Michigan's Labor Market Recovery

According to Comerica’s Michigan Economic Activity Index, the state’s economy is recovering.  Actually, revised labor market data confirms Michigan is expanding quite briskly.  Michigan has had the biggest drop in its unemployment rate and nonfarm payroll growth has outpaced the nation.  It appears that Michigan is repeating the historical pattern of having a stronger recovery than the nation after having a much worse downturn.

Michigan’s unemployment rate fell to 10.4% in February, down 3.1 percentage points in the past 12 months, compared to a reduction of 0.8 percentage points nationally.

A big part of Michigan’s employment is in auto and auto parts manufacturing.  As recently as 2003, this sector has accounted for 36% of total manufacturing jobs in Michigan and 6% of all jobs.  Now the auto sector accounts for only 26% of Michigan manufacturing jobs and 3% of all jobs.

The key conclusion is that Michigan is currently experiencing a stronger recovery in its labor markets than the nation.  That is largely because the state has a disproportionately large manufacturing base that is highly cyclically sensitive.  To keep ahead of the curve, Michigan would be well advised to do everything it can to create a more business friendly environment.

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