WASHINGTON—Republican presidential candidate John McCain conceded battleground Michigan to Democrat Barack Obama on Thursday, a major retreat as he struggles to regain his footing in a campaign increasingly dominated by economic issues.

In another sign of McCain’s woes, his campaign signaled that it would counter Obama’s efforts in Indiana, a state that hasn’t voted for a Democrat since 1964. And, a New Hampshire survey showed the Republican trailing by double digits.

With polls showing Obama leading comfortably, McCain’s campaign confirmed it was pulling staff and advertising out of economically distressed Michigan, and one adviser said it was “off the list.”