Comerica Bank’s Michigan Index improves

DETROIT—Comerica Michigan Economic Activity Index increased in May to a level of 106.7 from 105.5 in April.

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

Comerica economists said May was the sixth straight month the Michigan index rose, with increasing growth rates over the past three months, approaching the pre-pandemic level of early 2020. Six out of the nine components were positive for the month: housing starts, house parices, light vehicle production, total state trade, hotel occupancy, and state sales tax revenue. Unemployment insurance claims and industrial electricity demand were negative for the month, while nonfarm employment was neutral.

They added that some softening is expected in June after auto plants in Michigan either cut back on production or temporarily closed due to the global computer chip shortage and other supply chain constraints. However, they expect strong employment gains this fall as industrial production gets back to normal and extended unemployment benefits expire.

May’s reading was 24.4 percent higher than the all-time low of 85.8 reached in June 2020, at the bottom of the coronavirus recession. The index averaged 100 points for all of 2020, 9 points below the index average for 2019.

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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