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Michigan exports on the upswing again after June dip
Growth in global trade continued to crawl in July according to statistics compiled by the World Trade Organization. In the first seven months of 2013, the value of world merchandise exports rose 1.8 percent to $9.6 trillion dollars from the same period in 2012.
WTO's trade statistics from January to July show that the United States maintained its position as the second-largest exporter in the world with foreign sales hitting $918 billion, which was $8 billion more than during the first seven months of 2012.
China, the world’s leading exporter, sold abroad $1.24 trillion worth of merchandise so far this year. Germany, the export engine of the Euro Area, was ranked the world’s third-largest exporter, posting $841 billion in foreign sales in 2013. Despite a 12.8 percent decline in exports from a year ago, Japan sold abroad $415 billion of merchandise so far this year, keeping its place as the world's fourth-largest exporter.
At the state level, the latest tracking numbers on international trade show that foreign sales of made-in-Michigan goods rose $100.2 million, or 2 percent, in July, following a decrease of 2.9 percent in June.
July’s rise brought monthly state exports to $5.07 billion, adjusted for seasonal variation — a statistical technique that smoothes out monthly fluctuations for factors such as the number of working days in a month and thus gives a clear picture of monthly trends similar to the national trade numbers.
On an annual basis, the latest export statistics indicate that Michigan's companies posted gains in selling their goods overseas. In July, exporting companies shipped overseas $367.7 million, or 7.8 percent, more goods than in July 2012.
Foreign sales of manufactured goods — a major contributor to the state’s economic development — accounted for 85 percent of all state exports in July. Sales abroad from Michigan's factories increased in July by 1.3 percent from the previous month to $4.3 billion, adjusted for seasonal variation.
On an annual basis, the latest numbers of exports from state factories were $309.4 million higher than last year’s reading in July. Changes in sales abroad have implications for jobs in the Wolverine State. It is estimated that about one in every four local factory jobs is tied to exports because of the high labor content of manufactures in the chain of production.
Exports of non-manufactured goods went up 6.2 percent in July to $754.5 million, seasonally adjusted, from June. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which are foreign goods that entered Michigan as imports and are exported in substantially the same condition as when imported.
At the national level, exports of goods fell 0.8 percent in July to $132.7 billion, adjusted for seasonal variation, from June, reflecting declines in capital goods, consumer goods, and automotive vehicles, parts and engines. In the first seven months of 2013, U.S. exports of goods increased by 0.9 percent from the first seven months of 2012.
How did Michigan's companies fare in export growth through the first seven months of this year, which in turn impacts the state economy? Michigan ranked 16th in export growth among states during the first seven months of 2013. Particularly, in comparison with the first seven months of 2012, foreign sales from Michigan's companies, seasonally adjusted, increased by an annual rate of 3.5 percent.
The outlook over the next few months for exports of manufactured goods depends on the pace of incoming orders from foreign buyers. According to the August business survey conducted by the Institute of Supply Management, the nation’s purchasing executives are optimistic about the prospects of selling their products abroad.
The Tempe, Ariz.-based research institute reported that its export indicator showed an expansion in incoming export orders for the ninth month in a row, following six consecutive months of contraction dating back to July 2012. The August reading of its export gauge also indicated that orders from abroad were growing faster than in July.
In the August survey, from the pool of respondents of the largest manufacturers that sell their products abroad, 17 percent reported greater export orders from July; 77 percent reported no change in export orders from July’s levels; and only 6 percent reported smaller export orders from the previous month.
Evangelos Simos is chief economist of consulting and research firm e-forecasting.com. He may be reached at email@example.com.