DETROIT – The latest Comerica Bank’s Michigan Activity Index shows the state’s economy momentum, on the rise since February 2015, is starting to decline.
The Index declined in January, falling 1.2 percentage points to a level of 126.5 from 127.6 in December. But the good news is January’s reading is 52 points, or 71 percent, above the index cyclical low of 74, hit at the bottom of the last recession in 2007-09.
Comerica chief economist Robert Dye said it was “the first decline since February 2015. Even though the index has not dipped over the previous year, it also has not elevated much, indicating that the Michigan economy is losing some economic momentum. This would be consistent with peaking auto production and increasing headwinds for other parts of the state’s vital manufacturing sector. In January, most index components declined, including state exports, initial claims for unemployment insurance, housing starts, auto production and hotel occupancy.
Dye said nonfarm payrolls, house prices and state sales tax revenues all increased for the month. “We expect to see a pattern of modest gains to the index through the remainder of this year, driven by gains in non-manufacturing industries in Michigan.”
The Michigan Economic Activity Index consists of eight variables — nonfarm payrolls, exports, hotel occupancy rates, continuing claims for unemployment insurance, housing starts, sales tax revenues, home prices, and auto production. All data are seasonally adjusted, and indexed to a base year of 2008. Nominal values have been converted to constant dollar values. Index levels are expressed in terms of three-month moving averages.
The index averaged 124.5 points for all of 2015, seven and one-tenths points above the index average for 2014.
