Exports from Vermont surged 30.8 percent in March

Vermont Business Magazine, Jun 01, 2005 by Simos, Evangelos Otto

Improving consumer and business spending in Vermont's foreign markets contributed to stronger international sales in March. State companies exported $89.4 million more goods made in Vermont than in February.

As a result of March's 30.8 percent surge in foreign sales, which followed gains of 6 percent in February, Vermont exports of goods registered $379.5 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. March's reading is the highest level since October 2000 and the fourth highest mark on record.

The latest snapshot of the state's trade activity also showed that Vermont's companies posted export gains in comparison to last year. In March of this year, state exporters shipped abroad $103.6 million, or 37.6 percent, more goods than in March of 2004.

March's trade performance was driven by manufactured goods, which contributed 66 percent to all state exports. Sales abroad from Vermont manufacturers rose sharply in March by 18 percent from the previous month to $249 million, adjusted for seasonal variation.

Exports of manufactured goods are a major source of jobs and, consequently, overall economic development. In the words of Anne Krueger, managing director at the International Monetary Fund, the links between international trade, jobs and economic growth are "as close as love and marriage or, indeed, a horse and carriage," alluding to Frank Sinatra's song Love and Marriage.

What's the link between March exports of manufactured goods, export-related jobs and economic development in the Green Mountain State? Infometrica, Inc tracks monthly the connection of state exports, jobs and economic activity by "watching" the historical relations between incomes, production, jobs, industry mix, productivity, competitiveness as well as trends in and composition of international sales.

In March, 9,800 factory workers in Vermont were directly supported by exports of manufactured goods. Their jobs were tied to the production of final goods at manufacturing plants located in Vermont.

Similar to domestic markets, exports activity triggers ripple effects in supporting manufacturing industries which make parts or machinery for the manufacturing of exported goods. Consequently, there were 7 thousand additional factory jobs tied indirectly to Vermont exports of manufactured goods in March.

In sum, exports of goods from Vermont factories supported a total of 16.8 thousand manufacturing jobs in March. Given the recent trends in the state's overall manufacturing employment, one in every two factory jobs in the Green Mountain State depends on the volume of foreign sales of manufactured goods.

Also, manufacturing activity sustains jobs in a wide range of other industries. A good example is the transportation of raw materials and final goods to and from factories.

As a result, March's exports of manufactured goods generated another 39.1 thousand jobs in non-manufacturing businesses in Vermont. The industries that benefitted from sales abroad of manufactured goods were mainly wholesale and retail trade, transportation, business services and to a lesser degree utilities, mining and agriculture.

Exports of non-manufactured goods went up 65.1 percent in March to $130.5 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, US exports of goods, seasonally adjusted, came to a record $72.1 billion, a 1.4 percent increase from the previous month. The latest jump in national exports was driven by sales of consumer goods, which hit an all-time high; exports of capital goods -machinery and equipment used by businesses - also climbed in March to their highest level in four years.

The March record performance in national exports was a major contributor to GDP growth - the nation's output of goods and services in the first quarter of 2005. US exports posted their best quarter on record hitting $214.3 billion, a 10.3 percent surge from the first quarter of 2004. How did Vermont's companies fare in export growth in the. first quarter of 2005 which in turn impacts jobs and economic development in the state? Vermont ranked eighteenth in export growth among the fifty states during the first quarter of this year. Particularly, in comparison to the first quarter of 2004, foreign sales from Vermont's companies, seasonally adjusted, increased by an annual rate of 15.8 percent.

Forward-looking indicators point to an improving outlook for exports. According to a recent business survey conducted by the Institute of Supply Management, the nation's supply executives continue to be optimistic about the prospects of growing export markets.

The Tempe, AZ, based research institute reported that their export orders index grew in April for the 40th consecutive month. More important, the recent reading indicates that incoming export orders from foreigner buyers grew in April at a faster pace than in March. In the group of about 300 executives representing the largest U.S. corporations which sell their products overseas, 23 percent reported higher export orders in April from March's levels, 71 percent reported no change in export orders and just 6 percent reported lower export orders.