Comerica Bank's Michigan Index Moves Lower

Rhea-AI Summary

The Comerica Bank's Michigan Economic Activity Index dropped to a historical low of 90.3 in May 2020, down from a revised 102.4 in April. This decline reflects severe economic impacts from the coronavirus pandemic, particularly in the auto industry. Eight out of nine sub-indexes fell, with only the house price index showing an increase. Vehicle production resumed but remains below 2019 levels, with auto sales recovering slightly. The index is expected to improve in the coming months, but pre-crisis levels may not be reached this year.

Positive

• Vehicle production resumed in May after a near halt in April.
• U.S. auto sales improved to a 12.7 million unit annual rate in June, up from 9.0 million in April.

Negative

• Michigan Economic Activity Index reached a historical low of 90.3 in May.
• Eight out of nine sub-indexes declined in May.
• Auto production is still below the 10.6 million unit average rate for 2019.

DALLAS, July 29, 2020 /PRNewswire/ -- Comerica Bank's Michigan Economic Activity Index declined in May to a level of 90.3. May's reading marks a new historical low for the index. The index averaged 117.7 points for all of 2019, 0.9 points below the index average for 2018. April's index reading was revised to 102.4.

Our state economic activity indexes for May show the historic decline in economic activity this spring due to the coronavirus pandemic. The Michigan economy was hit particularly hard as auto production ground to a near halt in April, which is still impacting our May Index. Eight out of nine sub-indexes declined in May for Michigan. They were nonfarm employment, unemployment insurance claims (inverted), housing starts, industrial electricity demand, light vehicle production, total state trade, hotel occupancy and state sales tax revenue. As in April, the only monthly increase came from the house price index. We again note that house price data for Michigan has been limited this spring, and so we are making estimates that may be revised later. Vehicle production resumed in May after a near halt in April. June saw a further increase in auto and light truck production to an 8.3 million unit annual rate, still well below the 10.6 million unit average rate for 2019. U.S. auto sales have improved since bottoming out at a 9.0 million unit annual rate in in April. June saw an increase to a 12.7 million unit sales rate. Total sales for 2019 were 17.0 million units. Michigan is among the large group of states that saw an increase in coronavirus infections through July. As a result, Governor Whitmer extended her emergency declaration through August 11, limiting public gatherings and service at bars. We expect to see improvement in the Michigan Index in the next few months, but the index will likely not return to its pre-crisis level this year.

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 $84 billion at June 30, 2020 and celebrated its 170th anniversary in August 2019.

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 does the Comerica Michigan Economic Activity Index indicate for May 2020?

The index dropped to 90.3, indicating a significant decline in economic activity due to the coronavirus pandemic.

What factors contributed to the decline in the Michigan Economic Activity Index in May 2020?

The decline was driven by decreased nonfarm employment, increased unemployment claims, reduced housing starts, and lower industrial electricity demand.

How did vehicle production in Michigan perform in May 2020?

After a near halt in April, vehicle production resumed in May but remained below the 2019 average.

What were the auto sales figures for June 2020?

U.S. auto sales improved to a 12.7 million unit annual rate in June, up from a low of 9.0 million in April.

What is the outlook for the Michigan Economic Activity Index after May 2020?

Improvement is expected in the index in the coming months, but it may not return to pre-crisis levels this year.