Michigan exports plunge 9.6 percent in May
According to the latest worldwide statistics on international trade compiled monthly by the International Monetary Fund, global exports plunged at the start of the year. In the first quarter of 2009, the dollar value of exports from 186 counties plummeted by 28.7 percent in comparison with the first quarter of 2008.
For the 23-member group of advanced (also called industrial) countries, exports tumbled by 30.4 percent in the first quarter of 2009 from a year ago. Particularly, for the two leading global exporting countries, exports fell by 15.1 percent in Germany and by an astonishing 42.1 percent in Japan during the same period.
Using the latest national trade statistics for the United States, exports of goods rose by 2.6 percent in May to $82.1 billion, adjusted for seasonal variation. So far this year, national exports of goods plunged by an annual rate of 23.0 percent from the same period a year ago.
How does Michigan match up to the 50 states in export growth so far in 2009? In the first five months of the year, foreign sales from Michigan's companies, seasonally adjusted, decreased by an annual rate of 37.8 percent compared with the first five months in 2008.
In light of the year-to-date performance in the state’s foreign sales, Michigan ranked 48th among the 50 states in export growth.
Are there any signs that the drop in exports has hit bottom? Looking at the latest monthly snapshot of international trade numbers, foreign sales of goods made in Michigan plunged in May by 9.6 percent, after an increase of 6.9 percent in April.
Michigan's exporting companies sold overseas $2,198.9 million in goods in May, adjusted for seasonal variation — a statistical technique that, as with national numbers, smoothes out fluctuations for factors such as number of working days in a month, and thus portrays a lucid picture of monthly trends.
Compared with a year ago, Michigan's exporters in May 2009 fell behind their export performance in May 2008 by $1,405.1 million, or 39.0 percent.
Michigan's overall exports in May reflected the mix of trends in foreigners’ demand for goods made by different industries. Overseas shipments from Michigan's manufacturers, which accounted for 84 percent of all exports, decreased to $1,854.8 million, seasonally adjusted — 12.5 percent less than April’s level of factory shipments.
Exports of non-manufactured goods went up 9.7 percent in May to $344.1 million, adjusted for seasonal variation. This group of foreign sales consists of agricultural goods, mining products and re-exports, which are foreign goods that entered the state as imports and are exported in substantially the same condition as when imported.
Will the collapse of worldwide international trade continue? It depends on the outlook for growth in the world economy, which would drive demand for goods made in the state of Michigan during the rest of this year and in 2010.
In its World Economic Outlook Update published this month, IMF predicts global economic growth will contract by 1.4 percent in 2009 and expand by 2.5 percent in 2010. The combined output of the advanced economies is forecast to fall by 3.8 percent this year and slightly recover in 2010, growing by 0.6 percent.
Accordingly, economic growth in the emerging and developing economies — the group that also includes the fast-growing large economies of Brazil, Russia, India and China known as BRIC — is projected to increase by 1.5 percent in 2009 before growing by 4.7 percent in 2010.
Important for Michigan's exporting companies are IMF’s predictions on international trade. The Washington, D.C.,-based international organization forecasts the volume of global trade will fall by 12.2 percent in 2009 and grow by just 1.0 percent in 2010, compared with an increase of 2.9 percent last year.
Moderate gains in foreign demand for American goods by consumers in emerging and developing countries would help to cushion somewhat the adverse effects of weak demand from most of the industrial nations, which are expected to stay in recession in 2009, besieged by the aftermath of the financial turmoil, collapsing housing markets and rising unemployment.
Evangelos Simos is chief economist of the consulting and research firm Infometrica Inc.