The first degree external spherical harmonic coefficients are obtained for each year of a 12-year period centered at 1958.5, using annual mean values of X, Y, and Z components from 54 magnetic observatories. Values of the coefficient g0e of the zonal first degree harmonic clearly show a solar cycle variation. The peak-to-peak amplitude of the variation is approximately 29 nT, which is consistent with values obtained earlier by first filtering data to retain only those variations having periods near the solar cycle and then subjecting the filtered data to a spherical harmonic analysis. The variation in g0e is found to correlate extremely well with the annual mean Ds, index and with the annual number of days having Ap>60. Based on statistics of the mean square successive difference, an explanation is presented why the obtained solar cycle variation in g0e, which is very much smaller in magnitude than the standard deviations calculated by the conventional method, is statistically meaningful. The determined absolute (not relative) values of gie are in agreement, within several nanotesla, with the expectation from a theoretical model of solar wind compression of the magnetosphere and an analysis of the Dst index.