Area Economy

States exports continue to rise but future looks bleak

August 27, 2012
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At the national level, last year economic growth was anemic, unemployment high and exports of goods surged. In 2011, the nation’s GDP — a measure of the country’s output of goods and services produced — rose 1.7 percent, which is just about half of its 100-year trend of 3.3 percent. Unemployment averaged 9 percent at that time.

Driven by a weak dollar and robust growth in the emerging economies of Asia and Latin America, U.S. exports of goods jumped 16.2 percent in 2011. As a result, merchandise exports contributed 39.4 percent to the growth of the U.S. economy.

Simply put, if national export growth had been nil instead of 16.2 percent, the national economy would have registered a growth rate of just 1 percent in 2011 with additional adverse effects on jobs, and probably a double-digit unemployment rate.

Just like with the national economy, strong foreign demand for American goods in 2011 significantly contributed to Michigan's economic development and job growth. State exports acted as a cushion to anemic and fragile domestic demand for goods made by state companies.

What are the export trends so far this year? According to recently released international trade statistics, exports of goods for the country as a whole were flat in May, holding at April’s level of $130.7 billion, adjusted for seasonal variation. In the first five months of 2012, national exports of goods grew by an annual rate of 6.3 percent from the same period a year ago, compared to an average of 16.2 percent in 2011.

How does Michigan measure up among the 50 states in export growth in 2012? In the first five months of the year, foreign sales from Michigan's companies — seasonally adjusted — increased by an annual rate of 11.6 percent compared with the first five months in 2011. As a result, Michigan ranks 14th among states in export growth so far this year.

Looking at the latest monthly state snapshot of international trade numbers, Michigan's foreign sales surged in May by 12.3 percent, after a decrease of 7.9 percent in April. Michigan's exporters sold $4.95 billion in goods overseas in May, adjusted for seasonal variation, a statistical technique that smoothes out monthly fluctuations for factors such as the number of working days in a month and thus portrays a clear picture of monthly trends.

Compared with a year ago, Michigan's exporting companies surpassed their export performance by $724.2 million, or 17.1 percent.

Michigan's foreign sales reflected the mix of trends in foreigners’ demand for goods made by different industries in May. Overseas shipments from Michigan’s manufacturers, which accounted for 88 percent of all exports, increased to $4.33 billion, seasonally adjusted, or 11.6 percent more than April’s level of factory shipments abroad.

Exports of non-manufactured goods went up 17.2 percent to $618.8 million in May, adjusted for seasonal variation. This group of foreign sales 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 are the short-term prospects for Michigan exports? According to the latest business survey conducted by the Institute of Supply Management, the nation’s purchasing executives are no longer optimistic about the prospects of growing export markets. The Tempe, Ariz., research institute reported that its export orders index showed in June the first contraction signal since June 2009.

Prior to June, executives of exporting companies had indicated growth in incoming orders from abroad for the past 35 consecutive months. June was an unwelcome turning point for American exporters, consistent with weakening in the global economy.

From the pool of respondents of the largest corporations that sell their products abroad, only 16 percent reported greater export orders in June; 57 percent reported no change in export orders from May’s levels; and 27 percent reported smaller export orders from the previous month.

Evangelos Simos is chief economist of the consulting and research firm He may be reached at

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