Exports of N.H. goods hit a four-year high
Despite a strengthening of the dollar this year, foreigners’ appetites continue to be strong for goods made in New Hampshire.
Sales abroad from New Hampshire companies rose in June by 2.5 percent, after monthly gains of 1.3 percent in May. Foreign consumers and businesses paid $212.1 million to buy goods made in the Granite State.
Are New Hampshire exporters better off than a year ago? In June of this year, state companies sold overseas $35 million, or 19.8 percent, more goods than in June of last year. In June, New Hampshire’s exporting companies surpassed their performance of this time last year.
At the national level, U.S. exports of goods, seasonally adjusted, remained steady at $74.5 billion in June, which is the highest level on record. The latest match in record performance of national exports reflected increases in sales of capital goods and auto vehicles, parts and engines.
Manufactured goods dominated overall state exports in June. Shipments abroad from New Hampshire’s factories accounted for 82 percent of all state exports. Foreign buyers purchased $173.9 million of manufactured goods in June, adjusted for seasonal variation, 7 percent more than in the previous month. That marked the highest level in state exports of manufactured goods since July 2001.
State exports of the volatile non-manufactured goods went down 13.8 percent in June to $38.2 million, adjusted for seasonal variation. This group of foreign shipments 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 as when imported.
June’s foreign sales from New Hampshire’s manufacturing plants supported a total of 18.2 thousand factory jobs. More important, manufacturing production for exports sparked off ripple effects in other industries.
A total of 18.9 thousand additional jobs in wholesale and retail trade, transportation, business services and to a lesser degree utilities, mining and agriculture were linked to exports of manufactured goods in June.
Impact of China
How did New Hampshire exporters fare in terms of growth so far this year from the same period in 2004?
New Hampshire ranked 35th among the 50 states in the first half of 2005. In comparison to the first half of 2004, foreign sales from New Hampshire’s companies, seasonally adjusted, increased by an annual rate of 9.3 percent, compared with an 11 percent average growth for the nation as a whole.
In international economic relations, July 21 may be remembered as a defining date in global trade and finance. On this date, China ended the fixed peg of its currency, the yuan, to the dollar. The People’s Bank of China revalued the yuan, which is also known as the renmimbi, to make the Chinese currency effectively 2.1 percent stronger against the American dollar than it’s been since 1994.
The revaluation of the renmimbi was very small but there is more to come. It was the first stage to freeing a currency by beginning with managing its relation to the most important trading partner before engaging in currency management with all major partners.
What does the yuan’s revaluation mean for New Hampshire’s exporting companies? In the first six months of this year, China was the fifth-biggest consumer of all U.S. exports behind Canada, Mexico, Japan and the United Kingdom. In the first half of 2005, Chinese buyers purchased $19 billion in American goods, 10 percent more than the same period in 2004.
At the state level, consumers and businesses from the world’s second-largest economy bought $10.3 million of goods made in New Hampshire in June. So far this year, exports of goods from New Hampshire to China totaled $51.3 million.
More important, state exports to China are growing very fast. In the last three years, New Hampshire’s exports to China have increased by an average annual growth rate of 38.5 percent, while all state exports rose by an average annual rate of 10.4 percent during the three years period.
Before the revaluation, a Chinese importer was using 8.23 renmimbis to buy a product from New Hampshire that was priced for $1 dollar. If the renmimbi appreciates 10 percent by the end of 2005, as they expect to be the case, the Chinese buyer will use only 7.41 renmimbis to buy $1 worth of goods from New Hampshire.
Given the growth potential of the Chinese economy and its deepening in international trade, the yuan naturally will become a global currency for trade invoicing and financial transactions. Economic historians may mark 2005 as the year that a new global currency was born.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is editor of international affairs for the Journal of Business Forecasting and professor and department chair at the University of New Hampshire. He may be reached at firstname.lastname@example.org. Distributed by Infometrica Inc.