Exports from Michigan increase 71 percent in December
At the tail end of 2010, monthly exports from Michigan's exporting companies leaped to $3,772.4 million, from $3,523.9 million in November, adjusted for seasonal variation, a statistical process that equalizes recurring 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 7.1 percent leap in foreign sales from state exporters in the last month of 2010 followed a decrease of 4.2 percent in the previous month.
Compared with foreign sales a year ago, exporters from Michigan shipped abroad goods worth $412.3 million in December 2010, or 12.3 percent more than in December 2009.
Was 2010 a good year for Michigan's exporting companies and, consequently, a good year for state jobs related to exports? For all of 2010, exports of goods made in Michigan increased to $44,504 million, from $32,554 million in 2009.
How did Michigan's exporters fare in selling their products abroad during 2010? State exporters found the value of their foreign sales to have increased by 36.7 percent for the entire year, compared to an average increase of 20.6 percent for the nation as a whole. As a result, Michigan ranked fifth among the 50 states in export growth in 2010.
The latest state numbers of international trade display 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 local jobs because of heavy labor requirements in making industrial goods — accounted for 86 percent of all sales abroad in December. Foreign shipments from Michigan's factories increased in December by 7.1 percent from the previous month to $3,256.0 million, adjusted for seasonal variation.
Michigan exports of non-manufactured goods went up 6.6 percent in December to $516.5 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 entered the state as imports and are exported in substantially the same condition as when imported.
What is the global economic outlook for 2011 which will determine international trade and ultimately the demand for goods made in Michigan? Forward-looking indicators signal that international economic conditions — vital to export-related jobs in Michigan — are expected to improve in the rest of the year.
The Organization for Economic Cooperation and Development, a highly respected Paris-based think-tank whose members include the world's 30 richest countries, reported that the group’s combined leading economic indicator in December continued to provide signals of economic expansion. In particular, OECD’s leading indicator for the most advanced countries in the world — which tracks economic conditions six months in advance — increased 0.3 points in December 2010 and was 2.2 points higher than in December 2009.
Signs of expansion were seen in the major industrial countries. The Euro area’s leading indicator increased by 0.2 points in December, 1.6 points higher than a year ago. The leading indicator for Japan increased by 0.7 points in December, posting a reading of 4.9 points higher than a year ago.
Signs of a slowdown in future growth were evidenced in the United Kingdom where the leading indicator edged up only 0.1 points in December 2010 making the leading indicator's reading 0.8 points lower than a year ago. Similarly, north of the border, the leading indicator for Canada increased by 0.2 points in December, resulting in a reading that was 0.1 points lower than a year ago.
In the emerging large economies, which led the current global recovery, leading indicators are slowing down from recent high levels of economic performance. The leading indicator for China points to a downturn by decreasing 0.2 points in December 2010, posting a reading that is 3.4 points lower than a year ago.
Similarly, the leading indicator for India declined in December by 0.5 points and its recent reading is 2.1 points lower than a year ago. The leading indicator for Brazil increased by 0.2 points in December and its leading indicator was 0.2 points higher than a year ago. In energy-rich Russia, the leading indicator increased by 0.4 points in December, thus its recent reading was 7.4 points higher than a year ago.
These new numbers about future economic activity around the globe confirm the view that the worldwide economic recovery will continue in 2011 but at a slower pace than in 2010. Michigan's companies doing business abroad will experience a weakening in export orders, which will translate into a slowdown in the growth of production activity for exports, profits and local export related jobs.
The link of the state’s economy to the global markets is expected to be less beneficial for overall economic development this year than in 2010.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com.