March’s index reading was revised to 104.7.

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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