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Comerica Bank’s Michigan Index Increases

February 28, 2018
By Robert A. Dye, Ph.D., Daniel Sanabria

Comerica Bank’s Michigan Economic Activity Index increasedby 0.3 percent in December to a level of 118.6.December’s reading is 21 points, or 21 percent, above theindex cyclical low of 97.9. The index averaged 118.2 pointsfor all of 2017, nine-tenths of a point above the index averagefor 2016. November’s index reading was 118.3.

Comerica Bank’s Michigan Economic Activity Index movedup again in December, its third consecutive monthly increase.Gains across the Michigan economy were widespread.Seven of the nine factors were positive in December,including nonfarm payrolls, unemployment insuranceclaims (inverted), housing starts, house prices, auto production,total state trade and hotel occupancy. Industrialelectricity demand and state sales tax revenues were bothnegative. The Michigan economy has been riding the tailwindof a late 2017 increase in domestic auto production.After hitting its cyclical peak in 2015 and 2016, auto productionbegan to slow through the first half of 2017. Thedestruction of autos from last year’s hurricanes, whichstruck Texas and Florida, helped pull forward automobiledemand. The boost to demand is proving temporary. U.S.auto sales slid from a 17.8 million unit rate in December to17.2 million in January. We expect auto sales to continuemoderating this year, which will pull domestic auto productiondown, and this will be drag on our Michigan Index.We also look for moderating job growth in non-autorelatedmanufacturing in Michigan this year. This meansthe state will rely more on its services sector to push upjob and economic growth moving forward. The U.S., Canadaand Mexico are in the seventh round of NAFTA discussionsin Mexico City. This round of negotiations is expectedto end in early March without a final agreement.

For a PDF version of this report click here: MI_Index_0218

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