Comerica Bank's Michigan Index Improves

DALLAS, Jan. 3, 2018

Comerica Bank's Michigan Economic Activity Index increased slightly in October after stalling through last summer. The October gain is the first increase in the Michigan Index since last May. Over the previous 12 months, the Michigan Index was up only 0.8 percent in October, so it is fair to say the Michigan economy was feeling less momentum through most of 2017 than it did in 2016. Positive factors for October were nonfarm payrolls, housing starts, house prices and auto production. Industrial electricity demand, total state trade, hotel occupancy and state sales tax revenues were negatives. We expect auto sales to ease gradually through 2018 as the support from hurricane-related replacements in Texas and Florida fades. A key positive for auto sales in 2018 will be the expected solid performance of the U.S. economy. However, with auto sales currently near the cyclical peak of the mid-2000's, it looks like there is only limited upside potential for sales even in a relatively strong economy. We look for the service sector in Michigan to support modest growth going forward as the push from auto-related manufacturing eases. Tax reform will be an overall positive for the U.S. economy, including Michigan. However, higher interest rates through 2018 are a developing headwind for both the auto sector and real estate.

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 more than 200 banking centers 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 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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