Comerica Bank’s Michigan Index Inches Downward

DETROIT — Comerica Bank’s Michigan Economic Activity Index was down slightly in December, by 0.1 percentage points, to a level of 129.7.

The Michigan Economic Activity Index consists of eight variables: nonfarm payrolls, exports, hotel occupancy rates, continuing claims for unemployment insurance, housing starts, sales tax revenues, home prices, and auto production.

All data are seasonally adjusted, indexed to a base year of 2008, and converted to constant dollar values to eliminate the effects of inflation. Index levels are expressed in terms of three-month moving averages.

Said Robert Dye, Comerica chief economist: “Five components were positive for the month, including nonfarm payrolls, housing starts, home prices, state sales tax receipts and hotel occupancy. The negative factors were state exports, unemployment insurance claims and auto production. The strong dollar and uncertainty about U.S. trade agreements imply ongoing downside risk for Michigan’s international exports. However, a stronger domestic economy would be a counterweight to reduced global demand. Auto production also has downside risk with the expectation that U.S. auto sales will ease this year after the record pace of 2016. Again, a stronger U.S. economy could shift that expectation. Higher interest rates this year are another potential headwind for Michigan, likely reducing both housing and auto affordability.”

December’s reading is 56 points, or 75 percent, above the index cyclical low of 74.1, reached at the bottom of the last recession in 2007-09. The index averaged 127.8 points for all of 2016, four and one-fifth points above the index average for 2015. November’s index reading was 129.8.

To subscribe to Comerica economic publications, emailĀ  ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/economics.

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