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Foreign sales of locally made
goods have considerably bolstered this year as demand from around the globe
has strengthened significantly.
State companies have reaped the benefits of a gradually falling dollar that
works its way in boosting exports. A weak dollar makes Nevada'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 which accounts the dollar’s
value against the currencies of our major trading partners - has declined 25
percent.
More important, the dollar has fallen 44 percent against the euro, implying
that consumers from Germany, France, Italy 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 Nevada 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
state exports. It doesn’t happen right away. It takes about a year for the
adjustment process to the new competitive price, ordering by the buyers and,
finally, shipping the product from Nevada'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 2.4 percent in August, international sales from
Nevada's companies surged 22 percent in September. The latest snapshot in
international trade activity brought state exports of goods to $277.1
million, adjusted for seasonal variation, the highest level on record.
The changing winds of the global economy over the last twelve months have
turned toward Nevada's exporters. Led by strong demand from Switzerland,
last September state companies shipped abroad $96.0 million, or 53.0
percent, more goods than in September of 2003.
September’s exports were largely driven by manufactured goods, which
accounted for 81 percent of all state exports. Foreign shipments from
manufacturing companies rose sharply in September by 29.8 percent from the
previous month to $224.9 million, adjusted for seasonal variation. On an
annual basis, sales abroad from state factories were $78.3 million, or 53
percent, higher than in September of last year.
The inherent connection between production and employment translates to a
strong link between foreign sales and export-related jobs. Considering the
state’s composition of international trade, industrial mix and productivity,
one in every six manufacturing jobs in the Silver State is tied to exports.
The generation of export jobs results from two production 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 Nevada, for every one hundred direct jobs in the first phase, there are
36 indirect jobs generated in phase two.
Exports of non-manufactured goods went down 3.3 percent in September to
$52.2 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, US 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.
The September record performance in national exports becomes a major
contributor to the growth of GDP - the nation’s output of goods and services
– in the third quarter of 2004. U.S. exports posted their best quarter on
record hitting $204.4 billion, a 14.7 percent surge from the third quarter
of 2003.
How did Nevada's companies fare in export growth in the third quarter of
2004 that ultimately influences the state’s output of goods and services?
Nevada ranked eighth in export growth among the fifty states during the
third quarter of this year. Particularly, in comparison to the third quarter
of 2003, foreign sales from Nevada's companies, seasonally adjusted,
increased by an annual rate of 27.4 percent. State exporters fared much
better in selling their products abroad than the national average.
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