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One of the major global
developments in the last three years is the so-called realignment of
currencies, which relates to an enduring change in a key currency against
the dollar. Of main interest for international trade is the strengthening of
the euro.
Since February 2002, the euro has jumped 50 percent against the dollar,
implying that businesses and consumers from countries that use the euro
could now pay 50 percent less than in 2002 to buy American goods if their
prices have stayed the same.
Twelve countries -- Germany, France, Italy, Spain, the Netherlands, Austria,
Belgium, Luxemburg, Ireland, Finland, Greece and Portugal -- have opted to
use the euro as their currency and their integration has created the world's
second market, after the United States. Consequently, the bloc is the
largest potential single market for Massachusetts' exporters.
Have Massachusetts companies reaped the benefits of a gradually rising euro
that works its way in increasing state exports? A strong euro makes
Massachusetts' goods cheaper in the euro area's single market and gives
state exporters an extra advantage.
In January, $570.6 million worth of goods made in Massachusetts were sold to
euro-buyers. In comparison to last year, shipments to euro-companies last
January were 18.1 percent higher than in January of 2004.
The euro area accounted for 16 percent of all U.S. exports in January; after
Canada, it is the second largest destination of made in America goods. At
the state level, foreign shipments of goods from Massachusetts to the euro
area accounted for 36 percent of all state exports in January. State
exporters have a strong presence in the world's second largest market.
In other words, one-third of all state exports -- and consequently the
thousands of jobs tied to these exports -- depend upon the economic
conditions of the 12 countries and the value of the euro. In January,
Massachusetts ranked second in terms of dependence upon the economic health
of the euro area.
This year dawned with signs of a slowdown in foreign sales from
Massachusetts companies.
Exports of locally made goods edged down in January by 1.2 percent from
December, adjusted for seasonal variation -- a statistical process that
equalizes monthly performance for factors such as the number of days in a
month and holidays.
In the latest snapshot of the state's global business, sales abroad of goods
made in the Bay State fell to $1.758 billion in January.
How did Massachusetts exporters fare in selling their products abroad in
January in comparison to a year ago? The changing conditions of the global
economy over the 12-month span kept the demand firm for
made-in-Massachusetts goods. In January, state companies shipped abroad the
same value of goods as in January 2004.
January's exports were largely driven by manufactured goods, which accounted
for 88 percent of all state exports. Foreign shipments from manufacturing
companies edged down by 0.9 percent from the previous month to $1.548
billion.
Exports of nonmanufactured goods went down 3.2 percent in January to $210.9
million. The category 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.
For the country as a whole, exports of goods, seasonally adjusted, edged up
by 0.2 percent in January to a record level of $71.2 billion, following a
4.4 percent jump in December. The slowdown in the growth of exports combined
with a surge in imports generated the second-largest ever trade deficit in
January.
New Hampshire
Foreign sales of goods made in the Granite State edged down a seasonally
adjusted 3.2 percent to $194.6 million in January.
However, the improved global economic conditions since last year have built
up the demand for made-in-New Hampshire goods. In January of 2005, state
companies shipped abroad $16.9 million, or 9.5 percent, more goods than in
January of 2004.
January's shipments abroad were largely driven by manufactured goods, which
accounted for 80 percent of all state exports. Foreign sales from
manufacturing companies fell in January by 3.8 percent from the previous
month to $155.2 millio.
On an annual basis however, in January of this year sales abroad from state
factories were $5.3 million, or 9.5 percent, higher than in January of last
year.
Exports of nonmanufactured goods edged down 1.2 percent in January to $39.4
million.
New Hampshire companies have a strong presence in the euro area and reaped
the benefits of the rising euro in the last three years. In January, $40.1
million worth of goods made in New Hampshire were sold to euro-buyers.
Foreign shipments of goods from New Hampshire to euro countries accounted
for 22 percent of all state exports in January, compared with the national
average of 16 percent. New Hampshire ranked 11th among the 50 states in
terms of dependence upon the economic health of the euro.
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