State's exporters enjoy significant summer resurgence
According to statistics compiled by the World Trade Organization, growth in global trade continued to grow at a moderate pace in July. In the first seven months of 2014, the value of world merchandise exports rose 2.6 percent to $9.9 trillion dollars from the same period in 2013.
WTO’s trade statistics from January-July show the United States maintained its position as the second-largest exporter in the world with foreign sales hitting $944 billion, which is 3.2 percent or $29 billion more than during the first seven months of 2013.
China, the world’s leading exporter, sold abroad $1.275 trillion worth of merchandise so far this year, 3 percent more than a year ago. Germany, the export engine of the Euro Area, was ranked the world’s third exporter posting $903 billion in foreign sales in 2014, or 7.8 percent more than a year ago. Despite a 3 percent decline in exports from last year, Japan sold abroad $403 billion of merchandise so far this year, keeping its place as the world's fourth largest exporter.
At the state level, the latest international trade numbers show foreign sales of made-in-Michigan goods surged $751.6 million or 16.1 percent in July, following a decrease of 6.7 percent in June.
July’s surge brought monthly state exports to $5.43 billion, 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 gives a clear picture of monthly trends similar to the national trade numbers.
On an annual basis, the latest export statistics indicate that Michigan's companies posted gains in selling their goods overseas. In July, exporting companies shipped overseas $351.5 million, or 6.9 percent more goods than in July 2013.
Foreign sales of manufactured goods — a major contributor to the state’s economic development — accounted for 84 percent of all state exports in July. Sales abroad from Michigan's factories increased in July by 15.1 percent from the previous month to $4.57 billion, adjusted for seasonal variation.
On an annual basis, the latest numbers of exports from state factories were $252.5 million higher than last year’s reading in July. Changes in sales abroad have implications for jobs in the Wolverine State. It is estimated that about one in every four local factory jobs is tied to exports because of the high labor content of manufactures in the chain of production.
Exports of non-manufactured goods went up 21.3 percent in July to $853.5 million, seasonally adjusted, from June. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which are foreign goods that entered Michigan as imports and are exported in substantially the same condition as when imported.
At the national level, exports of goods rose 1.3 percent in July to an all time high of $138.6 billion, adjusted for seasonal variation, from June reflecting increases in automotive vehicles, parts and engines, industrial supplies and materials, and capital goods. In the first seven months of 2014, U.S. exports of goods increased by 2.9 percent from the first seven months of 2013.
How did Michigan's companies fare in export growth through the first seven months of this year, which in turn impacts economic development and local jobs? Michigan ranked 31st in export growth during the first seven months of 2014. Particularly, in comparison with the first seven months of 2013, foreign sales from Michigan's companies, seasonally adjusted, decreased by an annual rate of 0.1 percent.
The outlook over the next few months for exports of manufactured goods depends on the pace of incoming orders from foreign buyers. According to the August business survey conducted by the Institute of Supply Management, the nation’s purchasing executives are optimistic about the prospects of selling their products abroad.
The research institute reported its export indicator showed an expansion in incoming export orders for the 21st month in a row. The August reading also indicated that orders from abroad were growing faster than in July.
In the August survey, from the pool of respondents of the largest manufacturers that sell their products abroad, 18 percent reported greater export orders from July; 74 percent reported no change in export orders from July’s levels; and only 8 percent reported smaller export orders from the previous month.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com. He can be reached at email@example.com.