Growth in manufactured exports means more jobs
A slowdown in the growth of consumer and business spending in New Hampshire’s foreign markets outstripped the benefits of a weaker dollar and dampened international sales in March. State companies exported nearly the same amount of made-in-New Hampshire goods as in February as state exports edged down just $400,000.
As a result of March’s 0.2 percent drop in foreign sales — which followed a decline of 1 percent in February — New Hampshire exports of goods registered $191.4 million, adjusted for seasonal variation – a statistical process that smoothes monthly performance for factors such as the number of days in a month and holidays.
The latest snapshot of the state’s trade activity also showed that New Hampshire companies posted export gains in comparison to last year. In March of this year, state exporters shipped abroad $9.7 million, or 5.4 percent, more goods than in March of 2004.
March’s trade performance was driven by manufactured goods, which contributed 84 percent to all state exports. Sales abroad from New Hampshire manufacturers significantly improved in March by 5.8 percent from the previous month to $161.6 million, adjusted for seasonal variation.
Exports of manufactured goods are a major source of jobs and, consequently, overall economic development. In the words of Anne Krueger, managing director at the International Monetary Fund, the links between international trade, jobs and economic growth are “as close as love and marriage or, indeed, a horse and carriage,” alluding to the Frank Sinatra song, “Love and Marriage.”
What’s the link between March exports of manufactured goods, export-related jobs and economic development in the Granite State? In March, 10,500 factory workers in New Hampshire were directly supported by exports of manufactured goods. Their jobs were tied to the production of final goods at manufacturing plants located in New Hampshire.
Similar to domestic markets, exports activity triggers ripple effects in supporting manufacturing industries which make parts or machinery for the manufacturing of exported goods. Consequently, there were 6,700 additional factory jobs tied indirectly to New Hampshire exports of manufactured goods in March.
In sum, exports of goods from New Hampshire factories supported a total of 17,200 manufacturing jobs in March. Given recent trends in the state’s overall manufacturing employment, one in every five factory jobs in the Granite State depends on the volume of foreign sales of manufactured goods.
Manufacturing activity also sustains jobs in a wide range of other industries. A good example is the transportation of raw materials and final goods to and from factories.
As a result, March’s exports of manufactured goods generated another 17,800 jobs in non-manufacturing businesses in New Hampshire. The industries that benefited from sales abroad of manufactured goods were mainly wholesale and retail trade, transportation, business services and, to a lesser degree, utilities, mining and agriculture.
Exports of non-manufactured goods went down 23.7 percent in March to $29.8 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.
For the country as a whole, U.S. exports of goods, seasonally adjusted, came to a record $72.1 billion, a 1.4 percent increase from the previous month. The latest jump in national exports was driven by sales of consumer goods, which hit an all-time high. Exports of capital goods — machinery and equipment used by businesses – also climbed in March to their highest level in four years.
The March record performance in national exports was a major contributor to GDP growth in the first quarter of 2005. U.S. exports posted their best quarter on record hitting $214.3 billion, a 10.3 percent surge from the first quarter of 2004.
New Hampshire ranked 32nd in export growth among the 50 states during the first quarter of this year. Particularly, in comparison to the first quarter of 2004, foreign sales from New Hampshire’s companies, seasonally adjusted, increased by an annual rate of 7.2 percent.
Forward-looking indicators point to an improving outlook for exports. According to a recent business survey conducted by the Institute of Supply Management, the nation’s supply executives continue to be optimistic about the prospects of growing export markets.
The Tempe, Ariz.-based research institute reported that their export orders index grew in April for the 40th consecutive month. More important, the recent reading indicates that incoming export orders from foreigner buyers grew in April at a faster pace than in March.
In the group of about 300 executives — representing the largest U.S. corporations that sell their products overseas — 23 percent reported higher export orders in April from March’s levels, 71 percent reported no change in export orders and 6 percent reported lower export orders. nhbr
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 email@example.com. Distributed by Infometrica Inc.