|
|
Following three years of decline, the dollar has been strengthening this year, making American goods more expensive.
The dollar’s advance has restrained the appetite of foreigners for goods
made in Nevada.
Source: infometrica
Sales abroad from Nevada companies declined in June by 4.9 percent, after a
monthly drop of 7.9 percent in May. Foreign consumers and businesses paid
$289.8 million to buy goods made in the Silver State.
Despite two consecutive monthly declines, state companies are exporting at
historically high monthly rates as the underlying trend remains nearly at
record levels.
The state’s export numbers are adjusted for seasonal variation — a
statistical process that smooths monthly performance for factors such as the
number of days in a month and holidays — thus becoming comparable to the
national statistics.
Are Nevada exporters better off than a year ago? In June of this year, state
companies sold $88.3 million, or 43.8 percent, more goods overseas than in
June of last year. In June, Nevada’s exporting companies surpassed their
performance of this time last year.
At the national level, U.S. exports of goods, seasonally adjusted, remained
steady at $74.5 billion in June, which is the highest level on record. The
latest match in record performance of national exports reflected increases
in sales of capital goods and auto vehicles, parts and engines.
Manufactured goods dominated overall state exports in June. Shipments abroad
from Nevada’s factories accounted for 74 percent of all state exports.
Foreign buyers purchased in $214.7 million, adjusted for seasonal variation,
in manufactured goods in June 12 percent less than in the previous month.
State exports of the non-manufactured goods went up 23.6 percent in June to
$75.1 million, adjusted for seasonal variation. This group of foreign
shipments consists of mining products — a key export industry for Nevada —
agricultural goods and re-exports which are foreign goods that entered the
state as imports and are exported in substantially the same condition as
when imported.
Exports of manufactured goods are a major source of state jobs within the
manufacturing industries and other related industries that contribute to the
final preparation of the goods shipped abroad.
June’s foreign sales from Nevada’s manufacturing plants supported 18,400
factory jobs. More important, manufacturing production for exports sparked
ripple effects in other industries.
A total of 22,200 additional jobs in wholesale and retail trade,
transportation, business services and to a lesser degree utilities, mining
and agriculture were linked to exports of manufactured goods in June.
With June’s exports, we can make a mid-year evaluation in terms of the
effectiveness of state companies in their marketing efforts to penetrate
foreign markets. How did Nevada exporters fare in terms of growth so far
this year from the same period in 2004?
Nevada ranked second among the states in the first half of 2005. In
comparison to the first half of 2004, foreign sales from Nevada’s companies,
seasonally adjusted, increased by an annual rate of 50.3 percent compared
with an 11 percent average growth for the nation as a whole.
In international economic relations, July 21 might be remembered as a
defining date in global trade and finance. On this date, China ended the
fixed peg of its currency, the yuan, to the dollar. The People’s Bank of
China revalued the yuan to make the Chinese currency effectively 2.1 percent
stronger against the American dollar than it’s been since 1994.
The revaluation of the currency was very small but there is more to come. It
was the first stage to freeing a currency by beginning with managing its
relation to the most important trading partner before engaging in currency
management with all major partners.
On Aug. 11, People’s Bank of China Governor Zhou Xiaochuan announced that
the U.S. dollar, euro, yen and South Korean won are “naturally” key
currencies in a basket used to help manage the yuan in the future.
What does the yuan’s revaluation mean for Nevada’s exporting companies?
In the first six months of this year, China was the fifth-largest
destination of all U.S. exports behind Canada, Mexico, Japan and the United
Kingdom. In the first half of 2005, Chinese buyers purchased $19 billion of
American goods, 10 percent more than the same period in 2004.
At the state level, consumers and businesses from the world’s second-largest
economy bought $21.4 million of goods made in Nevada in June. So far this
year, exports of goods from Nevada to China totaled $68.6 million.
More important, state exports to China are growing very fast. In the last
three years, Nevada’s exports to China increased annually at an average of
120.4 percent, while all state exports rose by an average annual rate of
54.8 percent during the same period.
Will the revaluation of the yuan impact state exports in the future?
A strengthening in the yuan will make state products less expensive for
Chinese buyers. Before the revaluation, a Chinese importer was using 8.23
yuans to buy a product from Nevada that was priced for $1. If the yuan
appreciates the expected 10 percent by the end of 2005, the Chinese buyer
will use only 7.41 yuans to buy $1 worth of goods from Nevada.
Ultimately, in the last stage of its monetary integration, China will let
the yuan float freely in the financial markets like the dollar, the euro and
the yen. International trade between China and other countries could be
settled in yuans instead of U.S. dollars or euros.
Given the growth potential of the Chinese economy and its deepening in
international trade, the yuan naturally will become a global currency for
trade invoicing and financial transactions.
Economic historians might mark 2005 as the year that a new global currency
was born.
|
