Comerica Bank's Michigan Index Declined Through October

Rhea-AI Summary

The Comerica Michigan Economic Activity Index fell by 2.9% annualized in the three months through October, despite a 3.6% year-over-year increase. Only four of the index's nine components saw growth in October. Employment in the state rose, but so did continuing claims for unemployment insurance, indicating a mixed job market. Car and light truck assemblies increased to 10.5 million units, but production slowed in subsequent months. House prices declined for five consecutive months, falling 1.9% from the May peak, while housing starts rose by 21.7% year-over-year. The economic outlook for Michigan is cautious due to rising interest rates.

Positive

• Car and light truck assemblies rose to 10.5 million units in October, indicating improving supply chains.
• Housing starts increased for the third consecutive month, up 21.7% from last year.

Negative

• The Comerica Michigan Economic Activity Index fell by 2.9% annualized through October.
• House prices declined for five straight months, down 1.9% from the May peak.
• Continuing claims for unemployment insurance increased, suggesting labor market instability.

DALLAS, Jan. 31, 2023 /PRNewswire/ -- The Comerica Michigan Economic Activity Index fell 2.9% annualized in the three months through October. The Index was up a solid 3.6% from the same month of last year. Only four of the index's nine components increased in October.

Employment rose in the month – but so did continuing claims for unemployment insurance, painting a mixed picture of the state's job market.

Car and light truck assemblies rose to 10.5 million units at a seasonally adjusted annualized pace in October from 10.3 million in September and topped 10 million for the seventh consecutive month. October's run rate was just shy of the 10.6 million units assembled in 2019 prior to the pandemic, a further sign that supply chain disruptions are finally abating; assemblies slowed in November and December, though, which will weigh on the index in the next few releases. Electricity consumption by the state's industrial sector declined in October.

House prices declined for the fifth consecutive month and were down 1.9% from the peak in May. Housing starts rose for a third consecutive month and were still up 21.7% from a year earlier, even after a precipitous decline in July. Housing is likely to weaken further near-term as high prices and soaring mortgage rates weigh on demand.

Michigan's economy will likely slow along with national and global economies in 2023. Rising interest rates will slow credit-intensive sectors, such as housing and commercial real estate investment. 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 due to 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 Michigan, California, Florida and Arizona. Additionally, Comerica has select businesses operating in Canada and Mexico. Comerica reported total assets of $85.4 billion as of Dec. 31, 2022.

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

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SOURCE Comerica Bank

FAQ

What is the latest Comerica Michigan Economic Activity Index report date?

The latest report was released on January 31, 2023.

What was the change in the Comerica Michigan Economic Activity Index through October?

The Index fell by 2.9% annualized in the three months through October.

How did employment change in Michigan according to the January 2023 report?

Employment rose, but continuing claims for unemployment insurance also increased.

What trends were observed in car and light truck assemblies in October 2022?

Assemblies rose to 10.5 million units, marking the seventh consecutive month above 10 million.

How did housing prices in Michigan perform as of January 2023?

House prices declined for the fifth month in a row, down 1.9% from the peak in May.