Light at the end of the export tunnel?
Indicators that gauge current economic conditions around the globe show that the economies of industrial countries stabilized in the second quarter.
In its August 19th report, the Organization of Economic Cooperation and Development — a Paris-based economic research think-tank of the 30 richest countries – announced that the combined income of its members did not fall in the second quarter of 2009, after six consecutive quarters of steep declines.
The OECD announced that the Gross Domestic Product (GDP) — the best overall measure of a country’s economic well-being — rose in Germany, France and Japan in the second quarter, although it continued to decline in the United States.
There also is more encouraging news for exporters. Since March, the value of the dollar against the currencies of our major trading partners declined by 9 percent, thus making American goods 9 percent cheaper for foreign buyers.
Statistics point to an end of the freefall in sales abroad. Although exports linger to a large extent below year-ago levels, the combination of improving global demand and a low dollar has begun to perk up orders from overseas.
According to the latest snapshot of state trade numbers, foreign sales of made-in-New Hampshire goods fell $5.5 million, or 2.3 percent, in June, following an increase of 6.3 percent in May.
The latest fall brought monthly exports to $230.9 million — $79.2 million, or 25.5 percent, fewer goods than in June 2008.
International sales of manufactured goods accounted for 76 percent of all exports in June, a decrease of 4.4 percent from the previous month, to $175.5 million, or $71 million lower than June 2008.
This is important news for economic development and jobs in the Granite State. It is estimated that one in every four local factory jobs is tied to exports because of the industrial mix of state exports of manufactures.
And for every 100 jobs tied to exports of manufactured goods, there are another 104 supporting jobs in non-manufacturing industries, mainly wholesale and retail trade, transportation, business services and to a lesser degree utilities, mining and agriculture.
Exports of non-manufactured goods rose up 4.9 percent in June to $55.4 million from the month before.
At the national level, exports of goods rose 2.3 percent in June to $84 billion, reflecting strong sales of foods, feeds and beverages, and industrial supplies and materials.
New Hampshire ranked 22nd in export growth among the 50 states during the first six months of 2009. In comparison with the first six months of 2008, foreign sales by Hampshire companies decreased by an annual rate of 21 percent.
However, leading economic indicators point to an improving outlook for exports. According to the July business survey conducted by the Institute of Supply Management, the nation’s supply executives found the first signs of recovery in export markets.
According to the group of about 400 executives representing the largest U.S. corporations that sell products overseas, 16 percent of members reported higher export orders in July from June’s levels, 69 percent reported no change in export orders and 15 percent reported lower export orders.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is international affairs editor for the Journal of Business Forecasting and professor at the Whittemore School of Business & Economics, University of New Hampshire. He may be reached at firstname.lastname@example.org.