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Exports from Michigan rose 5 percent in October
According to the last international trade numbers of 2009, foreign sales from Michigan's exporting companies rose 5.0 percent in October from the previous month, following an increase of of 5.9 percent in September.
In October, $3,203.5 million worth of goods were shipped from Michigan going to foreign markets, which is $151.7 million more than the value of exports recorded in September.
Michigan's numbers on exports are adjusted for seasonal variations, a statistical process that smoothes out monthly statistics for factors such as the number of days in a month and holidays, thus making them comparable to the national numbers.
Manufactured goods led foreign sales, accounting for 87 percent of all state exports. Shipments abroad from Michigan's manufacturers increased in October by 4.0 percent from the previous month to $2,790.4 million, adjusted for seasonal variation.
On an annual basis, overseas sales from state factories were $279.0 million, or 13.6 percent, lower than in October of last year.
Exports of non-manufactured goods went up 12.2 percent in October to $413.1 million, adjusted for seasonal variation. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which are foreign goods that have entered the state as imports and are exported in substantially the same condition as when imported.
How much did the worldwide recession influence foreigners’ decisions for buying American goods? Global economic activity measured by all nations’ incomes after being adjusted for inflation is estimated to have declined by 1.7 percent in 2009, after going up 2.2 percent in 2008.
As a result, in the first 10 months of this year, national exports of goods have plunged 21.8 percent from the same period in 2008, compared with an average annual growth of 11.2 percent in 2008 and 13.2 percent in 2007.
Has the foreign sales bust of 2009 spread evenly across the nation’s exporting companies? During the January-October period, exports of goods from Michigan, seasonally adjusted, decreased by an annual rate of 33.0 percent from the same period of 2008. Consequently, Michigan ranked 46th in export growth among the 50 states during the first 10 months of this year.
What are the prospects for global economic growth in 2010, which will ultimately shape the demand for Michigan's exports, the state’s overall economic development and the generation of export-related jobs?
In its end of the year global economic outlook, the Organization for Economic Cooperation and Development predicts a modest recovery in the industrial countries from “the most virulent recession in decades,” driven by public stimulus policies and strong demand from non-industrial countries such as China, India and Brazil.
The Paris-based economic think tank of the 30 richest countries in the world forecasts economic activity for its members to have declined by 3.5 percent in 2009 and to recover in 2010 posting an annual growth of 1.9 percent.
In terms of Michigan's major trading partners, OECD’s economic outlook predicts Canadian economic conditions to improve in 2010. Following a decline of 2.7 percent in 2009, Canada’s total income, adjusted for inflation, is forecast to grow by 2 percent in 2010 and 3 percent in 2011.
In the Euro Area, economic conditions are also forecast to get better in 2010, posting a positive growth rate of 0.9 percent, after declining by 4 percent in 2009.
The emerging countries in Asia, led by China and India, are expected to be the forerunners of growth in global incomes and thus global demand. Particularly, OECD predicts China’s economy to expand by 10.2 percent in 2010 and 9.3 percent in 2011.
Most important, OECD predicts world trade to moderately recover during 2010-11. Following an unprecedented decline of 12.5 percent in 2009, the volume of world trade is forecast to expand by 6 percent in 2010 and 7.7 percent in 2011.
The projections on global growth and international trade suggest an expected improvement in export orders for Michigan companies. The strengthening of foreign demand will give a boost to production activity at the state level and, as a result, several export-related jobs will be gained in 2010.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com. He may be reached at firstname.lastname@example.org