DETROIT – Comerica Bank’s Michigan Economic Activity Index increased in August to a level of 103.1, some 19 percent, higher than the cyclical low. But the index averaged 117.7 points for all of 2019.
Our Michigan Economic Activity Index rebounded in July and August as a result of the early summer business re-openings and resumption of economic activity. We expect the index to show ongoing improvement in September as well.
In August, all nine sub-indexes improved for at least the second consecutive month. Housing starts, light vehicle production and hotel occupancy have improved for three consecutive months. House prices have continued to firm since late 2019.
As the center of the U.S. auto industry, Michigan faces both regional and national risk factors through the remainder of this year.
Regionally, Comerica was very concerned about the spread of the coronavirus through the manufacturing intensive Midwest region. A late-2020 surge in cases could lead to more restrictive social mitigation policies and their associated drag on the regional and national economies.
Nationally, there is downside risk for car and truck demand that could potentially lead to reduced vehicle production, and manufacturing employment, in Michigan. To date, light vehicle demand has bounced back after the spring lows.
September saw a 16.6 million unit sales rate for the U.S. as improved consumer confidence allowed pent-up demand from last spring to get spent out. Boeing’s recent announcement that the 737 Max is near final FTA approval is also good news for western Michigan manufacturers.
The Michigan Economic Activity Index consists of nine variables, as follows: nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house price index, industrial electricity sales, auto assemblies, total trade, hotel occupancy and sales tax revenue. All data are seasonally adjusted. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.
