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It’s a tale of two economies for Michigan’s exporters
The worldwide economic recovery advances at two uneven speeds, according to the latest Interim Economic Assessment published this month by the Organization for Economic Cooperation and Development, a Paris-based think-tankof the 34 richest economies in the world.
Depending on the destination of their foreign sales, Michigan’s exporting companies are experiencing either a strengthening or weakening in the foreign demand for their products.
“The gradual recovery in the advanced economies is encouraging, while the slowdown in emerging economies is likely to be a drag on global growth,” said Rintaro Tamaki, deputy secretary general of OECD.
Despite that outlook, there is currently very little good news for Michigan's exporters. In the latest snapshot of international trade, exports of goods made in the Wolverine State dropped $220.2 million to a monthly total of $4.55 billion in January, adjusted for seasonal variation — a statistical process that equalizes monthly performance for factors such as the number of days in a month and holidays.
Accelerating economic growth abroad translates to higher demand for state exports. A higher rate of export growth boosts overall sales for local companies, improves corporate profitability and generates jobs. Let’s look at how well Michigan’s exporters performed in January of this year in comparison with January 2013.
Exports of goods from Michigan, seasonally adjusted, decreased in January by an annual rate of 6.1 percent from the same month in 2013. As a result, Michigan ranked 33rd in export growth among the states in January.
Exports of manufactured goods were the key contributor of foreign sales in January accounting for 88 percent of all state exports. Overseas shipments from manufacturing companies decreased in January by 4.1 percent from the previous month to $3.98 billion, adjusted for seasonal variation.
Exports of non-manufactured goods dropped by 8.2 percent in January to $568.9 million, adjusted for seasonal variation. 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 as when imported.
At the national level, exports of goods, adjusted for seasonal variation, rose 0.8 percent in January to $133.8 billion, mainly reflecting increases in industrial supplies and materials, capital goods and consumer goods.
The prospects over the next few months for exports of manufactured goods depend on the pace of incoming orders from foreign buyers. According to the February business survey conducted by the Institute of Supply Management, the nation’s purchasing executives continue to be optimistic about the prospects of selling abroad their products.
The Tempe, Ariz.-based research institute reported that its export indicator showed an expansion in incoming export orders for the 15th month in a row. However, the February reading of its export gauge also indicated that orders from abroad were growing at a slower pace than in January.
In the February survey, from the pool of respondents of the largest manufacturers who sell their products abroad, 16 percent reported greater export orders from November; 75 percent reported no change in export orders from the previous month; and only 9 percent reported smaller export orders from January.
Evangelos Simos is chief economic adviser of the consulting and research firm e−forecasting.com. He can be reached at email@example.com.