Michigan’s exporters take a significant hit to close summer
According to the latest numbers on international trade flows released by the World Trade Organization, in the first eight months of 2015 the value of world merchandise exports dropped 11 percent to $10.1 trillion from $11.3 trillion during the same period in 2014.
WTO ranks China as the world’s leading exporter during that time period, selling $1.46 trillion in goods during the eight-month period, which is down 1.6 percent compared to the first eight months of 2014.
The United States ranked as the second largest exporter in the world in the first eight months of 2015. So far this year, foreign sales hit $1.02 trillion, or 6.1 percent less than during the first eight months of 2014.
Germany, the export engine of the European Union, remained the third-largest exporter in the world with foreign sales registering $880.7 billion so far this year, which is an astonishing 13 percent less than during the first eight months of 2014.
Japan was ranked the world’s fourth exporter selling abroad $416 billion of merchandise this year, or 9.1 percent below exports in the first eight months of 2014. The four-country combined value of exports accounted for 38 percent of all exports in the world in the first eight months of 2015.
At the state level, the latest trade statistics show foreign sales from Michigan exporting companies dropped 7.6 percent in August, following an increase of 4.5 percent in July. As a result, $4.4 billion worth of goods left Michigan going to international markets in August.
The state export numbers are adjusted for seasonal variation to bring them in line with national trade numbers.
On an annual basis, August’s statistics indicate exporters posted gains due to foreigners’ demand for goods made in Michigan. Exporters sold $86 million, or 2 percent, more goods than in August of last year.
Exports of manufactured goods accounted for 83 percent of all state exports in August. Shipments abroad from state factories decreased in August by 11.2 percent from the previous month to $3.68 billion, adjusted for seasonal variation.
August’s foreign shipments from state manufacturing companies were $10.4 million, or 0.3 percent, higher than in August of last year.
Exports of non-manufactured goods went up 16 percent in August to $743.1 million, adjusted for seasonality. 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, America’s exports of goods, seasonally adjusted, fell 3.2 percent in August from the previous month to $124.5 billion.
Looking at export growth in 2015, Michigan ranked 30th among states during the first eight months of this year. Compared to 2014, foreign sales from Michigan's companies, seasonally adjusted, decreased by an annual rate of 6.3 percent. So far this year, national exports of goods have fallen 6.1 percent, which is the 50-state average growth rate.
What are the prospects for the rest of the year and in 2016 for Michigan's exporting companies? It depends mainly on foreign buyers’ finances, which are affected by economic growth in their countries.
In its semiannual World Economic Outlook, the International Monetary Fund evaluated global economic conditions summarized in the introduction by Maury Obstfeld, director of the research department. IMF projects global economic growth to average 3.1 percent this year, down from 3.4 percent in 2014. For next year, IMF predicts worldwide economic growth to edge up to 3.6 percent.
The weaker-than-expected growth outlook for 2016 reflects setbacks to economic activity in the advanced economies next year. In the key export markets of the industrial countries, which include the United States, European economies, Canada, Australia and Japan, IMF predicts economic growth to average just 2.2 percent in 2016.
More important for Michigan's exporters, IMF predicts the volume of exports for industrial countries to average 3.1 percent in 2015 and slightly accelerate to 3.4 percent in 2016. In the emerging market and developing economies, IMF forecasts exports growth to average 3.9 percent this year and 4.8 percent in 2016.
In view of these future trends, Michigan companies doing business abroad are expected to witness somewhat better levels of export orders from their major foreign markets next year, especially from clients in emerging economies.
Evangelos Simos is chief economic adviser of the consulting and research firm e-forecasting.com. He can be reached at email@example.com.