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Michigan exporters can expect modest growth in 2013
According to the last international trade numbers, worldwide merchandise exports edged up 0.2 percent in October from the previous month, following a monthly drop of 4 percent in September. This monthly data is compiled by the World Trade Organization from 70 reporting countries that account for more than 90 percent of world trade, and is adjusted for seasonal events.
For the United States, exports of goods dropped 3.6 percent in October, the largest monthly decline in national exports in nearly four years.
Looking at the state’s performance, foreign sales from Michigan's exporting companies leaped 5.8 percent in October from the previous month, following a decrease of of 3.2 percent in September. In October, $4.66 billion worth of goods were shipped from Michigan going to foreign markets, which is $257.3 million more than the value of exports recorded in September.
Michigan’s numbers on exports are adjusted for seasonal variation — 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 and international numbers.
Manufactured goods led foreign sales, accounting for 84 percent of all state exports. Shipments abroad from Michigan’s manufacturers increased in October by 6 percent from the previous month to $3.9 billion, adjusted for seasonal variation.
On an annual basis, overseas sales from state factories were $615.4 million, or 16.4 percent, higher than in October of last year.
Exports of non-manufactured goods went up 4.8 percent in October to $757.1 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.
In the first 10 months of this year, national exports of goods have increased by an annual rate of 4.9 percent from the same period last year, compared with an average annual growth of 14.2 percent in 2011 and 16.7 percent in 2010.
How did Michigan's companies fare in export growth so far this year, which in turn impacts local jobs and economic development?
During the January-October period, exports of goods from Michigan, seasonally adjusted, increased by an annual rate of 11.1 percent from the same period of 2011. Consequently, Michigan ranked 10th in export growth among states during the first 10 months of this year.
What are the prospects for global economic growth in 2013, which will eventually shape the demand for Michigan's exports 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 “hesitant and uneven recovery” in the industrial countries over the next two years. Presenting the 2013 economic forecast, Angel Gurria, secretary-general of OECD, said that the "near-term outlook is not only weak, but also downside risks predominate. The lingering Euro Area crisis remains a serious threat to the world economy."
The Paris-based economic think tank of the 30 richest countries in the world predicts economic activity for its members to increase by 1.4 percent in 2013, the same as in 2012.
In terms of Michigan's major trading partners, OECD’s economic outlook predicts Canadian economic conditions will deteriorate in 2013. Following an increase of 2.0 percent in 2012, Canada’s total income, adjusted for inflation, is forecast to grow by 1.8 percent in 2013 and 2.4 percent in 2014.
In the Euro Area, economic conditions also are forecast to remain poor in 2013, posting a negative growth rate of 0.1 percent, after declining by 0.9 percent in 2012.
The emerging countries in Asia, led by China and India, are expected to be the forerunner of growth in global incomes and thus global demand. Particularly, OECD predicts China’s economy will expand by 8.5 percent in 2013 and 8.9 percent in 2014.
Most importantly, OECD predicts world trade to moderately improve during 2013-14. Following a modest increase of 2.8 percent in 2012, the volume of world trade is forecast to expand by 4.7 percent in 2013 and 6.8 percent in 2014.
The projections on global growth and international trade suggest modest improvement in export orders for Michigan companies in 2013. The stalling in growth of foreign demand will not provide a needed boost to production activity at the state level and, as a result, will not generate significant gains in export-related jobs in 2013.
Evangelos Simos is chief economist of consulting and research firm e-forecasting.com. He may be reached at email@example.com.