Oregon exports rise, bucking national trend

Oregon exporters picked up the pace in the latest numbers as growth accelerated over the prior month, according to Beacon Economics’ analysis of foreign trade data released today by the U.S. Commerce Department.

Oregon exports totaled $1.86 billion in March, a 3.7% increase over the same month last year and up from the 2.5% year-over-year increase in February. By comparison, exports in the U.S. overall declined by 6.1% year-over-year.

After adjusting for price changes Oregon’s exports actually increased by 15.9%, sharply higher than the 3.7% nominal growth rate. The difference is due to a 10.5% decline in Beacon Economics’ estimate of export prices for the State of Oregon.

Exports of manufactured goods were responsible for the bulk of the net gains in March as non-manufactured exports declined year-over-year. Shipments of manufactured goods totaled $1.4 billion in March, a 10.8% increase over the same time last year. Non-manufactured goods (mostly agricultural produce and raw materials) totaled $209.8 million and were down 29.5%, while re-exports increased 7.4% over the same time period.

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., January–March) with the corresponding period one year earlier. That analysis shows that Oregon’s merchandise exports totaled $5.21 billion, a 4.9% nominal increase over the same three month period last year. After adjusting for price changes the state’s real export growth increased by 13.4%.

Computer and electronic product exports, chiefly semiconductors, continued to be the stalwart of export growth for Oregon. These exports totaled $2.2 billion during the latest three month period, up 16.2% from the same period one year prior, and were able to offset the declines in other export categories.

Shipments of non-electrical machinery and chemicals were other notable contributors to gains in the January-March period. Totaling $598.9 and $430.0 million, respectively, these exports were 8.6% and 14.3% higher than the same time period in 2014.

The largest overall drag on export growth came from agricultural products, but this can be attributed largely to price changes. For the January-March period, agricultural product exports totaled $618.9 million, a 13.8% decrease from the same time period one year prior. During the latest three month period, however, trade prices for agricultural product exports have declined by 14.6% year-over-year, which suggests that the volume of goods exported actually increased by 0.5%.

Malaysia took the number one spot for contributing to export growth during the latest three month period. Oregon’s exports to Malaysia totaled $665.7 million, a 41.2% increase over the same time period one year prior. Even though this represented just 12.7% of total exports, it made up 79.2% of the net increase in total exports during the year-over-year period. The bulk of the growth in exports to Malaysia was due to a 50.2% increase in the value of semiconductor and other electronic component shipments.

China continued to be a steady contributor to the latest increase in total exports. Totaling $1.1 billion, exports to China were 13.6% higher than the same three month period on 2014. Exports to Vietnam represented the largest drag on overall growth as the value of shipments to that country declined by 49.0%, driven by a 60.6% decline in semiconductor and other electronic product exports.

U.S. Trade Deficit
Last fall the U.S. dollar began to sharply increase in value as strong signs of economic growth convinced currency traders that the Federal Reserve would begin raising interest rates even as other central banks cut theirs. The impact of this shift was very apparent in the first quarter trade numbers of 2015. Imports—particularly from Asia—surged even as exports dropped off. According to initial estimates from the U.S. Bureau of Economic Analysis, the widening trade gap shaved 1.2 percentage points off of growth in the first quarter of the year.

“Trade was the single largest drag on the U.S. economy and explains much of the weakness in overall growth at the start of 2015,” said Christopher Thornberg, Founding Partner of Beacon Economics. Interestingly, the nominal trade deficit only grew by 2% over the same period, however, most of that change had to do with the cheaper price of imports relative to exports.

Although the source of weakness, trade will also be the driver of changes that will reduce the drag on the economy as 2015 proceeds. The weak first quarter economic numbers have put expectations of an imminent Fed rate hike on the back burner for now, and better growth numbers from Europe suggest the global economy may be shifting to stronger ground. The U.S. dollar has also fallen slightly in recent weeks. Nevertheless, Beacon Economics expects trade to remain a drag on the U.S. economy in the second quarter.