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Despite rise, exports by manufacurers at 10-year low
Germany maintained its position as the world’s leading exporter of goods in 2008, according to the latest annual trade rankings compiled by the World Trade Organization. German exporters sold $1.46 trillion dollars of goods worldwide, which is 11 percent more than in 2007.
Since 2001 — when the country joined the WTO — China’s merchandise exports have increased by an average annual rate of 24 percent, twice the growth rate of all country exports. Last year, Chinese companies shipped abroad goods worth an all-time high of $1.43 trillion, an increase of 17 percent from 2007. China was ranked again as the world’s No. 2 exporter and nearly closed the gap with Germany.
American exporters had one of their best years in 2008. National exports of goods rose 12 percent in 2008 to an all-time high of $1.30 trillion. As a result, WTO ranked the United States the third largest merchandise exporter in 2008.
Worldwide exports of goods increased 5 percent in 2008 to $15.8 trillion. The world’s top three exporters — Germany, China and the United States — accounted for 26 percent of the world’s exports in 2008.
In the first two months of 2009, national exports shrank to $167 billion, which is $46 billion or 21.5 percent less than the same period in 2008. The monthly numbers for 2009 indicate that American foreign sales have fallen to levels comparable to those in 2006, thus confirming an end of the export boom of 2007-2008.
A weakening in exports leads to a contraction in overall sales, undermines profitability, postpones capital expenditures and, most importantly, results in job losses. How well have Michigan's exporters done so far in 2009?
During the January-February period, exports of goods from Michigan, seasonally adjusted, decreased by an annual rate of 38.4 percent from the same period of 2007. Like the national numbers, state trade figures are adjusted for seasonal variation, a statistical process that refines monthly performance by eliminating the effects of uneven recurring events such as the number of days in a month and holidays.
Consequently, Michigan ranked 47th in export growth among the 50 states during the first two months of this year.
According to the latest snapshot of monthly trade numbers, exports from Michigan's companies surged 13.2 percent in February from the previous month, following six consecutive monthly declines. At their February mark, foreign sales registered $2,443.7 million, seasonally adjusted, which is $285.4 million more than in January.
Was February’s export performance broad-based? Manufactured goods, an engine of export-related jobs, accounted for 80 percent of all state exports. Foreign shipments from Michigan's manufacturers increased in February by 3.4 percent from the previous month to $1,942.1 million, adjusted for seasonal variation. It was the second lowest monthly level of manufacturing goods exports since June 1998.
On an annual basis, overseas shipments from state factories were $1,338.6 million, or 35.7 percent lower than in February of last year.
Exports of non-manufactured goods went up 78.8 percent in February to $501.6 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.
What are the prospects for global trade in 2009 that will influence the demand for Michigan's exports and eventually the state’s overall economic development along with the future of export-related jobs?
“The collapse in global demand brought on by the biggest economic downturn in decades will drive exports down,” said Director-General Pascal Lamy, who presented the WTO’s 2008 report on trade and economic prospects March 23.
The Geneva-based organization, which deals with the rules of trade between nations helping producers, exporters and importers conduct their worldwide business, forecasts worldwide exports to fall by roughly 9 percent in 2009, the biggest contraction since the Second World War.
Specifically, WTO predicts the trade contraction in 2009 to be particularly severe in the industrial countries, with exports falling by 10 percent compared to 2-3 percent in the developing countries.
“The depleted pool of funds available for trade finance has contributed to the significant decline in trade” said Lamy. “As a consequence, many thousands of trade related jobs are being lost.”
In sum, the WTO predicts a severe slowdown in global growth and trade in 2009. The projections suggest that this year export orders for Michigan companies will continue to come in from foreign buyers but at a significantly lower pace than in 2008.
Evangelos Simos is chief economist of the consulting and research firm Infometrica Inc.