Global demand remains strong for N.H. goods
Like here at home, foreign consumers in the countries doing business with New Hampshire companies are feeling the pain of higher fuel prices and have slowed down their purchases of non-energy related goods, which has an adverse impact on their imports from New Hampshire.
The global connectivity of markets links the surge in oil prices with New Hampshire’s exporters, which influences their volume of production, sales, profits and jobs. If energy prices continue to rise, we will probably see a significant dent in the spending habits of foreign consumers, considerably slowing down global demand for goods made in New Hampshire.
Most analysts, however, expect energy prices to either decline or stabilize amid conservation, use of alternatives to oil resources, technological advancements that improve energy efficiency, and an easement in geopolitical uncertainties.
In March, exports of goods made in the Granite State fell by 1.6 percent to $219.4 million, from $223 million in February, adjusted for seasonal variation. On an annual basis, New Hampshire’s exporters posted gains in marketing their goods abroad. In March of this year, foreign outbound shipments from state companies surpassed their level during March of 2005 by $23.6 million, or 12 percent.
Exports of manufactured goods dominated the state’s international trade, accounting for 82 percent of all exports. In March, shipments abroad from New Hampshire’s factories dropped 1.2 percent to a seasonally adjusted volume of $179.8 million from February, and they were 9.5 percent higher than in March 2005.
As production of manufactured goods requires a significant amount of labor, foreign sales of manufactured goods become a major source of many export-related jobs in New Hampshire. Sales abroad of manufactured goods contributed to 11,000 factory jobs in producing the final goods exported in March.
There also were 7,000 additional manufacturing jobs in New Hampshire in related industries that support the state’s exporting companies.
Exports of non-manufactured goods went down 3.1 percent in March to $39.7 million, 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 as when imported.
On the whole, U.S. exports of goods, seasonally adjusted, advanced by 2.2 percent in March to an all-time high of $82.1 billion, following a 1.5 percent decline in February.
How good has trade been for New Hampshire’s economy in the first three months of 2006? In comparison to the same period of 2005, overseas sales from New Hampshire’s companies – seasonally adjusted – increased by an annual rate of 15 percent, compared with a 14.4 percent average growth for the nation as a whole. As a result, New Hampshire ranked 26th among the 50 states through the first three months of 2006 for export growth.
What is the forecast for global economic growth this year and in 2007 which in due course will shape the future demand for goods made in New Hampshire and the amount of export-related jobs? In its latest report, released late in April, the International Monetary Fund revised global growth estimates for 2006 up by 0.6 percentage points to 4.9 percent and predicts 2007 to be another good year, with global growth at an annual rate of 4.7 percent.
The IMF predicts the volume of world trade to grow by 8 percent in 2006 and 7.5 percent in 2007, slightly higher than the growth rate of 7.3 percent in 2005.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is editor for International Affairs in the Journal of Business Forecasting, and professor/department chair at the Whittemore School of Business & Economics, University of New Hampshire. Distributed by Infometrica Inc. He may be reached at email@example.com.