Comerica Bank’s Michigan Economic Activity Index edged down one point in June, to a level of 86. The June index level is 15 points, or 21 percent, above the cyclical index low of 71. Year-to-date, the index has averaged 88 points, three points above the average for all of 2010.
“The Michigan index gave back the small gains it made over the first three months of the year, finishing the second quarter at the same level as 2010 year-end,” said Robert Dye, Chief Economist at Comerica Bank. “Weak motor vehicle sales, and weak vehicle production in the wake of the Japan earthquake, along with weak growth in nonfarm payrolls, held the index down in June. A third quarter rebound in the state’s auto sector should provide lift to the index in coming months. However, downside risk to the broader U.S. economy and to the Euro-Zone economies remains elevated. The rapid decline in consumer confidence in August is particularly threatening to the auto sector. The good news is that there is ample pent-up demand for new cars, which would be unleashed in the presence of moderate job creation, stable gasoline prices and low interest rates.”