The latest snapshot for Michigan’s exporting companies shows that in the last month of 2009, foreign sales rose to $3,336.1 million, from $3,203.5 million in November, adjusted for seasonal variation, a statistical process that equalizes recurring volatility in the monthly state indicators for factors such as the number of days in a month and holidays.
December’s 4.1 percent rise in state exports at the tail end of 2009 followed an increase of 5 percent in the previous month.
Compared with foreign sales a year ago, Michigan exporters shipped abroad goods worth $62.4 million in December 2009, or 1.8 percent less than December 2008.
Was 2009 a good year for Michigan’s exporting companies and, consequently, a good year for state jobs related to exports? For all of 2009, exports of goods made in Michigan decreased to $32,554 million, from $44,871 million in 2008.
How did Michigan’s exporters fare in selling their products abroad during 2009? State exporters found the value of their foreign sales to have decreased by 27.4 percent for the entire year, compared to an average decline of 18.1 percent for the nation as a whole. As a result, Michigan ranked 44th among the 50 states in export growth in 2009.
Last December’s state export numbers display a mix of overall economic conditions in the countries of foreign buyers and also their preferences — related to quality, design and price — for various goods made in Michigan, from business equipment to consumer goods, parts and raw materials.
State exports of manufactured goods — an important driver of jobs — accounted for 86 percent of all sales abroad in December. Foreign shipments from Michigan’s factories increased in December by 2.4 percent from the previous month to $2,857.4 million, adjusted for seasonal variation.
Michigan exports of non-manufactured goods went up 15.9 percent in December to $478.7 million, also adjusted for seasonal variation. 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.
What is the global economic outlook for 2010, which will determine international trade and ultimately the demand for goods made in Michigan? Forward-looking indicators signal that international economic conditions are expected to improve in the rest of the year.
The Organization for Economic Cooperation and Development, whose members include the world’s 30 richest countries, reported that the group’s composite leading economic indicator in December provided stronger signals of an expansionary economic outlook than last month.
In particular, OECD’s leading indicator for the most advanced countries in the world increased 0.9 point in December 2009 and was 10.1 points higher than in December 2008.
Signs of expansion were evidenced in the major industrial countries. The Euro area’s leading indicator increased by 0.9 point in December — 12.2 points higher than a year ago. The leading indicator for Japan increased by 1.2 points in December, posting a reading of 8.1 points higher than a year ago. In the United Kingdom, the leading indicator increased by 0.9 point in December 2009 and was 11.5 points higher than a year ago. North of the border, the leading indicator for Canada increased by 1.1 point in December, 11.3 points higher than a year ago.
In the emerging large economies, which led the current global recovery, leading indicators are stabilizing at high levels of economic performance. The leading indicator for China decreased by 0.1 point in December 2009 but was 9.4 points higher than a year ago. The leading indicator for India was unchanged in December and 4.9 points higher than a year ago. Russia’s leading indicator increased by 0.3 point in December, which was 14.2 points higher than a year ago. The leading indicator for Brazil increased by 0.1 point in December and it was 13.8 points higher than a year ago.
These new numbers confirm the general view that global economic expansion is on track for the rest of 2010. Michigan’s companies doing business abroad will continue to receive increased export orders, which will translate into growth in production activity for exports, an increase in profits and more jobs.
The link of the state’s economy to the global markets is expected to be more beneficial for overall economic development this year than in 2009.
Evangelos Simos, chief economist of the consulting and research firm e-forecasting.com, is editor for International Affairs in the Journal of Business Forecasting, and professor of economics at the University of New Hampshire. He can be reached at firstname.lastname@example.org