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Exports from Michigan surge 34.9 percent in July
Following a year of falling sales abroad, Michigan's exporters now see the first signs of recovery in their orders from overseas. Recent indicators about international economic conditions undoubtedly paint a cheerful picture for state exporting companies.
An economic revival abroad implies that foreign buyers have more income to spend for goods in general and goods made-in-Michigan in particular. This is the so-called “income-effect” that drives foreign demand for state exports.
In addition, a weaker currency boosts future sales abroad as foreign consumers are able to buy more goods made in Michigan with their own highly valued currency. This is the so called “price effect” on foreign demand for goods made in Michigan.
Since the beginning of this year, the dollar dropped against a variety of major currencies by nearly 10 percent, thus making American goods 10 percent more attractive to foreign consumers.
From February through August 2009, the dollar fell by 12 percent against the euro, 15 percent against the pound sterling and 13 percent against the Canadian dollar.
In the latest trade numbers, $3,004.6 million worth of goods left Michigan for international markets in July, 34.9 percent more than in June. State exports are adjusted for seasonal variation — a statistical process that smoothes out monthly fluctuations for factors such as the number of days in a month and holidays, thus providing a clear picture of state performance similar to the national numbers.
On an annual basis, Michigan's exporters did not post gains in selling their goods abroad. In July of this year, foreign outbound shipments from state companies fell behind their mark set in July of 2008 by $1,777.6 million, or 37.2 percent.
Exports of manufactured goods dominated the state’s international trade, accounting for 89 percent of all exports. In July, shipments abroad from Michigan's factories increased 39.8 percent to a seasonally adjusted volume of $2,661.2 million from June and were 34.8 percent lower than in July of 2008.
Exports of non-manufactured goods went up 6.1 percent in July to $343.5 million, adjusted for seasonal variation. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which are foreign goods that enter the state as imports and are exported in substantially the same condition.
For the country as whole, exports of goods, seasonally adjusted, rose 3.2 percent in July to $86.7 billion to an all-time high mark from June. Through the first seven months of 2009, national exports of goods declined by an annual rate of 23.6 percent in comparison with the first seven months of 2008.
How did Michigan's companies fare in export growth during the first seven months of 2009, which in turn impacts jobs and overall state economic development? In comparison with the same period of 2008, overseas sales from Michigan's companies — seasonally adjusted — decreased by an annual rate of 38.7 percent.
As a result, Michigan ranked 47th among the 50 states through the first seven months of 2008 in export growth.
How do experts from around the world see the prospects for international trade in the rest of 2009 and early in 2010, which will ultimately determine the demand for Michigan's foreign sales with a strong impact on jobs and overall economic development?
According to the latest findings of the World Economic Survey, conducted in the third quarter of 2009 by the Ifo Institute of Economic Research at the University of Munich and the Paris-based International Chamber of Commerce, the global economic climate strongly improved in the third quarter of 2009.
Evangelos Simos is chief economist of the consulting and research firm Infometrica Inc. He may be reached at email@example.com