Comerica’s Michigan Index declines

Economic activity report breaks eight-month streak but still is higher than in 2020.
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Robert Dye. Courtesy Comerica Bank

Comerica Bank’s Michigan Economic Activity Index broke an eight-month streak of gains by declining in August.

The bank’s monthly index report showed a decrease in August to a level of 106.6. August’s reading was 24.4% higher than the historical low of 85.7 reached in June 2020 and still above the average of 100 points for all of 2020, which was nine points below the index average for 2019.

July’s index reading was revised to 107.4.

“Our Michigan Economic Activity Index eased by 0.8 points, or 0.7%, in August. This was the first monthly decline since last November, breaking a string of eight consecutive monthly gains,” said the report authored by Robert Dye, senior vice president and chief economist at Comerica.

The August index level of 106.6 was still well below the May 2018 peak. In August, only three out of nine index components increased: nonfarm payrolls, unemployment insurance claims (inverted) and house prices.

The four decliners were housing starts, industrial electricity demand, light vehicle production and sales tax revenue. Total state trade and hotel occupancy were little changed.

“The Michigan economy is being held back by supply chain issues and labor shortages plaguing the state’s key manufacturing industries,” Dye wrote. “U.S. auto and light truck assemblies fell to a weak 6.45-million-unit annual rate in September, well down from the peak 8.95-million-unit rate from July 2020.”

Michigan’s unemployment rate fell to a moderately tight 4.6% in September, still above the pre-pandemic 3.7%.

“The global shortage of computer chips is a key issue for automakers, but they also face shortages of resin, steel, paint and other inputs, in addition to labor,” Dye said. “Industry experts estimate that lost production this year will cost U.S. automakers $210 billion. Manufacturing employment in Michigan has been stable at about 573,000 workers since recovering from the spring 2020 shutdowns. This is well shy of the pre-pandemic peak of about 633,000 workers.”

The bank’s Michigan Economic Activity Index consists 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. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages. 

Comerica Bank is a subsidiary of Comerica Inc. (NYSE: CMA), a financial services company headquartered in Dallas and strategically aligned by three business segments: The Commercial Bank, The Retail Bank and Wealth Management. In addition to Texas, Comerica Bank has locations in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $94.5 billion as of Sept. 30.

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