DETROIT – The Comerica Michigan Economic Activity Index jumped 5.2% annualized in the three months through April, although it was still down 0.4% from a year earlier after declines between June and February. Six of the index’s nine components increased in April, while three fell.

Employment rose by a solid 10,800. While continuing claims for unemployment insurance were higher, the unemployment rate fell to the lowest since early 2020’s pre-pandemic low.

Auto and light truck assemblies are back to the highest since mid-2020 as the chip shortage fades in the rear-view. Industrial electricity consumption was up 2% from a year earlier in April, although it was down slightly from March after big increase in that month. Housing starts have been volatile in early 2023 and in April were about a fifth below their level a year earlier. With listings tight, house prices rose sharply in March and April, and have now fully reversed their decline from mid-2022 to early-2023.

Michigan’s economy grew by 1.8% in 2022, slightly below the national average of 2.1%. The trend held in the first quarter, with Michigan’s GDP growth of 1.8% a tad below the national average of 2.0%. Michigan’s economy will likely slow along with the national economy in 2023. High interest rates will slow output and sales in credit-intensive sectors, such as housing, manufacturing, and commercial real estate investment. The auto industry will likely outperform other sectors of durable consumer goods manufacturing as car dealers restock inventories, but even it is not impervious to the effects of high interest rates and inflation on consumer demand.
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