Economic events unfolding overseas, far from Michigan, could shape the state’s business outlook for 2012. If the financial and sovereign debt crisis does not improve in the troubled economies of the Euro Zone — the 17-country monetary union using the euro as its currency — an expected severe downturn in Europe will have significant adverse spillovers worldwide, nationally and in the state’s industries.
In the first 11 months of 2011, national exports of goods to the Euro Zone edged up 1.5 percent from the same time in 2010, compared to 14.8 percent in 2010. National exports to the rest of the countries rose 13.6 percent in 2011, following a jump of 20.3 percent in 2010.
The weakening in the Euro Zone’s demand for American goods has become apparent to exporting companies. If the Euro Zone crisis continues in 2012, it will have devastating effects on worldwide trade — from Asia to the Pacific, the Americas and, ultimately, indirectly and directly to Michigan’s exporters.
After a decrease of 8 percent in October, shipments abroad from Michigan’s exporting companies rose 4.9 percent in November. The $191.8 million monthly rise in sales abroad from the previous month brought exports to $4.09 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, foreign consumers and businesses bought $573.8 million, or 16.3 percent, more goods made in Michigan than in November 2010.
Looking at foreign sales of manufactures — a major contributor of local jobs — shipments abroad from state factories increased 9.7 percent from the previous month to $3.505 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 $466.2 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 manufactures.
Exports of non-manufactured goods totaled $592 million in November, a 16.6 percent decrease from October. This group of shipments abroad consists of agricultural goods, mining products and re-exports, which is foreign merchandise that enters the state as imports and is exported in substantially the same condition as when imported.
Nationally, exports of goods, adjusted for seasonal variation, fell 1.2 percent in November to $126.6 billion, mainly reflecting declines in industrial supplies and materials; capital goods; automotive vehicles and parts; and foods, feeds and beverages.
In terms of export growth, a measure of the vitality of global demand for locally made goods, Michigan ranked 30th among states in the first 11 months of 2011. So far, Michigan’s exports of goods increased 14.6 percent compared to the same period in 2010, adjusted for seasonal variation. For the nation, U.S. exports of goods increased 17 percent during the same period.
What are the prospects for Michigan exports? According to the latest business survey, conducted by the Institute of Supply Management, the nation’s supply executives remained cautiously optimistic about the prospects of growing export markets. The Tempe, Ariz., based research institute reported that its export orders index continued to show moderate growth in new export orders in December for a second month in a row, following a flat reading of zero growth last October.
December’s reading implies that the speed of new orders received from abroad was slightly higher than in November. From the pool of respondents of the largest U.S. corporations that sell their products abroad, 18 percent reported greater export orders, 70 percent reported no change in export orders from November’s levels and 12 percent reported smaller export orders.
Evangelos Simos is chief economist of the consulting and research firm e-forecasting.com. He may be reached at email@example.com