Comerica Bank’s Michigan Economic Activity Index remained flat in February at a level of 118.3. January’s reading is 20 points, or 21 percent, above the index cyclical low of 97.9. The index averaged 118.1 points for all of 2017, four-fifths of a point above the index average for 2016.
Comerica Bank’s Michigan Economic Activity Index was unchanged at 118.3 in February, for the third consecutive month at that level. The Michigan Index remains below its recent peak of 118.6 from May and June of last year. Five out of nine index components were positive in February. They were nonfarm employment, unemployment insurance claims (inverted), house prices, industrial electricity consumption and auto and light truck production. The four negative index components were housing starts, total state trade, hotel occupancy and state sales tax revenues. Michigan’s economy has clearly lost momentum as the U.S. business cycle ages. Vehicle production was a consistent weight on the index from November 2016 through September 2017. The auto sales surge from last fall allowed automakers to ramp up production again in early 2018, but we believe that will be short-lived. We expect to see flat-to-gradually declining auto sales for the remainder of this year. That will keep production in check and contribute to an ongoing flat index for Michigan in 2018. We forecast the non-auto components of the state economy to be flat-to-positive through the remainder of this year. We expect tight housing supply to continue to support house price gains this year. However, Michigan’s ongoing net population outflow, resulting in weak population growth, will keep new home construction subdued compared to other markets.
For a PDF version of this report click here: MI-Index-0418.
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