December 5/04

New Hampshire companies have reaped the benefits of a gradually falling dollar. A weak dollar makes New Hampshire’s goods cheaper in the international markets and gives state producers an extra advantage.

Since the dollar’s swoon began back in February 2002, the greenback — measured by the Federal Reserve’s dollar index — has declined 25 percent. More important, the dollar has fallen 44 percent against the euro, implying that consumers from Germany, France, Italy, Spain and the Netherlands — the state’s major European export markets — could now pay 44 percent less than in 2002 to buy locally produced goods.

Also, since February 2002, the Canadian dollar appreciated by 22 percent against the greenback, which entails that goods made in New Hampshire are 22 percent cheaper north of the border so consumers and businesses can afford to buy more of them.

Historically, a dollar’s slide has presaged acceleration in the growth of exports. It takes about a year for the adjustment process to result in ordering by buyers and, finally, shipping the product from New Hampshire’s factories to foreign destinations.

Given the historical record, the two-year weakness in the dollar has generated solid gains in foreign sales and thus a boost in local jobs, especially in the manufacturing sector.

Following a decline of 1.6 percent in August, international sales from New Hampshire’s companies surged 12.3 percent in September, hitting a 38-month high. The latest snapshot in international trade activity brought state exports of goods to $212.4 million, adjusted for seasonal variation, which is $23.3 million more than in August.

September’s exports were largely driven by manufactured goods, which accounted for 78 percent of all state exports. Foreign shipments from manufacturing companies significantly improved in September by 5.9 percent from the previous month, to $166.0 million, adjusted for seasonal variation. On an annual basis, sales abroad from state factories were $34.2 million, or 33.7 percent, higher than in September of last year.

One in every four manufacturing jobs in the Granite State is tied to exports.

Export jobs come in two phases. The first phase involves workers in factories producing the final product exported to the global markets. The second phase considers spillover effects within the manufacturing sector. It includes workers in other factories who support the manufacturing of materials that enter into the production of the first phase.

In New Hampshire, for every 100 direct jobs in the first phase, there are 63 indirect jobs generated in phase two.

For the country as a whole, U.S. exports of goods, seasonally adjusted, rose 1.4 percent in September to $68.9 billion, an all-time record. The latest jump in national exports was driven by record sales in industrial supplies and consumer goods. Also, exports of automotive vehicles, parts and engines hit the second highest level on record.

New Hampshire ranked ninth in export growth among the 50 states during the third quarter of this year. Particularly, in comparison to the third quarter of 2003, foreign sales from New Hampshire’s companies, seasonally adjusted, increased by an annual rate of 26.5 percent.

Maine exports

International sales from Maine’s companies surged 23.8 percent in September, a strong rebound from a 17.4 percent decline in August, The latest snapshot in international trade activity brought state exports of goods to $180.9 million, adjusted for seasonal variation, which is $34.8 million more than in August.

Led by strong demand from Malaysia and Singapore, foreign sales from Maine’s companies improved on an annual basis too. In September of 2004, state exporters shipped abroad $7.9 million, or 4.6 percent, more goods than in September of 2003.

September’s exports were largely driven by manufactured goods, which accounted for 80 percent of all state exports. Foreign shipments from manufacturing companies rose sharply in September by 19.9 percent from the previous month to $144.2 million, adjusted for seasonal variation. Compared to last year, sales abroad from state factories were $23.8 million, or 4.6 percent, higher than in September of 2003.

Weaker dollar boosts N.H., Maine exports