Comerica Bank's Michigan Index Falls Sharply Through December

Rhea-AI Summary

The Comerica Michigan Economic Activity Index decreased by 3.9% annualized in the three months ending December 2022, though it was up 0.5% year-over-year. Of the index's nine components, only three improved in December while five declined and one remained stable. Employment saw modest increases, but hiring rates significantly dropped in the latter half of the year. Auto assembly was slightly lower at 9.9 million units, marking a reduction after eight months of stability. Housing market indicators worsened with house prices down 1.9% from May and housing starts plummeting nearly 15% from November. The forecast for Michigan's economy suggests a slowdown in 2023 due to high interest rates impacting credit-related sectors.

Positive

• The index is up 0.5% year-over-year, indicating some resilience.
• Employment claims fell in December, suggesting some labor market stability.

Negative

• The index fell 3.9% annualized over the last three months of 2022.
• Auto assemblies decreased to 9.9 million units, indicating potential demand issues.
• House prices dropped 1.9% below their May peak.
• Housing starts fell nearly 15% in December from November, following a 30% drop earlier.

DALLAS, April 12, 2023 /PRNewswire/ -- The Comerica Michigan Economic Activity Index fell 3.9% annualized in the three months through December, but was still up a modest 0.5% from a year ago. Only three of the index's nine components increased in December, while five fell and one was unchanged.

Employment rose modestly in the month—the pace of hiring slowed materially in the second half of the year compared to the first. Continuing claims for unemployment insurance fell in December.

Auto and light truck assemblies declined slightly to 9.9 million units at a seasonally adjusted annualized pace after eight consecutive months around or above 10 million units, indicating supply chain issues are finally abating. Electricity consumption by the state's industrial sector rose modestly in December, but was down 2.1% in the fourth quarter compared to the third.

House prices reverted down in December and were 1.9% below their May peak. Housing starts cratered again by nearly 15% in December from November and follow a 30% crash in November from the previous month.

Michigan's economy will likely slow along with national and global economies in 2023. High interest rates will slow output and sales in credit-intensive sectors, such as housing 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 a decline in demand from high interest rates and inflation.

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 http://www.comerica.com/insights.

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SOURCE Comerica Bank

FAQ

What is the latest Comerica Michigan Economic Activity Index update?

The Comerica Michigan Economic Activity Index fell 3.9% annualized for the three months ending December 2022.

How did employment change in Michigan in December 2022?

Employment rose modestly, but the pace of hiring significantly slowed in the second half of the year.

What happened to auto assembly rates in December 2022?

Auto and light truck assemblies decreased to 9.9 million units, indicating supply chain improvements but also potential demand weakness.

How did house prices perform in Michigan at the end of 2022?

House prices were 1.9% lower compared to their peak in May 2022.

What are the projections for Michigan's economy in 2023?

Michigan's economy is expected to slow, influenced by high interest rates affecting housing and commercial real estate sectors.