Pace of export gains begins to slow

Indicators that gauge current economic conditions in industrial countries show signs of an end to a short-lived recovery, which followed massive government spending and low interest rates. In line with global business trends is an undergoing slowdown in the foreign demand for American goods. Historically, when an economy enters recovery from a deep recession, GDP advances at an accelerating pace, bringing back jobs lost in the business downswing. This has not been the case in the current economic recovery in the industrial countries. In the second quarter of 2010, growth in industrial countries’ gross domestic product – the best measure of a country’s overall economic well-being – registered an annual rate of 2.8 percent, the same reading as in the first quarter. Here at home, economic growth in the second quarter decelerated to an annual rate of 2.4 percent from 3.7 percent in the first quarter and 5 percent in the last quarter of 2009. Foreign demand played an important role in the loss of pace of the U.S. economic rebound, resulting in more job losses. According to the Department of Commerce, merchandise exports as part of the GDP declined in the first half of this year from the last quarter of 2009. Growth in goods and services bought by consumers and businesses from around the world registered an annual rate of 10.3 percent in the latest quarter, from 11.4 percent in the first quarter and an astounding 24.4 percent in the fourth quarter of 2009. Following an increase of 2 percent in May, exports of goods made in New Hampshire edged up $700,000, or 0.2 percent, in June. In June, state companies shipped $106.2 million, or 45.3 percent, more goods than in June of 2009. The latest monthly increase brought state merchandise exports to a total of $340.6 million for the month.Sales of manufactured goods from New Hampshire companies increased in June by 4.0 percent from the previous month to $269 million, adjusted for seasonal variation – $86.1 million higher than June 2009. Exports of non-manufactured goods fell 11.9 percent to $71.6 million, seasonally adjusted, from May. The state ranked fifth in export growth among the 50 states during the first six months of the year. In comparison with the first six months of 2009, foreign sales from New Hampshire’s companies, seasonally adjusted, increased by an annual rate of 44.5 percent. This compares with a national average of 22.2 percent during the same period. Looking forward, leading indicators point to a weakening outlook for export growth. In a recent business survey conducted by the Institute of Supply Management, the nation’s supply executives continue to see the short-term prospects for their foreign sales favorably, but not as favorably as in the recent past.Evangelos Simos, chief economist of the consulting and research firm, is international affairs editor of the Journal of Business Forecasting and professor at the Whittemore School of Business & Economics, University of New Hampshire. He may be reached at