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State
Exports Connecticut |
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Recent economic statistics have
confirmed what Federal Reserve Chairman Alan Greenspan has termed a “soft
patch” in the U.S. economy in the second quarter that caused a slowdown in
adding workers in the payrolls.
New jobs creation, especially in
the manufacturing sector, also depends to a great extent on the global
economy as on the average one in every five factory workers is tied to
foreign shipments at the national level. Latest international economic
indicators have provided evidence that the global economy appears to have
entered a “global soft patch” too this summer, leading to a decline in the
demand for made-in-USA goods.
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An
international survey conducted by the Munich-based Ifo Institute for
Economic Research in co-operation with the International Chamber of
Commerce in Paris has indicated a slowing in global economic activity
during the summer. Ifo’s worldwide quarterly index of current economic
conditions - based on responses from 1,178 business experts in 89
countries – edged up 2 percent in the second quarter after a big 22
percent surge in the first quarter of 2004 and a 13 percent jump in
the last quarter of 2003.
U.S exporters felt the global soft patch as their shipments abroad
cooled off in June after a big jump in May. The nation’s exports,
adjusted for seasonal variation, dropped 6.5 percent in June to $64.2
billion from May’s all-time record level of $68.7 billion.
How did state exporting companies fare in June? Slower economic growth
in the rest of the world results in weaker demand for goods
made-in-Connecticut and, undoubtedly, is causing state exports to
slow.
Like the nation, state exports declined in June as Connecticut
companies sold to foreigners $67.1 million less goods than in May,
according to an analysis of the state’s trade statistics. It was the
second consecutive decline in foreign sales that brought the volume of
monthly exports to $664.6 million, adjusted for seasonal variation
Compared with last year, the recent decline in exports shows an
unwelcoming annual trend in foreigners demand for made-in-Connecticut
goods. In June of this year, exporters shipped abroad $32.9 million,
or 4.7 percent, less goods than in June of 2003.
Manufacturers were hit hard in June as foreign shipments from
Connecticut companies went down sharply. Exports of manufactured goods
dropped 10.4 percent from the previous month to $592.7 million,
adjusted for seasonal variation.
Manufactured goods accounted for 89.2 percent of all state exports in
June. Compared with last year, shipments abroad from state factories
were $38 million lower than in June of 2003. The industrial mix of
foreign sales implies that one in every four factory jobs in
Connecticut is tied to exports. The recent declines in state exports
may have adverse effects on employment unless there is a reversal in
export trend in the coming months.
A bright spot in June’s state international trade was exports of
non-manufactured goods which increased by 2.3 percent to $71.9 million
from the previous month. This group of shipments abroad consists of
agricultural goods, mining products, and re-exports which are foreign
merchandise that entered the state as imports and are exported in
substantially the same condition as when imported.
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Evangelos Otto Simos, chief economist at the consulting and research firm Infometrica Inc., is editor for International Affairs in the Journal of Business Forecasting and professor
and chair of the Economics department at the University of New Hampshire.
Simos can be reached at: eosimos@infometrica.com
Copyright © 2004 Republican-American
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