DALLAS, July 1, 2020 /PRNewswire/ -- Comerica Bank's Michigan Economic Activity Index declined in April to a level of 103.0. April's reading is 5 points, or 5 percent, above the index cyclical low of 97.9. The index averaged 117.7 points for all of 2019, 0.9 points below the index average for 2018. March's index reading was 114.5.
Our state economic activity indexes for April are showing the full impact of the coronavirus pandemic on state economies. The Michigan economy was hit particularly hard as auto production ground to a near halt. Eight out of nine sub-indexes declined in April 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. The only gainer for the state was the house price index. We must also note that house price data for Michigan has been limited this spring, and so we are making estimates that may be revised later. Even with the smoothing process that we use for the monthly sub-indexes, we still see a dramatic decline in the headline index for Michigan in April. This points to a dramatic decline in second quarter GDP for the state. Unfortunately, Michigan, like all other states, is caught in an adverse feedback loop. As state economic activity declined this spring, so did tax revenue for the state. This is putting pressure on state and local government budgets, which is leading to layoffs and cuts in government services. Michigan has seen a huge increase in unemployment insurance claims from a pre-crisis level of about 80,000, to nearly 1,000,000 at the end of April. Through early June, the level of claims dropped to a still very high level of 727,000. We expect the data for May to also look very stressed.
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 (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 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.
SOURCE Comerica Bank