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Growth spurt masks annual decline for state’s exporters
Growth in global trade continued to be sluggish in July, according to statistics compiled by the World Trade Organization. In the first seven months of 2015, the value of world merchandise exports dropped by an astounding 10.9 percent to $8.9 trillion from the same period in 2014.
WTO’s trade statistics from January-July 2015 show the United States maintained its position as the second-largest exporter in the world. Still, foreign sales fell by $50 billion, or 5.6 percent, to $890 billion so far this year when compared to 2014.
China, the world’s leading exporter, sold abroad $1.27 trillion worth of merchandise so far this year, or 0.8 percent less than a year ago. Germany, the export engine of the Euro Area, was ranked as the world’s third-largest exporter, posting $782 billion in foreign sales in 2015, an astonishing 13.1 percent decline from a year ago. Despite an 8.4 percent decline in exports from last year, Japan sold abroad $369 billion of merchandise so far this year, keeping its place as the world's fourth-largest exporter.
At the state level, the latest reading of international trade metrics shows merchandise exports of made-in-Michigan goods rose $206.3 million, or 4.5 percent, in July, following an increase of 10.9 percent in June.
July’s rise brought monthly state foreign sales to $4.77 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 Michigan's companies did not post gains in selling their goods overseas. In July, exporting companies shipped overseas $533.8 million in goods, representing a 10 percent drop from the prior year.
Overseas shipments of manufactured goods — a major contributor to the state’s economic development — accounted for 87 percent of all state exports in July. Sales abroad from Michigan's factories increased in July by 7.2 percent from the previous month to $4.15 billion, adjusted for seasonal variation.
On an annual basis, the latest numbers of exports from state factories were $371.5 million lower than last year’s reading in July. Changes in sales abroad have implications for jobs in the Wolverine State. It is estimated about one in every four local factory jobs is tied to exports because of the high labor content of manufacturers in the chain of production and distribution.
Exports of non-manufactured goods went down 10.2 percent in July to $640.9 million, seasonally adjusted, from June. This group of shipments 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.
At the national level, exports of goods rose 0.5 percent in July to an all-time high of $128.2 billion, adjusted for seasonal variation, from June reflecting increases in automotive vehicles, parts, and engines. In the first seven months of 2015, U.S. exports of goods declined by 5.6 percent from the first seven months of 2014.
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 34th among states during the first seven months of 2015. Specifically, in comparison with the first seven months of 2014, foreign sales from Michigan's companies, seasonally adjusted, decreased by an annual rate of 7.4 percent.
The prospects over the next few months for exports of manufactured goods depend 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 not optimistic about the outlook of selling their products abroad.
The Arizona-based research institute reported its export indicator showed a drop in incoming export orders for the third month in a row. The August reading of its export gauge also indicated orders from abroad were falling faster than in July.
In the August survey, from the pool of respondents of the largest manufacturers who sell their products abroad, 10 percent reported greater export orders from July; 73 percent reported no change in export orders from July’s levels; and 17 percent reported smaller export orders from the previous month.
Evangelos Simos is chief economic adviser of the consulting and research firm e-forecasting.com. He can be reached at email@example.com.