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Exports from Michigan rose 4.9 percent in September
In its latest analysis of global economic conditions, the Organization for Economic Cooperation and Development points out that economic recovery "has become more hesitant since the early part of the year." Growth in economic activity and international trade "have softened" around the globe as the temporary government stimulus programs have faded.
According to the Paris-based economic think tank of the 30 richest countries in the world, the current "soft patch" in global trade has affected countries unevenly, particularly the major industrial countries.
What is the effect of the worldwide economic soft patch on Michigan's exporting companies?
The latest export numbers show that shipments abroad from Michigan's exporting companies rose to $3,781.6 million in September — $176.5 million or 4.9 percent more than in August. Like national exports, the state’s export numbers are adjusted for seasonal variation, a statistical process that smoothes monthly performance for factors such as the number of days in a month and holidays.
How are Michigan's exporting companies doing compared with the same time last year? In September of 2010, state companies sold abroad $828.5 million, or 28.1 percent, more goods than in September of 2009.
Manufactured goods were the key driver of September’s foreign sales, accounting for 88 percent of all state exports. Shipments abroad from Michigan's manufacturers increased in September by 5.7 percent from the previous month to $3,309.0 million, adjusted for seasonal variation.
On an annual basis, exports from state factories were $716.8 million, or 28.1 percent, higher than in September of last year.
Exports of non-manufactured goods went down 0.7 percent in September to $472.6 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.
For the U.S. as a whole, in the first nine months of 2010 exports of goods increased by 21.4 percent in comparison to the first nine months of last year.
How do Michigan's companies measure up in export growth to other states so far this year? Michigan ranked first in export growth among the 50 states during the first nine months of 2010. In particular, compared with the same period in 2009, foreign sales from Michigan's companies, seasonally adjusted, increased by an annual rate of 46.6 percent.
What are the prospects for global economic growth in 2011, 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, OECD predicts economic growth in the industrial countries to slow down from 2.7 percent this year to 2.2 percent in 2011, before picking up to 2.7 percent in 2012.
Most important, OECD predicts growth in world trade to slow in the next two years. Based on partial data for the current year, OECD estimates that in 2010, trade has rapidly recovered from 2009, advancing by 12.3 percent. However, OECD forecasts the volume of world trade to expand by 8.3 percent in 2011 and 8.1 percent in 2011.
The projections on global growth and international trade suggest a slowdown in the volume of export orders for Michigan companies. The softening of foreign demand will slow down production activity at the state level and, as a result, fewer export-related jobs will be gained in the next two years, compared to 2010.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com. He may be reached at firstname.lastname@example.org