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Exports from Michigan pull back 4.1 percent in August
International trade went through its deepest slump since WWII, highlighting the severity of the global recession. Michigan's exporters took an unprecedented beating in the first half of this year, resulting in big job losses in industries that rely on selling their goods overseas.
With international trade data on exports from around the world completed for the first half of this year, worldwide exports — a measure of global trade as one country’s exports are another country’s imports — totaled $5.8 trillion, down from $8.2 trillion during the same period in 2008. It was an astonishing 30 percent annual decline in global trade.
In the first six months of 2009, the United States was ranked the third largest exporter in the world with foreign sales hitting $498 billion — $155 billion or 24 percent less than during the first half of 2008. Germany, which used to be the world’s leading exporter, sold abroad $521 billion of goods, 33 percent less than in 2008. Consequently, Germany was bumped to second.
The new global leader for exports is now China. Chinese exports hit $522 billion in the first six months of this year, 22 percent less than in 2008. Japan was ranked the world’s fourth exporter, shipping abroad $251 billion of merchandise. The four-country combined value of exports accounts for one third of all exports in the world in the first half of 2009.
According to the latest trade numbers, foreign sales from Michigan exporters pulled back 4.1 percent in August, following an extraordinary increase of 34.9 percent in July. With this change, $2,880.8 million worth of goods left Michigan, hitting global markets in August.
The state export numbers are adjusted for seasonal variation by infometrica to bring them in line with the national trade numbers — a statistical process that smoothes out monthly fluctuations for factors such as number of days in a month and holidays, thus providing a clear picture of monthly performance similar to the national numbers.
On an annual basis, the August performance shows that exporters did not post gains in foreigners’ demand for Michigan-made goods. In August of this year, state companies exported $1,008.9 million, or 25.9 percent, less goods than in August of last year.
Manufactured goods, a major part of growth in international trade and the major driver of bringing online new local jobs, accounted for 86 percent of all state exports in August. Exports from state manufacturers decreased in August by 6.8 percent from the previous month to $2,480.9 million, adjusted for seasonal variation.
How are Michigan manufacturers looking when compared with last year? The August shipments bound for global markets were $720.6 million, or 22.5 percent, lower than in August of last year.
Even with such a drastic change prior to a year ago, companies are finding ways to improve their exports. One way is by building partnerships with foreign companies to burst into international markets. American Clay Enterprises Inc. of Marina del Rey, Calif., recently celebrated its seventh anniversary by signing with a Chinese distributor for its award-winning patented earth plaster finish for interior walls. CEO and co-founder Croft Elsaesser sees the China partnership as an opportunity to provide products that fill “a growing niche within their marketplace.”
Exports of non-manufactured goods went up 16.4 percent in August to $399.9 million, adjusted for seasonality. This group of shipments abroad 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.
Looking at the whole United States, exports of goods, seasonally adjusted, were flat in August, posting foreign sales of $86.8 billion, the same as July. In this month’s highlights, exports of capital goods were at the lowest level since October 2005, while exports of industrial supplies and materials as well as automotive vehicles, parts, and engines substantially improved.
Taking into account all 50 states, it brings a fresh perspective and shows that each state has been affected differently by the global recession. Some states are already feeling the positive effects of recovery while others are still suffering.
By looking at export growth, a measure of the gains that state companies made in penetrating foreign markets, Michigan ranked 46th among the 50 states during the first eight months of this year. Compared with the same period in 2008, foreign sales from Michigan's companies, seasonally adjusted, decreased by an annual rate of 36.9 percent. So far this year, America’s exports declined 24 percent.
Forward-looking business indicators point to an improving outlook for exports. According to the September business survey conducted by the Institute of Supply Management, the nation’s supply executives continue to see signs of recovery in export markets.
The Tempe, Ariz.-based research institute reported that their export orders index showed its third consecutive expansion in August, following nine consecutive months of contraction.
In the group of about 400 executives representing the largest U.S. corporations that sell their products overseas, 20 percent reported higher export orders in September from August’s levels; 70 percent reported no change in export orders, and only 10 percent reported lower export orders.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is editor for International Affairs in the Journal of Business Forecasting, and professor of economics at the Whittemore School of Business & Economics, University of New Hampshire. Distributed by Infometric Inc. Simos may be reached at firstname.lastname@example.org