Unemployment Rates Leveling Off, Consumer Consumption Increasing

In March of 2021 the unemployment rates for the State of Michigan and for the City of Detroit continued to a decline, which is a more recent trend. The State of Michigan reported an unemployment rate of 5.2 in March, which is the same at its February rate. However, since December of 2020 the State’s unemployment rate declined from 7.3 to 5.2.  For the City of Detroit, the unemployment rate for March of 2021 was 9.3, which is 0.3 points lower than the February unemployment rate and 11 points lower than the December 2020 rate. Both the Michigan and the Detroit rates were similar to the January 2020, pre-pandemic rates.

The chart above shows unemployment rates beginning to level off and the chart below reflects a similar message for some counties. Livingston, Macomb, Oakland and Wayne counties all reported higher unemployment rates in March of 2020 than March of 2021. In March of 2020 St. Clair County had the highest unemployment rate of 5.9, followed by Wayne County with an unemployment rate of 5.7.  Washtenaw County had the lowest unemployment rate in March 2020 at 2.7, but by March of 2021 that increased to 4.3. Washtenaw and Monroe counties were the only two in the region with higher unemployment rates in March of 2021 than March 2020. Both Monroe and Wayne counties had the highest unemployment rates in March of 2021 at 5.6. Livingston County had the lowest unemployment rate in March of 2021 at 3.2.

Just as the unemployment rate in the region is declining, so is the number of continued unemployment claims. These claims, also referred to as insured unemployment, are the number of people who have already filed an initial claim and who have experienced a week of unemployment and then filed a continued claim to claim benefits for that week of unemployment. Continued claims data are based on the week of unemployment, not the week when the initial claim was filed, according to the Southeastern Michigan Council of Governments.

The chart below shows a spike in April and May of 2020, when COVID restrictions tightened throughout the State. Since then though there has been a steady decline in the number of continued claims. The largest declines occurred between May and June of 2020 and September and November of 2020. Although there have been some increases in the number of continued unemployment claims since November of 2020, the April 10, 2021 number of 102,721 unemployed claims is the lowest number of claims in over a year.

Although unemployment numbers have been on the decline, there has been a recent increase in the number of small business closures, according to the Opportunity Insights Economic Tracker. This source uses credit card transaction data from 500,000 small businesses, Opportunity Insights estimates closures from the number of small businesses not having at least one transaction in the previous three days. The data cover many industries, including healthcare services, leisure and hospitality, and retail and transportation. The date source does says it has less coverage in manufacturing, construction, and finance.

According to the data, 31 percent of small businesses closed as of May 1, 2021. This number was an increase from the 26 percent of small business that were estimated to be closed on April 23, 2021. 

Since April of 2020 the percentage of small business closures has increased, but those numbers are not as high as when the pandemic began.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2021. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how consumption of services continues to remain steady, but not back to pre-COVID levels. On March 1, 2021 it was estimated that there was $8,182 billion in consumption of services, a slight increase from the month prior but below the January 1, 2020 levels.

The expenditures on durable and non-durable goods are now increasing above pre-COVID levels with the amount spent on durable goods being $2,314 billion as of March 1, 2021 and the amount spent on non-durable goods being $3,342 billion.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $148,500 in February of 2021; this was $1,500 higher than the average family dwelling price in January. The February 2021 price was an increase of $14,070 from February of 2020 and $49,430 from February of 2014. Home prices have continued to increase year-after-year but the recent average price of single-family dwellings sold in the Metro-Detroit area has increased at a higher rate than in previous years.  

Economic Indicators: Unemployment Rates, Housing Costs Remain Higher than Pre-COVID

We are a year into the COVID pandemic, unemployment rates have peaked and then declined, but they are still substantially higher than a year ago. Average home prices have increased as demand for homes has increased. Broader consumption trends though, while they are faring better than nearly a year ago, have yet to fully recover to pre-pandemic levels. Below we show just how these various indicators have changed over the last year.

In December of 2020 the unemployment rates for the State of Michigan and for the City of Detroit continued to increase after declines following the initial unemployment spikes due to COVID-19. The State of Michigan reported an unemployment rate of 7.3 in December, a higher rate than what was reported in November, which was 6.3. For the City of Detroit, the unemployment rate for December of 2020 was 20.3, which is higher than the November rate of 18.7. The December unemployment data further highlights how the unemployment gap between the State and Detroit continues to grow wider as the COVID case numbers increased rapidly over the holidays.

In line with what was reported above, COVID impacted unemployment rates at the county level in Michigan as well. In December of 2020 each county in Southeastern Michigan had a significantly higher unemployment rate than the year prior. According to data from the Michigan Department of Technology, Management and Budget, Wayne County experienced the largest increase at about 8 points. In December of 2020 Wayne County had an unemployment rate of 12.4 and in December of 2019 it was 4.5. Washtenaw County experienced the smallest increase at 1.5 points. In December of 2020 Washtenaw County had an unemployment rate of 3.6 and in December of 2019 it was 2.1. While there were overall unemployment increases, the differences in the unemployment percentages between each county is, at least in part, dependent on the type of jobs available in each county and the occupations of residents. For example, in Wayne County the top occupations are office and administrative support, production and sales and food service. In Washtenaw County the top occupations are office and administrative support, education instruction, health care practitioners and food service workers. Throughout much of the year some positions related to office and administrative support and food service have been considered non-essential or experienced higher layoff rates while those in health care and education have been at less risk of being unemployed.

The Bureau of Economic Analysis recently released data on the per capita personal income by county for 2019, showing that overall incomes in Southeastern Michigan did grow between 2018 and 2019. In 2019 Oakland County had the highest per capita personal income at $72,271 but it had the lowest percent change between 2018 and 2019 at 2.7 percent.  Wayne County had the lowest per capital personal income at $44,512 with the percent change from the year prior being 3.3 percent. St. Clair County had the lowest percent change in per capita income between 2018 and 2019 and 2.7 percent; its per capita personal income in 2019 was $45,662.

When examining personal income growth between 2017-18 and 2018-19 the percent change was lowest for the most recent year of data, as opposed to the growth from between 2017-18.

We have yet to know what the impact COVID will have on personal income for 2020, but the data below does show that growth was already beginning to slow down prior to the pandemic. That coupled with higher rates of unemployment, business closures and decreases in spending on goods and services may very well mean lower personal incomes for 2020.

The automobile industry continues to be a driving force in Michigan’s economy and the latest data on vehicle sales show that the number of auto sales for lightweight vehicles has been steadily increasing in recent months while light truck and car sales slightly declined in February of 2021. However, compared to a year ago, sales still remain below what they were. In February of 2021 auto sales for: sales of light weight vehicles were 16.5 million, compared to 16.8 million the year prior; light truck sales were 12.3 million compared to 12.5 million in February of 2020; car sales were 3.4 million, compared to 4.2 million the year prior.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2021. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how services have yet to make it back to the pre-COVID consumption levels, but the consumption of durable and non-durable goods have risen. In January of 2021 $8,016 billion in services was consumed, $2,148 billion in goods was consumed and $3,206 billion in nondurable goods was consumed.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $139,240 in November of 2020; this was $145 higher than the average family dwelling price in October. The November 2020 price was an increase of $11,770 from November of 2019 and $15,200 from November of 2018. So, just as unemployment rates remain higher than what they were a year ago so do average home prices. This is interesting though because with higher unemployment rates traditionally comes lower incomes and hesitation around the housing market. However, during the COVID-19 pandemic, as shown, the average price for a home has been increasing despite higher unemployment rates. Demand for existing homes has been up substantially across the nation over the last year

COVID’S Economic Impacts Continue in Michigan and Beyond

Twenty-twenty may be a wrap but the COVID-19 pandemic continues on and the economic impacts continue to be felt, nationally and locally. According to the Michigan Department of Health and Human Services, on Jan. 2, 2021 there were 497,127 confirmed COVID-19 cases; that is 8,983 new confirmed cases since Dec. 29, 2020 (the State did not release data over the New Year’s holiday). According to the five-day rolling average (shown in the chart below) there were 489,096 confirmed COVID cases in Michigan on Dec. 31, 2020. New case numbers continue to remain in the thousands, and while the vaccine is in its first phase of distribution, we still have a ways to go until the affects of this virus—physically, economically, socially and mentally—are no longer felt.

In November of 2020 the unemployment rates for the State of Michigan and for the City of Detroit increased after general declines between July and October. The State of Michigan reported an unemployment rate of 6.3 in November, a higher rate than what was reported in October, which was 5.7—the lowest rate reported since the pandemic began. While the November unemployment rate was still lower than what was reported between April and September of 2020, it was still an increase from October and likely a reflection of the stronger COVID-19 restrictions imposed by the State and growing caution from citizens as the confirmed case numbers began to rapidly increase.

For the City of Detroit, the unemployment rate for November of 2020 was 18.7, which is higher than the October rate of 15.4. While Detroit’s unemployment numbers remain much higher than what they were a year ago and above the State’s, the city is following the same trend as the State. Furthermore, the November unemployment data shows how the unemployment gap between the State and Detroit continues to grow wider as the case numbers increase.

A direct reflection of the unemployment data above is the number of small business closures. According to the Southeastern Michigan Council of Governments (SEMCOG), 33 percent of small businesses in Metro-Detroit closed as of Dec. 30, 2020. While this lower than the May 12, 2020 local small business closure percentage of 54 it is still far above the 3 percent closure rate on April 1, 2020—less than a month after COVID hit Michigan.

The data on the percentage of small business closures is determined through the Opportunity Insights Economic Tracker. This source uses credit card transaction data from 500,000 small businesses and estimates closures from the number of small businesses not having at least one transaction in the previous three days. The data covers industries such as healthcare services, leisure and hospitality, and retail and transportation.

Michigan’s economy continues to rely heavily on the auto industry and between February and March of 2020 auto sales for cars, trucks and light weight vehicles were cut in half. Since then, the number of auto sales has slowly, yet steadily, grown—but not to pre-pandemic levels. In November of 2020 auto sales for: light weight vehicles was 15.5 million, compared to 16.9 million the year prior; light truck sales was 11.8 million compared to 12.6 million in November of 2019; car sales was 3.8 million, compared to 4.4 million the year prior. All three types of vehicles have experienced a decline, with light weight vehicles experiencing the largest decline when comparing 2019 sales to present sales.

Below shows the consumption expenditures of goods in the U.S. between 2019 and 2020. According to the U.S. Bureau of Economic Analysis, durable goods have an average useful life of at least 3 years (e.g. motor vehicles) while nondurable goods have an average useful life of less than 3 years (e.g. food) and services are commodities that cannot be stored or inventoried and are consumed at the time of purchase (e.g., dining out). The chart below shows how in March of 2020 consumption of nondurable goods increased while consumption of durable goods and services decreased. Following the initial panic of the COVID-19 pandemic, consumption expenditures of nondurable goods decreased in April, 2020 and have since somewhat leveled off. In November of 2020 $3167 billion in nondurable goods was consumed and in November, 2019 $3017 billion in nondurable goods was consumed.  Overall, there has been an increase in consumption expenditures of nondurable goods since last year. For durable goods, $1813 billion was consumed in November of 2020 and in November of 2019 $2032 billion was consumed; this shows an overall decrease.

Services have been the hardest hit in terms of expenditure consumption. In November of 2020 $8014 billion in services was consumed and in November of 2019 $8589 billion was consumed.

In addition to COVID impacts on employment rates and consumption of goods and services, it has also impacted the sale prices of homes. However, the pandemic seems to have had the opposite effect—home prices have continued to increase.

According to the Case-Shiller Home Price Index, the average price of single-family dwellings sold in Metro Detroit was $135,760 in September of 2020; this was $164 higher than the average family dwelling price in August. The September 2020 price was an increase of $8,290 from September of 2019.

Economic Indicators: Industrial Areas Seeing Increase in Leasing

In October of 2019 the unemployment rate for the State of Michigan was 3.5, the same as it was for the month of September, according to the most recent data provided by the Michigan Department of  Technology, Management and Budget. The State unemployment rate for October of 2018 was only slightly higher than it was this year in October, 3.7.

In October of 2019 Detroit’s unemployment rate was 7.8 percent.  That Detroit unemployment rate was 0.7 points lower in October of 2019 from the previous month. Also, the October 2019 unemployment rate for Detroit was 1.5 points lower from the previous year. In October of 2018 it was 9.3 percent.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for October of 2018 and 2019. In October of 2019 Wayne County had the highest unemployment rate at 4.5. Washtenaw County had the lowest unemployment rate at 2.5.

Between October of 2018 and 2019 each county in the region had a lower unemployment rate in 2019 than the previous year; the county with the largest decrease was Macomb County. In October of 2018 the unemployment rate in Macomb County was 4.1 and in October of 2019 it decreased to 3. Also, Macomb, Livingston, Monroe and Washtenaw counties all had unemployment rates at 3 percent or lower while St. Clair and Wayne counties had unemployment rates at 4.1 and 4.5, respectively.

The availability of industrial spaces is another aspect of an area’s financial health and below is information from the quarterly reports of Cushman and Wakefield, a global real estate firm, which produces information related to Metro-Detroit. According to the company, leasing of industrial spaces in the third quarter of 2019 is up from the second quarter, with the Airport area having the strongest increase by landing companies such as DSV and Crane World Wide Logistics with their lease renewals. Additionally, the overall vacancy rate in the Metro-Detroit area is at 2.9 percent, and as shown in the first chart below the Downriver and East side areas have the lowest vacancy rates at 1.5 percent. The Southfield area has the highest vacancy rate at 5 percent.

The second chart below shows the average cost of industrial spaces in the region per square foot. There are three different types of industrial space as defined by Cushman and Wakefield and those are: manufacturing, office space and warehouse/distribution spaces. As the chart shows, office space has the highest market value, with the Southfield area having the highest cost at $14.19 per square feet. In nearly all the areas warehouse/distribution spaces has the second highest cost with Southfield again having the highest market rate at $7.15 per square foot. In the Downriver and Troy areas though manufacturing spaces have a higher market rate than the warehouse space. In Downriver, manufacturing spaces average $4.94 per square foot and warehouse spaces average $4.80 per square foot; in Troy manufacturing spaces average $7.22 per square foot and $5.60 per square foot for warehouse spaces. Troy also has the highest market value for manufacturing spaces in the region.

According to Cushman and Wakefield, there is an expectation that utilization of industrial spaces will continue to increase in 2020 meaning a continuation of low vacancy rates.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $129,250 in September 2019; this was $800 lower than the average family dwelling price in August. The September 2019 price was an increase of $4,460 from September of 2018 and an increase of $11,650 from September of 2017, an increase of $19,470 from September of 2016 and increase of  $25,670 from September of 2015 and, finally, an increase of 
$30,910 from September of 2014.

Metro-Detroit Economic Indicators

In December of 2018 the unemployment rate for the State of Michigan was 4.1, an increase from the November unemployment rate of 3.4, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for December of 2017 was 0.6 points below what it was in December of 2018 (4.7). Since April of 2018 the data shows that the unemployment rate for the State essentially leveled out around 4, except when it dropped to 3.4 in November.

The Detroit rate was 0.5 points higher in December of 2018 from the previous month. Also, the December 2018 unemployment rate for Detroit was 0.1 points lower than what it was in December of 2017.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for December of 2017 and 2018. In December of 2018 Wayne County had the highest unemployment rate at 4.9, with St. Clair County having the second highest regional unemployment rate 4.7. Livingston, Oakland and Washtenaw counties were the only three in the region with unemployment rates below 4 in December of 2018. The unemployment rate for Livingston County was 3.3, the unemployment rate for Oakland County was 3.3 and the unemployment rate for Washtenaw County was 3.1.

When comparing 2017 and 2018, Monroe, Washtenaw and Wayne counties were the only three in the region to experience a decrease in unemployment. Wayne County had the largest decrease at 0.9 points. Livingston, Macomb and St. Clair counties all experienced an increase from 2017 to 2019. Livingston County had the largest increase at 0.2.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $123,550 in December 2018; this was $490 lower than the average family dwelling price in November. The December 2018 price was an increase of $6,210 from December of 2017 and an increase of $13,430 from December of 2016, an increase of $19,780 from December of 2016 and increase of $26,570 from December of 2014.

Unemployment Rates in Detroit,Region Take Recent Drop, Higher Than Previous Year

  • The unemployment rate decreased in Detroit and at the state level(monthly);
  • Regionally, April 2018 unemployment rates are higher than the prior year;
  • Housing prices continue to rise in Metro-Detroit.

In April of 2018 the unemployment rate for the State of Michigan was 4, a decrease from the March unemployment rate of 4.6, according to the most recent data provided by the Michigan Department of Technology, Management and Budget. The State unemployment rate for April was 0.3 point above what it was in April of 2017.

The Detroit rate was 1.3 points lower in April of 2018 than in March. In April of 2018 Detroit’s unemployment rate was reported to be 7.4, this was .3 points higher than in April of 2017.

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for April of 2017 and 2018. Monroe County was the only one in the seven county region to have a lower unemployment rate in 2018 than in 2017. In April of 2017 Monroe County’s unemployment rate was 3.7 and in 2018 in dropped slightly to 3.7.

In April of 2018 Wayne County had the highest unemployment rate at 4.3, St. Clair County was only slightly below at 4.2. These two counties were the only two in the region to have unemployment rates about 3.5 in April of 2018. Washtenaw County had the lowest unemployment rate in the region at 2.8. Oakland County and Livingston County were the only other two counties in the region with an unemployment rate below 3.

While Livingston County had among the lowest unemployment rate in the region in April of 2018 it also had the largest increase in its unemployment rate between April 2017 and April 2018. In April 2017 the unemployment rate for Livingston County was 2.4 and in 2018 it increased to 2.9.

The above chart shows the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $120,020 in March 2018; this was $1,220 higher than the average family dwelling price in February. The March 2018 price was an increase of $16,240 from March of 2016 and an increase of $22,120 from March of 2015 and an increase of $26,240 from March of 2014.

Detroit 30-Year Mortgage Rates Below National Average

  • The average 30-year mortgage interest rate in Detroit is lower than the national average (weekly);
  • The Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices continue to increase monthly and annually.
  • The unemployment rate increased at the State and local level(monthly);
  • Regionally, Washtenaw County’s unemployment rate remained the lowest;
  • The Purchasing Manager’s Index for Southeastern Michigan dropped below 50 but is expected to increase (monthly);
  • The Commodity Price Index dropped to its lowest point in over a year (monthly);

Slide03

On March 15, 2017 the Federal Reserve Raised the federal interest rate by .25 percent; it now ranges between .75 and 1 percent. This is the third time the rate has been raised since the financial crisis. Prior to last week rates were raised once in 2015 and once in 2016. The rate increase has been attributed to strong job growth, more investment from businesses into operations and a higher rate of consumer spending.

This rate increase will impact credit products, such as mortgages and auto loans, in addition to savings, home equity lines of credit and credit cards. Another item that may be affected is new home starts, a statistic that is not readily available through the Southeastern Michigan Council of Governments website, as it once was.

Above are three average 30-year mortgage interest rates at the national, state and local levels. These rates were provided by bankrate.com, which does a national survey of large lenders on a weekly basis. As a 30-year fixed rate mortgage is the most traditional type of home financing this was chosen to show the rate differences. The State of Michigan had the lowest average interest rate for the week of March 16 at 4.14 percent and the national average was the highest of the three at 4.44 percent. Detroit’s average 30-year fixed mortgage interest rate was 4.42 percent, which according to bankrate.com is an increase from the previous week. According to bankrate.com, Detroit’s rate for an average 30-year fixed mortgage rate in the Detroit area is equivalent to about an additional $4.50 a month on a mortgage for $165,000. Such an increase brings the average monthly payment to about $819.

Slide05

The above charts show the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $109,790 in October 2016. This was an increase from $6,520 from October of 2015 and an increase from $11,570 from October of 2014.

**This information has not been updated since December of 2016. It was presented in a previous post, however due to the relation to the information above we are republishing it.**

Slide07

According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan slightly increased to 5.2 in January of 2017 from 5 the previous month. Detroit, however, had a big increase. Unemployment in the City of Detroit increased from to 9.8 in December to 12.3 in January. The January unemployment rate for Detroit in 2017 was 1.2 points higher than it was the previous year at that time.

Slide09

The chart above displays the unemployment rates for each of the seven counties in Southeastern Michigan for January of 2016 and 2017. For 2017, St. Clair County had the highest rate at 7.7 while Washtenaw County had the lowest at 3.4. St. Clair and Wayne counties were the only two in the region with unemployment rates above 7 in January. Four of the seven counties (Livingston, Monroe, Oakland and Washtenaw) all had unemployment rates at or below 5.

While in 2016 St. Clair County again had the highest unemployment rate for the month of January, regionally, and Washtenaw County had the lowest, it is interesting to note that unemployment rates were higher across all counties in 2017. Wayne County had the largest difference between 2016 and 2017 at 1 point; the unemployment rate was 6.2 in 2016 and 7.2 in 2017.

Slide11

 

The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for December 2016 was 53.3, a significant drop from an index of 61.9 the prior month. History shows though that January traditionally has a lower PMI readings and it is expected to increase for February.

Slide13

The January 2017 Commodity Price Index dropped to the lowest it has been since September of 2015. At that time the Commodity Price Index was 41.2 and this most recent reading was 41.7. There is speculation from the Institute of Supply Management-Southeastern Michigan that this drop could reflect policy changes from the new federal administration, especially as gas and oil prices are up.

Southeastern Michigan Economy Gaining Strength

  • The unemployment rate across the state remained stagnant while the rate in the city of Detroit decreased (monthly);
  • The number of employed Detroit residents increased, (monthly);
  • The Purchasing Manager’s Index for Southeastern Michigan remains strong, especially after increasing 7 points (monthly);
  • The Commodity Price Index remained the same (monthly);
  • The Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices continue to increase monthly and annually.

slide03

According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan slightly increased to 4.7 in October of 2016 from 4.6 the previous month. However, unemployment in the City of Detroit decreased to 11.1 in September, from 12.4 the previous month. The September unemployment rate in 2016 was 0.4 points lower than it was in September of 2015.

slide05

In September of 2016 the number of employed Detroit residents rose to 221,238, an increase of 2,314 from August. Between September of 2016 and September of 2015 there was a total increase of 10,012 employed Detroit residents, according to the Michigan Department of Technology, Management and Budget.

While the number of employed Detroit residents increased between August and September the labor force decreased by 1,067. In August the labor force was reported to be 250,047 and in September it was reported to be 248,971.

slide07

The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for October 2016 was 67.2, an increase of 7 points from the prior month. The October 2016 PMI was an increase of 8.4 from the previous year.  With this increase, the PMI is considered to be strong, particularly because it has remained above 50 since June of 2014. Much of this growth, according to the Institute of Supply Management of Southeastern Michigan, is due to the resurgence of the auto sector in the region.

slide09

The October 2016 Commodity Price Index decreased 0.2 points from September but increased 3.2 points from the prior year. The three month average for the Commodity Price Index was 48, which the Institute of Supply Management of Southeastern Michigan states is good for short-term profits.

slide11

The above charts show the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $109,660 in August 2016. This was an increase from $103,750 from August of 2015 and an increase from $98,720 from August of 2014.

Detroit Unemployment Increases, Along with Number Employed and Labor Force

  • From April to May 2016, the unemployment rate across the state and within the city of Detroit increased (monthly);
  • Overall, however, the number of employed Detroit residents increased (monthly);
  • The Purchasing Manager’s Index for Southeastern Michigan decreased from May to June 2016 (monthly);
  • Commodity Price Index also decreased for Southeastern Michigan (monthly);
  • Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area shows home prices continue to gradually increase on a month-to-month basis.

Unemployment

According to the most recent data provided by the Michigan Department of Technology, Management and Budget, the unemployment rate for the State of Michigan increased to 4.5 percent in May 2016; the unemployment rate was 4.3 percent in April. During this same period, unemployment in the City of Detroit also increased, but at a higher rate. Detroit’s unemployment increased from 9.1 percent in April to 9.8 percent in May.

Slide05

In May of 2016 the number of employed Detroit residents rose to 218,656, an increase of 1,577 from April. Between May of 2016 and May of 2015 there was a total increase of 8,756 employed Detroit residents, according to the Michigan Department of Technology, Management and Budget.

Along with the the number of employed Detroit residents increasing over the last year, so has the labor force. Between April and May of 2016 the labor force increased by 3,784 and between May of 2015 and May 2016 the labor force increased by 803. In May of 2016 the labor force recorded by the the Michigan Department of Technology, Management and Budget for the city of Detroit was 242,432.

Auto Manufacturing employment

The above chart shows the number of people employed in the auto manufacturing industry in the Detroit Metropolitan Statistical Area (MSA) (Detroit-Warren-Livonia) from May 2015 to May 2016. In that time frame the number of people employed in this industry decreased by 900, from 94,200 to 93,300.

PMI

The Purchasing Manger’s Index (PMI) is a composite index derived from five indicators of economic activity: new orders, production, employment, supplier deliveries, and inventories. A PMI above 50 indicates the economy is expanding.

According to the most recent data released on Southeast Michigan’s Manager’s Index, the PMI for June 2016 was 58.8, a decrease of 1.1 points from the prior month. The May 2016 PMI was a decrease of 3.2 from May of 2015.  Although there was a decrease, the PMI is still considered strong because of new orders, employment and production. There was a decrease in finished goods, which caused the decrease, along with a decrease in the commodity price index, which is shown below.

Commodity Price Index

The June 2016 Commodity Price Index decreased 7.1 points from May and 6.9 points from the prior year. According to the ISM-Southeastern Michigan PMI the Commodity Price decreased between May and June, however fuel, paper and plastics went up in price.

Detroit Home Prices

The above charts show the Standard and Poor’s Case-Shiller Home Price Index for the Detroit Metropolitan Statistical Area. The index includes the price for homes that have sold but does not include the price of new home construction, condos, or homes that have been remodeled.

According to the index, the average price of single-family dwellings sold in Metro Detroit was $103,780 in March 2016. This was an increase from $97,900 from March of 2015 and an increase from $93,780 from February of 2014.

The Motor City and Automotive Industry still dictate state’s export economy

The Southeast Michigan region was the fifth largest export market in the United States in 2013 according to U.S. Census Bureau Statistics, with more than $53.9 billion in exports. In the same year, the state of Michigan reported $58.7 billion in exports, making the region (which includes Lapeer County in the Southeast Michigan) responsible for 91.8 percent of the state’s export economy. This post explores the role of exports in the regional economy and examines how trade connects the region to the world economy.

The map above shows the top 25 export recipients receiving goods originating in Michigan in 2014. In 2014, Michigan exports accounted for 3.4 percent of the national export total, by value. Among the top 25 export recipients are countries on six of seven continents. The strongest partnership is with neighboring Canada at more than $25,405 million. Fellow North American Free Trade Agreement (NAFTA) partner Mexico follows Canada, but is well behind at $10,804 million.

Export statistics support Michigan’s case as a leader in automotive manufacturing, and this is driven by Detroit. Of the top 25 products being exported, 21 were automotive parts or vehicles; they comprised 45.4 percent of all exports from the state of Michigan in 2014, and grew by 2.9 percent, on average, between 2013 and 2014. Exported products that were not directly related to the automotive industry were aircraft parts, natural gas, iron ore and medicines. These products represented just 6.6 percent of all exports, by value, and saw an average growth of just 2.7 percent from 2013 to 2014.

In 2013 Wayne County produced the lion’s share of exports by value in the region ($31 billion), more than double the second-highest exporting county (Oakland at $14.5 billion), according to the International Trade Administration (ITA), a division of the U.S. Department of Commerce, using Census data from 2013.

The ITA also indicates that exports were not predominantly the Big 3 automakers exporting finished products, but small producers of automotive parts. In 2011, 7,215 different businesses exported out of metropolitan region, with 90 percent of exports coming from firms employing fewer than 500 employees, according to the ITA.

The next two maps look specifically at the Ports of Detroit (this includes two ports, Detroit Metropolitan Airport and the Port of Detroit – a container port). These maps show export partners by value and by weight for 2010, the last year for which the Census Bureau has port-specific data publicly available. When examined by value, Detroit sent a great deal of export value in 2014 ($USD) to Canada and Western Europe. No country outside these two regions received more than $25 million in exports from Detroit. Nations with robust automotive industries of their own – Germany, the United Kingdom and France – are among some of the largest recipients of Detroit products.

When examined by weight, a more broad trade geography emerges. Including this measure allows us to see more clearly where finished vehicles and iron ores are going. While Canada, Germany and the United Kingdom still lead among export recipients when considered by weight, South Africa and China emerge as significant trade partners.

The ITA indicates that since 2010 Michigan has seen a noteworthy increase in trade (by value) with Mexico, Saudi Arabia, China and the United Arab Emirates, which have overtaken many of the European nations to join Canada among the top five recipients of Detroit-area exports.