Exports from Michigan surged 10.6 percent in July
Following an exceptionally strong recovery in the first quarter of 2010, the growth of global trade has substantially slowed down according to the latest available monthly statistics on trade flows from around the globe.
The annual growth rate of the dollar value of worldwide exports, measured by the International Monetary Fund, reached an impressive peak of 30 percent in March 2010, compared with a negative growth rate of 34 percent in April 2009, which was the worst month in modern history of global trade.
In June 2010 — the latest month that trade data from all countries are available in the IMF — the annual growth rate of worldwide exports, although positive, declined for the third month in a row, posting a gain of 19 percent, compared with 30 percent in March.
Will the global slowdown in trade continue, leading to a slowdown in Michigan's exports and yet another round of job losses?
Experts from around the world see the prospects for international trade for the rest of 2010 and early in 2011 to be less favorable than the beginning of this year. Lower trade prospects will ultimately determine the demand for Michigan's foreign sales with a strong impact on jobs and overall economic development.
According to the latest findings of the World Economic Survey, conducted in the third quarter of 2010 by the Ifo Institute of Economic Research at the University of Munich and the Paris-based International Chamber of Commerce, the global economic climate has "clouded over slightly" in the third quarter of 2010.
Reporting the results of the survey, Hans-Werner Sinn, president of the Institute, pointed out that “the global economic climate deteriorated somewhat," because "economic expectations have again been slightly downgraded."
About 1,100 executives from 116 countries participating in the international survey appraised the current worldwide economic conditions to be satisfactory and better than a year ago. Looking forward at the next six months, the executives expect the global economy to improve from the current levels but at a slower pace than in the last two quarters.
The findings of the World Economic Survey about international trade are important to Michigan's exporting companies. The business experts from around the world anticipate the global volume of imports to continue increasing in the next two quarters but at a slower speed from the previous survey.
Strong import growth trends are expected from the Asian and Pacific Rim countries, Latin America and the countries of the former Soviet Union, especially Russia.
In the latest snapshot of Michigan's international trade, exports of goods rose by 10.6 percent in July from the previous month to $3,878.7 million. State trade numbers are adjusted for seasonal variation, a statistical process that smoothes out monthly fluctuations for factors such as the number of days in a month and holidays, thus truly providing a clear picture of state performance similar to the national numbers.
On an annual basis, Michigan's exporting companies posted gains in selling their goods abroad. In July of this year, foreign outbound shipments from state exporters surpassed their mark set in July 2009 by $970.6 million, or 33.4 percent.
Exports of manufactured goods had a major contribution to the state’s international trade, accounting for 66 percent of all exports. In July, shipments abroad from Michigan's factories decreased 17.4 percent to a seasonally adjusted volume of $2,575.7 million from June and were 0.2 percent lower than in July 2009.
Exports of non-manufactured goods went up 237.5 percent in July to $1,303.0 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.
For the country as a whole, exports of goods, seasonally adjusted, rose 2.7 percent in July to $107.7 billion. Through the first seven months of 2010, national exports of goods increased by an impressive annual rate of 22.1 percent in comparison with the first seven months of 2009.
How did Michigan's companies fare in export growth during the first seven months of 2010, which in turn impacts jobs and overall state economic development? In comparison with the same period of 2009, overseas sales from Michigan's companies, seasonally adjusted, increased by an annual rate of 52.8 percent, compared with a 22.1 percent average growth for the nation as a whole. As a result, Michigan ranked second among the 50 states through the first seven months of 2010 in export growth.
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 of economics at the Whittemore School of Business & Economics, University of New Hampshire. He may be reached at firstname.lastname@example.org