Comerica Bank’s Michigan Index Flattens

Comerica Bank’s Michigan Economic Activity Index went unchanged in May at a level of 117.5. May’s reading is 20 points, or 20 percent, above the index cyclical low of 97.9. The index averaged 118.4 points for all of 2018, 0.1 points above the index average for 2017. April’s index reading was revised to 117.5.

Comerica Bank’s Michigan Economic Activity Index was unchanged for the second consecutive month in May. The headline index has clearly flattened out over the last year and a half. In fact, in the 17 months since January 2018, the Michigan Index has only increased in three months. It decreased in eleven months and was unchanged in three months. The good news for the state is that it continues to generate new jobs. However, it is fair to say that the pace of job growth is slipping. In May, Michigan payroll employment was up by 0.4 percent over the previous 12 months, well below the U.S. national rate of 1.6 percent. Other factors are holding down the Michigan Index. Unemployment insurance claims have been trending up this year. Housing starts have been declining for two years. Industrial electricity demand has also eased over the last 2 years. Auto production has slipped this year as well. In May, three factors were positive. They were house prices, total state trade and sales tax revenue. The six negatives for May were payroll employment (barely), unemployment insurance claims, housing starts, industrial electricity demand, auto and light truck production and hotel occupancy. Trade issues remain unsettled for the state. The USMCA trade deal was ratified by Mexico in June, but remains unratified by the U.S. and Canada. The U.S./China trade war is also unresolved with no clear prospects for a reduction in imports tariffs.

The Michigan Economic Activity Index consists of nine variables, as follows: 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. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.

Comerica Bank, with one of the largest banking center networks in Michigan, is a subsidiary of Comerica Incorporated (NYSE: CMA), a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Michigan and Texas, Comerica Bank locations can be found in Arizona, California, and Florida, with select businesses operating in several other states, as well as in Canada and Mexico.