Economic growth unfolding around the globe affects business and consumer spending, and through purchases of foreign goods shapes up Michigan’s exports, jobs and overall economic development.
In its newly released Global Economic Prospects annual report, the World Bank estimated that the global economy grew at an anemic rate of 2.3 percent in 2012, compared with 2.7 percent in 2011. The four-year-old global economic recovery “remains fragile and uncertain, clouding the prospect for rapid improvement," said Jim Yong Kim, president of the World Bank Group, while presenting the report Jan. 15.
After an increase of 5.8 percent in October, foreign sales from Michigan's exporting companies leaped 8.1 percent in November. The $375.6 million monthly leap in shipments abroad from the previous month brought exports to $5.04 billion in November, adjusted for seasonal variation.
In comparison to the same time a year ago, the latest trade numbers show that state exporting companies posted gains in international demand for goods made in the Wolverine State. In November 2012, foreign consumers and businesses bought $855.1 million, or 20.5 percent, more goods made in Michigan than in November 2011.
Looking at Michigan's manufacturers who do business abroad, exports from state factories increased 11.4 percent from the previous month to $4.35 billion, adjusted for seasonal variation.
Manufactured goods accounted for 86 percent of all state exports in November. Compared with 12 months ago, November’s exports from state manufacturing plants were $775.5 million higher. The latest export trends are important for the state’s job market and overall economic development as the industrial mix of foreign sales implies that nearly one in every four factory jobs is tied to exports of manufactured products.
Exports of non-manufactured goods totaled $687.2 million in November, a 9.2 percent decrease from October. This group of shipments abroad consists of agricultural goods, mining products and re-exports — foreign merchandise that enters the state as imports and is exported in substantially the same condition.
Nationally, exports of goods, adjusted for seasonal variation, rose 1.3 percent in November to $129.3 billion, mainly reflecting increases in capital goods; automotive vehicles, parts and engines; industrial supplies and materials; and consumer goods.
In terms of export growth — a measure of the vitality of global demand for locally made goods — Michigan ranked ninth among states in the first 11 months of 2012. Michigan's exports of goods increased 11.9 percent compared to the same period in 2011, adjusted for seasonal variation.
For the nation, U.S. exports of goods increased 4.6 percent during the same period.
What is the outlook for Michigan exports in 2013? According to the World Bank’s forecast, global growth is expected to remain anemic at 2.4 percent in 2013, before gradually strengthening to 3.1 percent in 2014 and 3.3 percent in 2015.
In the emerging countries — led by China and India — the World Bank forecasts solid economic growth at 5.5 percent in 2013, accelerating to 5.7 percent and 5.8 percent in 2014 and 2015, respectively. In the industrial countries, the World Bank forecasts economic growth at only 1.3 percent in 2013, firming to 2.0 percent in 2014 and 2.3 percent by 2015.
The global forecast implies that Michigan's exporting companies selling their products to emerging countries will do better in 2013 than last year with good prospects for growing exports over the next two years. However, exports to the industrial countries, particularly in Europe, are expected to stagnate during 2013-15.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com. He may be reached at email@example.com.