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The beneficial
effects of a weaker dollar were difficult to detect in recent state
international trade data.
Foreign sales from local companies waned in February in the face of
dwindling demand for goods made in Nevada.
Conventional wisdom maintains that a weaker currency will boost future
foreign sales as state exports become more affordable, and consequently,
more attractive overseas. This is the “price effect” on foreign demand.
In addition, economic conditions in foreign countries drive their demand for
Nevada products. This is the “income effect.” Simply put, if a foreign
consumer lost her job because of a national recession, she will be unable to
buy locally made goods despite being priced lower.
The combination of a lower dollar and the level of foreign buyers’ income
resulted in a decrease in overseas sales from Nevada’s exporting companies
in February.
Exports of goods made in the Silver State fell by 2.3 percent in February to
$332.4 million, adjusted for seasonal variation — a statistical process that
smooths monthly performance for factors such as the number of days in a
month and holidays.
In comparison with a year ago, Nevada exporters experienced gains in selling
their products abroad this February. State companies sold overseas $151.9
million, or 84.2 percent, more goods than in February 2004.
February’s performance was fueled by trade in manufactured goods, which
accounted for 83 percent of all state exports. Shipments abroad from Nevada
factories increased in February by 2.6 percent from the previous month, to
$275.9 million, adjusted for seasonal variation.
The dominance of exports of manufactured goods in Nevada is a major source
of export-related local jobs. Foreign orders translate into increased
production which results in more hiring and a boost in state economic
conditions.
What is the link between February exports of manufactured goods and factory
jobs in the Silver State? Using official state statistics on the
relationship between production, employment, industry mix, productivity and
composition of international sales, Infometrica Inc. tracks monthly the
connection between exports and jobs at the state level.
In February, 13,100 manufacturing jobs were directly related to exports from
Nevada. These jobs were in state manufacturing plants producing the final
goods shipped overseas.
In addition, there were 4,700 state manufacturing jobs indirectly related to
the manufacturing of final exports. Those workers manufactured the materials
needed for the production of the final exports. In other words, those are
jobs in state industries that support Nevada exporting industries.
As a result, the total number of state manufacturing jobs tied to exports of
manufactured products was 17,000. How does this compare with a year ago?
In February 2004, 9,800 state jobs were tied to exports, implying that
foreign buyers contributed to a gain of 8,000 jobs from the same period last
year.
How does Nevada fare among the 50 states in terms of manufacturing jobs
related to exports? State factory jobs linked to exports of manufactured
goods accounted for 38 percent of all manufacturing jobs in February. Nevada
ranked third in generation of export-related jobs in manufacturing
industries in the country.
Exports of non-manufactured goods were down 20.7 percent in February to
$56.5 million, adjusted for seasonal variation. This group of shipments
abroad 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 as when imported.
For the country as a whole, U.S. exports of goods, seasonally adjusted,
edged up slightly by 0.1 percent in February to a record level of $71.2
billion. February’s export figures reflected increases in industrial
supplies and materials and consumer goods; decreases occurred in capital
goods and automotive vehicles, parts and engines. The slowdown in the growth
of exports combined with a surge in imports generated the largest ever trade
deficit in February.
What is the outlook for exports and export-related jobs?
The New York based Economic Research Department of the Bank of
Tokyo-Mitsubishi conducts a monthly foreign trade survey to evaluate freight
levels of current and future shipments from trade centers, such as ports,
around the country. In the most recent survey — conducted in February — 62
percent of the respondents expect exports to be higher during the next three
months, a substantial improvement from 24 percent in the previous survey.
Thirty-eight percent of the trade experts polled in February expect no
change in export shipments during the next three months, which is better
than the 52 percent response in the previous month. More important, none of
the participants expects a decline in exports during the next three months
in the latest survey, compared with 24 percent anticipating a decline in
January.
“Export activity is expected to pick up over the next three months,”
concluded Ellen Beeson, director of the economic research department at the
Bank of Tokyo-Mitsubishi. Their index of future export conditions hit a
trend high in February. In comparison with future trends in imports, the
results of the survey “indicate export growth will outperform import growth
in the future,” Beeson said.
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