Comerica Bank's Michigan Index Inched Higher
Comerica Bank's Michigan Economic Activity Index rose to 106.2 in October, marking a 22% increase from its historical low. This is the fourth consecutive month of growth, although the rate of improvement has slowed recently. Key positive indicators include nonfarm employment and housing starts, while negative factors such as industrial electricity demand and light vehicle production present challenges. The auto industry is expected to face weaker sales amid rising COVID-19 cases and decreasing consumer confidence. Comerica reports total assets of $83.6 billion as of September 30, 2020.
- Michigan Economic Activity Index increased to 106.2 in October.
- Fourth consecutive month of growth in the index.
- Positive indicators include nonfarm employment and housing starts.
- Slowing rate of improvement in the Michigan Index over the last three months.
- Negative components include industrial electricity demand and light vehicle production.
- Forecast of weaker auto sales and production during winter.
DALLAS, Jan. 5, 2021 /PRNewswire/ -- Comerica Bank's Michigan Economic Activity Index increased in October to a level of 106.2. October's reading was 22 percent higher than the historical low. The index averaged 117.9 points for all of 2019, 0.6 points below the index average for 2018. September's index reading was 105.6.
Our Michigan economic activity index increased for the fourth consecutive month in October, reflecting improving economic conditions prior to the current surge in coronavirus cases. Ominously, the rate of improvement in the Michigan Index has declined for each of the last three months. We expect to see our state indexes cooling more in late 2020 and early 2021 as states and cities respond to critically limited hospital capacity by tightening and extending social mitigation policies. In October, we saw mixed results for Michigan. Four out of nine index components were positive including nonfarm employment, unemployment insurance claims (inverted), housing starts and house prices. The five negative components were industrial electricity demand, light vehicle production, total state trade, hotel occupancy, and sales tax revenue. While overall manufacturing conditions are improving globally, in the U.S. and in Michigan, the critical auto industry looks vulnerable to weaker sales this winter. Light vehicle production increased in November to an 11.0 million unit annual rate as sales slipped to a 15.9 million unit rate nationwide, down from 16.3 million in September and October. Surging coronavirus cases, combined with declining consumer confidence in December, may result in weaker auto sales and production this winter. Further drag may come from weaker U.S. personal income in December.
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
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SOURCE Comerica Bank
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