Michigan’s yearly exports increase by 3.6 percent
The latest international trade numbers compiled by the World Trade Organization from 70 reporting countries accounting for more than 90 percent of global trade indicate worldwide merchandise exports edged up 3.7 percent in October from the previous month.
On an annual basis, worldwide exports were $22 billion, or 1.6 percent, higher than in October 2012.
For the United States, exports of goods rose 2.2 percent in October to an all-time monthly high of $135.3 billion, led by strong demand from North America and China. Monthly exports to Canada, Mexico and China were the highest on record in October.
Looking at the state's international trade numbers, foreign sales from Michigan's exporting companies rose 2 percent in October from the previous month, following a decrease of 5.1 percent in September.
In October, $4.81 billion worth of goods were shipped from Michigan going to foreign markets, which is $93 million more than the value of exports recorded in September.
Michigan's numbers on exports are adjusted by e-forecasting.com 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 2.7 percent from the previous month to $4.06 billion, adjusted for seasonal variation.
On an annual basis, overseas sales from state factories were $18 million, the same as October of last year.
Exports of non-manufactured goods went down 2 percent in October to $750.3 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.
From January-October, national exports of goods have increased by an annual rate of 1.5 percent from the first 10 months of last year. This indicates a slowdown in the growth of national exports so far this year in comparison to a 4.6 percent increase in 2012 and a surge of 17.4 percent in 2011 during the first 10 months in each year.
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 3.6 percent from the same period in 2012. Consequently, Michigan ranked 19th among states during the first 10 months of this year.
What is the outlook for global economic growth in 2014, which will eventually shape the demand for Michigan's exports, export-related jobs and overall economic development?
In its end-of-the-year global economic outlook, the Organization for Economic Cooperation and Development predicts global economic activity "to strengthen gradually in 2014 and 2015, but the recovery is likely to remain modest." OECD’s report also points out that "near-term prospects appear a little weaker than had been expected” based on last May’s report, amid a further slowdown in the growth of large emerging economies — like China, India, Brazil and Russia — which are tempering the speed of economic recovery in the industrial countries.
The Paris-based economic think tank of the 30 richest countries in the world predicts economic activity for its members to increase 2.3 percent in 2014, compared with an average 3.6 percent worldwide economic growth.
In terms of Michigan's major trading partners, OECD’s economic outlook predicts Canadian economic conditions to improve in 2014. Following an increase of 1.7 percent in 2013, Canadians’ total income, adjusted for inflation, is forecast to grow 2.3 percent in 2014.
In the Euro Area, economic conditions are forecast to get slightly better in 2014, posting a positive growth rate of 1 percent after declining by 0.4 percent in 2013. The emerging countries in Asia, led by China and India, are expected to be the forerunners of growth in global incomes but at slower speeds than in the past.
Most important for Michigan's exporters, OECD predicts world trade to moderately improve in 2014. Following an increase of 3 percent in 2013, the volume of world trade is forecast to expand by 4.8 percent in 2014.
The projections on global growth and international trade suggest modest improvements in export orders for Michigan companies in 2014. The small acceleration in the growth of foreign demand will not provide a strong boost to production activity at the state level and, as a result, will not generate significant gains in export-related jobs in 2014.
Evangelos Simos is chief economic adviser of the consulting and research firm e-forecasting.com. He may be reached at email@example.com.