Comerica Bank’s Michigan Economic Activity Index fell again in August to a level of 118.1. August’s reading is 20 points, or 21 percent, above the index cyclical low of 97.9. The index averaged 118.2 points for all of 2017, one point above the index average for 2016. July’s index reading was 118.4.
Comerica Bank’s Michigan Economic Activity Index fell for the third consecutive month in August. This is the first three-month drop for the Michigan Index since early 2015. The August index value of 118.1 is little changed since the end of 2016, telling us that the Michigan economy has lost momentum over the last two years, coincident with the levelling of U.S. auto sales that began in late 2015. In 2018 it looks like the trend in auto sales is down even though they bounced back in September, to a 17.4 million unit rate. A key missing piece for the Michigan economy is momentum in the housing sector. Residential construction activity remains subdued. House prices have advanced in this business cycle, but appear to have stalled out this summer. Only three out of nine index components were positive in August. They were nonfarm employment, auto production and state sales tax revenues. The six declining components were unemployment insurance claims (inverted), housing starts, house prices , industrial electricity sales, total state trade and hotel occupancy. Consumer conditions in the U.S. are good with strong labor markets and high consumer confidence. However, Michigan’s auto sector has some headwinds in the form of higher materials and labor costs and higher interest rates. The resolution of the U.S.-Mexico-Canada Trade Agreement removes some uncertainty for many Michigan businesses. The pact remains to be ratified by each country.
For a PDF version of this article, please click here: Comerica Bank's Michigan Index Drops
The articles and opinions in this publication are for general information only, are subject to change, and are not intended to provide specific investment, legal, tax or other advice or recommendations. The information contained herein reflects the thoughts and opinions of the noted authors only, and such information does not necessarily reflect the thoughts and opinions of Comerica or its management team. We are not offering or soliciting any transaction based on this information. We suggest that you consult your attorney, accountant or tax or financial advisor with regard to your situation. Although information has been obtained from sources we believe to be reliable, neither the authors nor Comerica guarantee its accuracy, and such information may be incomplete or condensed. Neither the authors nor Comerica shall be liable for any typographical errors or incorrect data obtained from reliable sources or factual information.