Oregon exports cool a bit, still far outpace U.S.

After surging in December, Oregon’s export growth cooled somewhat in January but still posted strong gains over the same time last year, according to Beacon Economics ‘ analysis of foreign trade data newly released by the U.S. Commerce Department.

Oregon exporters shipped $1.67 billion worth of goods in January, an 8.9% increase over January 2014 . This is in stark contrast to the 4.7% decline in the value of goods exported nationwide in January and a continuation of the near-record high export levels coming out of the state this last year.

Year-over-year growth cooled somewhat from the 12.2% growth between December 2013 and December 2014 , but nevertheless represents a solid increase in nominal terms. After adjusting for inflation, the gains in January become even larger.

In real terms, Oregon’s exports increased by 17.1% due to a 7.0% year-over-year decline in Beacon Economics’ estimate of overall trade prices in the state.

“The U.S. trade deficit has widened sharply in recent months but this is not due to a collapse in export activity,” said Christopher Thornberg , Founding Partner of Beacon Economics. “It is because of a spike in import demand driven by accelerating consumer and business spending here in the U.S.”

Manufactured goods continued to be the sole driver of growth in January and totaled $1.25 billion, a 14.5% increase over the same time last year. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) totaled $245.2 million, a 6.4% year-over-year decline, and re-exports were down 2.7% over the same time period.

Non-Effects Of West Coast Ports Dispute

The now-resolved contract dispute between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) that had led to delays in the movement of some products in and out of West Coast ports, and a short lockout in the second half of February, did not have nearly the economic impact on the nation that much of the rhetoric and coverage implied.

There are multiple reasons for the lack of serious macroeconomic effect ( see more of our commentary on this topic here ).

While West Coast ports ferry 40% of total containers in and out of the nation, the actual value of the goods in these containers represent approximately 7% of total international trade in the United States.

And although West Coast ports represent the cheapest way to move goods into or out of the nation, they aren’t the only way, says Thornberg.

“Companies can find alternative solutions to supply chain issues such as airfreight and bringing goods in by land through Canada or Mexico or even sourcing their product domestically,” he said. “These may be more expensive options, but they are cheaper than losing sales to a rival.”

Additionally, for every company in the supply chain that finds their business disrupted, there is usually another company that benefits by being able to fill that order in some other way — meaning there is little net economic change.

Even if there had been a major strike that dragged on for a few weeks, it would have been very difficult to see it in any of the major economic numbers regularly used to estimate the health of the broader economy, according to the analysis. This is empirically supported by past disputes, which have had little to no measurable effect on the broader economy either nationally or in port cities themselves.

“This does not mean that individual companies didn’t suffer as a result of the port disputes—many did,” said Thornberg. “But the myth of the short run importance of the ports to the functioning of the U.S. economy is leverage unions use to extract growing demands from port management, and in turn from the U.S. consumer. Being honest about what the ports do and don’t mean for the economy may be key in reducing this tax and preventing future disruptions.”

A Closer Look At The Numbers

Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, Significant variations may occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends.

For that reason, Beacon Economics also compares the latest three months for which data are available (i.e., November–January) with the corresponding period one year earlier. That analysis shows that Oregon’s merchandise exports totaled $5.37 billion, a 12.1% nominal increase over the same three month period last year. After adjusting for prices changes the state’s real export growth actually increased by 19.3%.

The lion’s share of growth in the value of exports during the latest three month period were due to shipments of computer and electronic products, primarily semiconductors and other electronic components to Asia. Malaysia and China were the largest export destinations, and shipments of semiconductors and other electronic components to these two countries alone made up 23.6% of the state’s total export trade.

For the November-January period, exports of computer and electronic products totaled $2.22 billion, a 25.1% increase over the same time last year and comprised 76.5% of net export growth.

These products were a stronger driver of growth during this latest three-month period compared the October-December period, when they comprised 60.6% of the net increase to export values.

A large share of these products come from Intel, which has a large presence in the state. The strong performance speaks to the company’s resilience on the international scene as it faces a world that is transitioning away from the personal computer and towards tablets and smart phones.

As in prior months, exports of transportation equipment was the second largest contributor to total export growth during the latest three month period. In the second half of 2013 the Auto Warehousing Co. received approval to begin shipping Ford motor vehicles to China, and has been increasing shipments since, providing a boost to exports from the state. And while these vehicles are not manufactured in Oregon, they nevertheless support growth in the state’s economy through the logistics industries and higher port activity.

During the November-January period, transportation equipment exports totaled $392.7 million, a 41.0% increase over the same time last year. Of these exports, $220 million were motor vehicles, more than half of which were motor vehicles from China. For the remainder of 2015 expect year-over-year growth in transportation equipment exports to slow as this surge in activity becomes a more regular component of the state’s export trade.

The largest drag on trade during the latest three-month period came from exports of raw agricultural products, as well as manufactured food products. Agricultural product exports totaled $697.8 million (the third largest export by dollar value) and were down 7.5% over the same time period one year prior. Manufactured food products, ranked seventh on a dollar basis, totaled $135.6 million and were down 20.7% from the same time one year ago.

The outlook for exports is a mix of both good and bad news, says Thornberg.

“The global economy is starting to look better, which is good for export demand, but at the same time, the bifurcated global recovery has caused the U.S. dollar to appreciate sharply, which will start to weigh on purchases in the next few months. “