Michigan exports hit an all-time high in 2008
The most recent international trade numbers for Michigan show that in the last month of 2008, foreign sales declined to $2,975.1 million, from $3,368.7 million in November, adjusted for seasonal variation, a statistical process that smoothes out volatility in the monthly state indicators for factors such as the number of days in a month and holidays, and thus brings them in line with national indicators.
December’s 11.7 percent plunge in state exports at the tail end of 2008 followed a decrease of 10.3 percent the previous month.
Compared with international sales a year ago, exporters from the Wolverine State shipped abroad goods worth $490.0 million in December 2008, or 14.1 percent less than in December 2007.
Was 2008 a good year for Michigan's exporting companies and, consequently, a good year for jobs related to exports? Yes. For all of 2008, exports of goods made in Michigan increased to $44,871 million, from $44,372 million in 2007. Despite the declines at the end of the year, state exports in 2008 hit their highest annual mark on record.
The state’s export performance translates to an annual growth in foreign sales of 1.1 percent for 2008, compared to a national average of 12.4 percent. As a result, Michigan ranked 46th among the 50 states in export growth in 2008.
The newest state export statistics reflect a mix of overall economic conditions in the countries of foreign buyers, and also their preferences — related to quality, design and price — for various goods made in Michigan, from business equipment to consumer goods, parts and raw materials.
State exports of manufactured goods — an important driver of jobs — accounted for 88 percent of all sales abroad in December. Foreign shipments from Michigan's factories decreased in December by 5.3 percent from the previous month to $2,606.1 million, adjusted for seasonal variation.
Michigan exports of non-manufactured goods went down 40.2 percent in December to $369.0 million, also adjusted for seasonal variation. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which are foreign goods that enter the state as imports and are exported in substantially the same condition as when imported.
What are the worldwide economic prospects for 2009 that will shape the volume of global trade and eventually the foreign demand for goods made in Michigan? Forward-looking indicators signal that global economic conditions — vital to export-related jobs in Michigan — are expected to weaken in 2009.
The Ifo Institute for Economic Research, a Munich-based think-tank, in co-operation with the International Chamber of Commerce just released the findings of the World Economic Survey for the first quarter 2009 indicating that the economic climate has worsened further around the world. In particular, Ifo’s global economic barometer, which is based on responses of 1,035 business experts from 92 countries and which has tracked business activity since 1981, has fallen to a new historic low.
“The decline is solely the result of more unfavorable assessments of the current economic situation,” explained Dr. Hans-Werner Sinn, president of the Ifo Institute. However, “the expectations for the coming six months have improved somewhat,” he added.
Important for Michigan's exporting companies are the survey’s findings about international trade, which reveal that “the export and import expectations of the WES experts indicate a clear decline in world trade in the first half of 2009.”
These forward-looking indicators confirm the view that the severe global economic slowdown will persist at least in the first half of 2009. Michigan's companies doing business abroad should see a decline in export orders, which will translate into slower production activity, a restraint in profits and a cutback in jobs.
The increased dependence of the state’s economy to global markets via exports is expected to be less beneficial for overall state economic development in 2009 than in 2008.
Evangelos Simos, chief economist of the consulting and research firm e-forecasting.com, is editor for International Affairs in the Journal of Business Forecasting, and professor at the University of New Hampshire.