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Michigan exporters lined up well for emerging economies
In the first eight months of 2013, the value of world merchandise exports rose 2.1 percent to $11 trillion dollars from the same period in 2012, according to the latest numbers on global trade flows released by the World Trade Organization.
WTO's trade figures on exports from January to August show the United States ranked the second largest exporter in the world with foreign sales hitting $1.05 trillion, which was $14 billion or 1.4 percent more than during the first eight months of 2012.
China was the world’s leading exporter, selling abroad $1.4 trillion worth of exports so far this year. Germany, the export engine of the European Union, maintained its third place, posting $954 billion in foreign sales in 2013. Japan was ranked the world’s fourth exporter, selling abroad $474 billion of merchandise this year.
The four-country combined value of exports accounted for one-third of all exports in the world in the first eight months of 2013.
At the state level, the latest trade statistics show foreign sales from Michigan exporting companies fell 2 percent in August, following an increase of 2 percent in July. As a result, $4.97 billion worth of goods left Michigan on their way to international markets in August.
The state export numbers are adjusted for seasonal variation by e-forecasting to bring them in line with 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, August’s statistics indicate exporters posted gains due to foreign demand for goods made in Michigan. In August, exporters sold $352.6 million, or 7.6 percent, more goods than in August of last year.
Exports of manufactured goods — a vital contributor to overall economic development and an important generator of local jobs — accounted for 87 percent of all state exports in August. Shipments abroad from state factories increased in August by 0.5 percent from the previous month to $4.34 billion, adjusted for seasonal variation.
How do Michigan manufacturers’ performances compare to a year ago? August’s foreign shipments from state manufacturing companies were $364.4 million, or 9.2 percent higher than in August of last year.
Exports of non-manufactured goods dropped 16.8 percent in August to $627.4 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.
For the country as a whole, America’s exports of goods, seasonally adjusted, fell in August by 0.2 percent to $132.4 billion.
Looking at export growth in 2013, a gauge of the state’s performance in penetrating competitively international markets, Michigan ranked 16th among states during the first eight months of this year. Compared to the same period in 2012, foreign sales from Michigan's companies, seasonally adjusted, increased by an annual rate of 4 percent. So far this year, national exports of goods rose 1.2 percent, which is the 50-state average growth rate.
What are the prospects for the rest of the year and in 2014 for Michigan's exporting companies? It depends mainly on foreign buyers’ finances, which are affected by economic growth in their countries. The faster the buyers' countries grow, the higher their demand for goods made in Michigan.
In its new semiannual World Economic Outlook published this month, the International Monetary Fund evaluated global economic conditions and provided evidence that global economic “growth is still in low gear.” IMF projects global economic growth to average 2.9 percent this year, following an increase of 3.2 percent in 2012 and 3.9 percent in 2011. In 2014, IMF predicts global economic growth to edge up 3.6 percent, implying that next year the world economy will be slightly better off compared to this year.
In the key export markets of the industrial economies that include European economies, Canada, Australia and Japan, IMF predicts economic growth to average 2 percent in 2014. However, IMF forecasts the emerging and developing economies to grow by an average growth rate of 5.1 percent in 2014.
More important for Michigan’s exporters, IMF predicts the volume of international trade to average 2.9 percent in 2013 and accelerate to 4.9 percent in 2014. The worldwide trade forecasts compare unfavorably with actual trade growth rates of 12.6 percent in 2010 and 6.1 percent in 2011.
In view of these trends, Michigan companies doing business abroad are expected to witness somewhat better levels of export orders from their major foreign markets next year, especially from clients in emerging economies.
Evangelos Simos is chief economic adviser of the consulting and research firm e-forecasting.com. He may be reached at email@example.com.