Comerica Bank’s Michigan Economic Activity Index increased in July to a level of 107.6. July’s reading was 25.4 percent higher than the historical low of 85.8 reached in June 2020. The index averaged 100 points for all of 2020, 9.0 points below the index average for 2019. June’s index reading was revised to 107.3.
Our Michigan Economic Activity Index increased by 0.3 percent in July for its eighth consecutive monthly gain. The index is within striking distance of its pre-COVID level of 109.2 from February 2020. We expect it to get there before the end of the year pending increased output by automakers. The auto production sub-index for this July was up slightly for the month at 89.8, still well below its February 2020 level of 106.2. In July, six out of nine sub indexes improved. The gainers were nonfarm employment, unemployment insurance claims (inverted), house prices, light vehicle production, total state trade and hotel occupancy. Industrial electricity demand and state sales tax revenues declined. Housing starts were unchanged. COVID cases increased in Michigan since mid-summer, as they did in many other states. Fortunately, the most recent data through mid-September shows a flattening curve for new cases. We expect business to continue to operate in the state without increased restrictions through the remainder of this year. Even without new restrictions, the state’s manufacturing sector will face the continued challenges of a tightening labor market and supply chain constraints. Light vehicle assemblies increased for the second straight month in August to a 9.235 million unit annual rate, still well below the roughly 11 million unit rate trend through 2018 and 2019.
