Comerica Bank's Michigan Index Rose Through August

Rhea-AI Summary

The Comerica Michigan Economic Activity Index rose by 2.2% annualized in the three months ending August, reflecting a 4.0% increase year-over-year. Although the Index has slowed recently, five of its nine components improved, including rising employment and decreasing unemployment claims. Auto production reached an annualized pace of 10.33 million units, the highest since November 2020. However, house prices fell for the third month, with expectations for a slowing economy as rising interest rates impact sectors like housing and commercial real estate.

Positive

• Index rose 2.2% annualized over three months.
• 4.0% year-over-year increase in the Index.
• Auto production at annualized pace of 10.33 million units.

Negative

• House prices declined for three consecutive months.
• Expectations of an economic slowdown due to rising interest rates.

DALLAS, Nov. 9, 2022 /PRNewswire/ -- The Comerica Michigan Economic Activity Index rose at a 2.2% annualized pace in the three months through August. The Index has slowed in the past two months, after posting stronger gains in the first half of the year. Even so, the Index was up a solid 4.0% from the same month of last year. Five of the Index's nine components improved in August. Employment rose in the month, and continuing claims for unemployment insurance fell, demonstrating the state's job market's continued recovery toward pre-pandemic levels.

Auto production rose to an annualized pace of 10.33 million units in August, the highest since November 2020. Auto production has moved back above the 10 million annualized rate in four of the past five months. As supply chains further improve, additional gains are likely. Electricity consumption by the state's industrial sector rose, another sign of the resurgence of Michigan's industrial activity. However, house prices declined for a third consecutive month in August. While housing starts rose on the month, they are likely to weaken in the near-term as high house prices and soaring mortgage rates weigh on the housing market and blow a strong headwind against the state's positive momentum.

More broadly, Michigan's economy will likely slow along with the national economy into 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 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 www.comerica.com/insights.

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FAQ

What did the Comerica Michigan Economic Activity Index report for August 2022?

The Index rose by 2.2% annualized, with a 4.0% increase from the previous year.

How did employment change in Michigan according to the recent report?

Employment rose, and continuing claims for unemployment insurance fell, indicating recovery in the job market.

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

Rising interest rates are expected to slow down credit-intensive sectors like housing and commercial real estate.

What is the current auto production pace in Michigan?

Auto production reached an annualized pace of 10.33 million units, the highest since November 2020.

What economic challenges does Michigan face going into 2023?

The state's economy is likely to slow along with the national economy, with a potential decrease in housing starts.