Comerica Bank's Michigan Index Climbs

Rhea-AI Summary

Comerica Bank's Michigan Economic Activity Index rose to 108.6 in December, a 25% increase from the low in June 2020. This marks the index's strongest monthly gain since September, with six out of nine sub-indexes showing positive trends, including housing starts and state sales tax revenues. However, challenges exist, including a bifurcation in data between manufacturing and services, and concerns over the impact of a global chip shortage on Michigan’s auto industry. In 2020, the index averaged 104.6, 13.2 points lower than in 2019.

Positive

• Michigan Economic Activity Index increased 25% from June 2020 low.
• Index rose to 108.6, marking the strongest gain since September.
• Six out of nine sub-indexes were positive, indicating overall recovery.

Negative

• Bifurcation between strengthening manufacturing data and weak services data.
• Potential impact of global chip shortage on Michigan's auto industry.
• Year-end fiscal stimulus may have artificially boosted unemployment claims data.

DALLAS, Feb. 24, 2021 /PRNewswire/ -- Comerica Bank's Michigan Economic Activity Index increased in December to a level of 108.6. December's reading was 25 percent higher than the historical low reached in June 2020. The index averaged 104.6 points for all of 2020, 13.2 points below the index average for 2019. November's index reading was revised to 106.4.

Our Michigan economic activity index increased for the sixth consecutive month in December, showing the strongest monthly gain since September. Six out of nine sub-indexes were positive in December. They were nonfarm unemployment insurance claims (inverted), housing starts, house prices, industrial electricity demand, light vehicle production and state sales tax revenues. The three decliners were nonfarm payrolls, total state trade and hotel occupancy. There are three key factors that are causing us to temper our optimism about the headline gain in many states this month. First, is that we use a three-month moving average to smooth out the volatility that typically comes with regional economic data. So, this may underweight any drag from tighter social mitigation policy at year-end. Related to social policy, we are seeing a bifurcation between manufacturing-related economic data, which is generally strengthening, and services-related economic data, which may not be strengthening, at the regional, U.S. and international levels. So, a positive headline reading for any state this winter does not necessarily mean that conditions are improving for all industries in that state. Finally, timing issues around the year-end fiscal stimulus package may have artificially improved some data related to unemployment insurance claims. We also expect to see drag on Michigan's auto industry in February as the global computer chip shortage restricts production.

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.

Comerica Incorporated (NYSE: CMA) is a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Commercial Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Texas, Comerica Bank locations can be found in Arizona, California, Florida and Michigan, with select businesses operating in several other states, as well as in Canada and Mexico. Comerica reported total assets of $88 billion as of Dec. 31, 2020.

To subscribe to our publications or for questions, contact us at ComericaEcon@comerica.com. Archives are available at http://www.comerica.com/insights. Follow us on Twitter: @Comerica_Econ.

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SOURCE Comerica Bank

FAQ

What is Comerica's Michigan Economic Activity Index reading for December 2020?

The Michigan Economic Activity Index rose to 108.6 in December 2020.

How does December 2020's index compare to the historical low?

December's reading is 25% higher than the historical low reached in June 2020.

What were the main factors contributing to the index's increase?

Six out of nine sub-indexes were positive, including housing starts and state sales tax revenues.

What challenges does the Michigan economy face as reported in the index?

The Michigan economy faces challenges like a bifurcation in manufacturing vs. services data and impacts from a global chip shortage.

What was the average Michigan Economic Activity Index for 2020?

The index averaged 104.6 points for all of 2020, which is 13.2 points lower than in 2019.