N.H. exports plunge 23.4 percent to start 2012
New Hampshire exporters started 2012 on the wrong foot, with a 23.5 percent decline in January shipment, a drop of $74.1 million to a monthly total of $242.4 million.The year also started with two global economic shocks that increased uncertainty on the future course of global trade. First, oil prices have fluctuated in a range of $100 to $110 per barrel, compared with a three-month average price of $86 at the end of last summer, reflecting a “geopolitical risk premium” from Middle East tensions.The second adverse shock is the deepening of the recession in the euro area. Austere fiscal measures to hold down unsustainable debts, which led several countries near insolvency and ultimately disintegration of the union, are expected to result in a substantial drop in economic activity in the area.A major recession in the euro area — the second largest economy in the world with an annual income of $11 trillion — is expected to have unfavorable spillover effects on all its trading partners, and consequently on New Hampshire’s exporting companies.The euro area’s recession has resulted in a reduction of consumers’ incomes, leading to a weakening in demand for goods, both domestic and imported. In January, American exports to the euro area totaled $15 billion — 12.7 percent of all national exports.In January, $49.2 million in New Hampshire goods were sold to euro area buyers — 18.4 percent of all state exports. Among the 50 states, New Hampshire ranks eighth for its exposure to the economic conditions of the euro area.New Hampshire’s exports to the euro area declined by 0.6 percent in January 2012 from the year before. During the same period, state exports to all destinations in the world decreased by 31.2 percent.The exposure of New Hampshire’s foreign sales to the euro area’s economic conditions and the outlook for 2012 are expected to have adverse effects on the overall volume of state exports and thus export-related jobs for the rest of this year.Current trends and projections for the euro area suggest that New Hampshire’s exporters should intensify their marketing efforts to other parts of the word — such as Asia, Africa and Latin America – to counterweigh the euro area’s recession.Evangelos Simos, chief economist of the consulting and research firm e-forecasting.com, is editor for the Journal of Business Forecasting and a professor at the University of New Hampshire. He may be reached at email@example.com.