Comerica Bank's Michigan Index Rebounded in October Despite the UAW Strike

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Jan 22, 2024, 17:45 ET

DALLAS, Jan. 22, 2024 /PRNewswire/ -- The Comerica Michigan Economic Activity Index rose 7.2% annualized in the three months through October, reversing a drop in the prior three months. Nonetheless, the Index was still down 0.4% from a year earlier, and declined in those terms for most of 2023. Six of the index's nine components fell in October, while three rose.

Reflecting the effects of the United Auto Workers strike, employment in the Great Lakes State fell 13,000 in October and 13,700 in September. Similarly, continuing claims for unemployment insurance and the unemployment rate rose further in October. The Michigan labor market is likely to recover to its pre-strike condition in early 2024, since the strike ended before 2023's critical holiday shopping season.

Auto and light truck assemblies slumped by 1.6 million to 8.9 million annualized units in October. Industrial electricity use also fell. The timeliest data on auto production, which are not yet incorporated into the index, largely rebounded to pre-strike levels in late 2023. Housing starts rose by a sharp 8.5% in October, the fourth consecutive monthly increase, but were still down 1.3% from a year earlier. Despite the gains in the past few months, housing starts through October 2023 were 14.1% down from the same period of 2022. With listings tight, house prices rose sharply for the eighth consecutive month and have now more than reversed their decline from mid-2022 to early-2023. Seasonally-adjusted hotel occupancy declined on the month and also from a year earlier. Sales tax receipts, adjusted for seasonality and price differences, were also lower on a monthly and annual basis in October, indicating that consumer spending softened during the strike.

Michigan's real GDP grew by 1.6% in 2022, below the national average of 1.9%. The state's economy grew at a more subdued pace in the first three quarters of 2023 compared to the same period of the prior year and lagged behind the national growth rate. Michigan's economy will likely slow along with the national economy in late 2023 and into 2024. High interest rates will slow output and sales in credit-intensive sectors, such as housing, manufacturing, and commercial real estate. Carmakers' margins will likely be pressured by the combination of higher labor costs and increasing pricing competition amid many new EV models coming to market.

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, Comerica Bank, a subsidiary of 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 building relationships and helping people and businesses be successful, providing more than 400 banking centers across the country with locations in Arizona, California, Florida, Michigan and Texas. Founded 175 years ago in Detroit, Michigan, Comerica continues to expand into new regions, including its Southeast Market, based in North Carolina, and Mountain West Market in Colorado. Comerica has offices in 17 states and services 14 of the 15 largest U.S. metropolitan areas, as well as Canada and Mexico. Comerica reported total assets of $85.8 billion at Dec. 31, 2023. Learn more about how Comerica is raising expectations of what a bank can be by visiting www.comerica.com, and follow us on Facebook, X (formerly known as Twitter), Instagram and LinkedIn.