Comerica Bank's Michigan Index Declined Through September

Rhea-AI Summary

The Comerica Michigan Economic Activity Index declined at a 3.9% annualized rate for the three months ending September 2022, with seven of its nine components falling.

While the Index is up 3.7% year-over-year, the job market remains mixed with higher jobless claims. Auto production reached a 10.3 million unit pace, indicating a recovery, yet electricity consumption and house prices fell. Housing starts increased but were down 16% in Q3. The overall economic outlook for Michigan suggests slowing growth due to rising interest rates affecting housing and credit-sensitive sectors.

Positive

• Auto production reached a 10.3 million unit annualized pace, indicating recovery.
• The index reflects a 3.7% increase year-over-year, showcasing some resilience.

Negative

• Index declined 3.9% annualized in recent months, with seven components down.
• Higher jobless claims indicate a weakening job market despite employment growth.
• Housing starts fell 16% in Q3 from Q2, signaling potential market weakness.
• Rising interest rates are expected to slow Michigan's economic growth.

DALLAS, Dec. 13, 2022 /PRNewswire/ -- The Comerica Michigan Economic Activity Index fell at a 3.9% annualized pace in the three months through September. Seven of the Index's nine components were down over the period. The Index was up a solid 3.7% from the same month of last year, but that reflects a comparison against a soft patch in the fall of 2021 when the index was falling month-over-month. Michigan's job market looks mixed, with employment up in September but continuing jobless insurance claims higher, too.

Auto production rose to a 10.3 million unit seasonally-adjusted annualized pace in September, topping the 10 million mark for the sixth consecutive month. Auto production appears to have durably recovered to more than 10 million annualized units for the first time since January 2021, and will likely post further gains as supply chain issues continue to fade. But electricity consumption by the state's industrial sector declined in September, and house prices declined too, for a fourth consecutive month. Housing starts rose on the month. However, housing starts were down 16% in the third quarter from the second. Housing is likely to weaken further in the near-term as high prices and soaring mortgage rates weigh on affordability, a big headwind against economic growth.

More broadly, Michigan's economy will likely slow along with the national economy into 2023. Rising interest rates are big minuses for credit-intensive parts of the economy, such as housing and commercial real estate. The auto industry will likely outperform other types of durable consumer goods manufacturing as car dealers restock inventories, but even it could face a lower speed limit on its rebound from higher interest rates.

The Comerica Michigan Economic Activity Index is a monthly composite indicator of state economic activity. The Index provides a wholistic advance view of the state of Michigan's economy, using economic data that are available about one quarter earlier than real GDP is released. The index is comprised of nine components: Nonfarm payroll employment, continuing claims for unemployment insurance, housing starts, house prices, industrial electricity sales, auto and light truck production, foreign trade, hotel occupancy, and sales tax revenue. All data are seasonally adjusted with nominal values converted to constant dollar values as appropriate. To filter out month-to-month volatility in the index components, the index is calculated from the three-month moving averages of its components. Values for a minority of components are projected from the prior months' release due to the timing of data releases.

Comerica Bank is a subsidiary of Comerica Incorporated (NYSE: CMA), 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 $84.1 billion as of Sept. 30, 2022.

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

View original content:https://www.prnewswire.com/news-releases/comerica-banks-michigan-index-declined-through-september-301702164.html

SOURCE Comerica Bank

FAQ

What was the change in the Comerica Michigan Economic Activity Index as of September 2022?

The Comerica Michigan Economic Activity Index declined at a 3.9% annualized pace.

How does the current Michigan job market look according to the recent index?

The job market is mixed, with employment up but jobless claims also increasing.

What are the recent trends in Michigan's auto production?

Auto production rose to a 10.3 million unit pace, marking a recovery.

What impact do rising interest rates have on Michigan's economy?

Rising interest rates are expected to slow economic growth, particularly in housing and credit-sensitive sectors.

How did housing starts perform in Michigan in the third quarter of 2022?

Housing starts rose in September but were down 16% in Q3 compared to Q2.