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Comerica Bank's Michigan Index Improves

DALLAS, Oct. 31, 2019 /PRNewswire/ -- Comerica Bank's Michigan Economic Activity Index increased in August to a level of 118.3. August's reading is 20 points, or 21 percent, above the index cyclical low of 97.9. The index averaged 118.4 points for all of 2018, which was unchanged from the index average for 2017. July's index reading was revised to 118.1.

Comerica logo. (PRNewsFoto/Comerica Bank) (PRNewsfoto/Comerica Bank)

Comerica Bank's Michigan Economic Activity Index ticked up in August, showing the third consecutive monthly gain. The timing of the uptick in the Michigan Index is fortuitous, coming ahead of the GM/UAW strike which lasted for 40 days, from September 16, until October 25. We expect September and October data for the state to be depressed because of the strike. In August, seven out of nine index components were positive, including nonfarm payrolls, unemployment insurance claims (inverted), housing starts, house prices, industrial electricity demand, auto production, and state sales tax revenue. Total state trade was a negative for August, and hotel occupancy was unchanged. It is conceivable that every index component could be a negative for October. We already know that payroll employment for the state dropped in September, down by 5,700. We expect October payrolls to show a much larger decline as the full weight of the strike shows up in the numbers, along with disruptions to nonunionized workers farther up the supply stream for GM. Also, there may be tertiary effects depressing hiring in service industries, including restaurants. Likewise, we already know that auto and light truck vehicle assemblies dropped in September, to a 10.34 million unit rate. The October vehicle assembly data will be worse. We expect to see stronger data for Michigan when the November numbers are available later this year and early next 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 Bank, with one of the largest banking center networks in Michigan, is a subsidiary of Comerica Incorporated (CMA), a financial services company headquartered in Dallas, Texas, and strategically aligned by three business segments: The Business Bank, The Retail Bank, and Wealth Management. Comerica focuses on relationships, and helping people and businesses be successful. In addition to Michigan and Texas, Comerica Bank locations can be found in Arizona, California, and Florida, with select businesses operating in several other states, as well as in Canada and Mexico.

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