Despite weak dollar, N.H. exports continue to fall
Lower prices from a weak dollar and better quality from technological advancements have made it easier for New Hampshire’s exporting companies to compete globally. However, foreign demand is mainly determined by how much money consumers abroad have to buy goods from other countries.
In its end-of-the-year global economic outlook, the Organization for Economic Cooperation and Development (OECD), estimates that growth in the industrial countries eased somewhat in 2007, as their national incomes increased by an annual rate of 2.7 percent, down from 3.1 percent in 2006.
The outlook also estimates that global trade advanced by an annual rate of 7 percent in 2007, down from 9.4 percent in 2006. In the non-OECD emerging economies – the group includes China and India – the volume of trade is estimated to have climbed by 10.8 percent, about twice the growth of trade in the industrial OECD countries in North America, Europe and Japan.
The easing of economic activity in the industrial countries during 2007 was partially offset by solid gains in consumers’ income in the emerging countries in Asia and Latin America.
As a result, in the first 10 months of 2007, U.S. exports increased 12.3 percent from the same period in 2006, surpassing by 5.3 percent the growth in world trade. The foreign sales boom of 2007 has not spread evenly across the nation’s exporting companies.
But export success at the state level depends on the relative economic health of each state’s trading partners. In 2007, the more vital the markets of the emerging economies were in each state’s overall exports, the better the export performance, measured by growth in foreign sales.
During the January-October period, exports of goods from New Hampshire, seasonally adjusted, increased by an annual rate of 1.6 percent from the same period of 2006. New Hampshire ranked 43rd in export growth among the 50 states during the first 10 months of 2007.
Exports from New Hampshire companies fell 3.5 percent in October from September, following a decrease of 2.0 percent in the previous month. In October, foreign sales registered $229.6 million, seasonally adjusted — $8.3 million less than the volume recorded in September.
Manufactured goods accounted for 84 percent of all state exports. Foreign shipments from New Hampshire’s manufacturers decreased in October by 7.8 percent from the previous month to $192.1 million, adjusted for seasonal variation.
On an annual basis, overseas sales from state factories were $5 million, or 1.5 percent, higher than in October of 2006.
Exports of non-manufactured goods went up 27.1 percent in October to $37.4 million, adjusted for seasonal variation. This group of shipments abroad consists of agricultural goods, mining products and re-exports.
Total U.S. exports of goods, seasonally adjusted, rose 0.7 percent in October to $101.1 billion, the highest level on record. The increase reflected a record in overseas shipments of capital goods.
But in its new forecast, the OECD predicts continuation of growth at a slower pace than in 2007 through 2009. The research organization forecasts economic growth for its members at a rate of 2.1 percent in 2008 and 2.4 percent in 2009. In terms of the major trading partners, its economic outlook predicts Canadian economic growth to be strong, averaging 3.3 percent during 2008-09, while in the euro area growth will average 2 percent in the next two years.
The emerging countries in Asia, led by China and India, are expected to maintain their fast expansion path. China’s economy in particular is forecast to expand by 10.7 percent in 2008 and 10.1 percent in 2009.
Most important, the OECD predicts world trade to accelerate, advancing by 8.1 percent in both 2008 and 2009 from 7 percent in 2007. Global trade growth is expected to be nearly three times faster than economic growth in industrial countries, implying export opportunities for New Hampshire’s companies doing business abroad, especially in emerging economies.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is international affairs editor of the Journal of Business Forecasting and professor/department chair at the Whittemore School of Business & Economics at the University of New Hampshire. Distributed by Infometrica Inc. He may be reached at email@example.com.