2nd Quarter 2010

Graphs link to larger view.

tennessee trade-weighted dollar index graph

tennessee monthly exports graph

tennessee monthly imports graph

tennessee's leading trade partners graph

Tennessee International Trade Report

by Steven G. Livingston

Exports returned to the levels of before the great global crash of 2008.

State exports surged to $6.4 billion in the second quarter, nearly a billion-dollar gain from a year ago. It was the best second quarter in the state's history, as exports returned to the levels of before the great global crash of 2008. Imports also soared. Tennessee firms purchased $11.5 billion overseas, a two-billion dollar increase. In contrast to the doldrums of the domestic economy, Tennessee's international trade was going gangbusters.

The problem with reporting export figures for this quarter is monotony. Everything grew, and by a lot. Among the state's larger export sectors, the one slight exception to this was the state's medical equipment industry, which grew only modestly. Its 3% gain was the smallest of any major Tennessee export sector. Other significant health care industries, such as orthopedics and pharmaceuticals, also performed more poorly than most for the quarter. Perhaps this is not so surprising, as these industries' foreign sales were much less affected by the global downturn and so there was much less in the way of a rebound this year.

The state's biggest increases were tallied by its two largest export industries. Tennessee's chemical exports increased by a full third and crossed the billion-dollar mark in quarterly sales. Most of this huge gain was in the plastics sector (especially in cellulose derivatives and polyesters). But both organic (up 39%) and inorganic (25%) chemicals also did very well. The gains were truly global, with East Asia, Mexico, Brazil, Russia, Australia, and Singapore being among the strongest markets.

The auto industry did equally well. Car and SUV exports more than doubled (to $245 million), thanks to substantial new exports to the Middle East (especially Saudi Arabia) and Canada. Automotive engines did even better, with exports triple those of last year. Canada is the destination of almost all of them. Engine part exports doubled (to $109 million). And diesel engines (not all of which go into cars or trucks) more than quadrupled, to $51 million. Oil and other automotive filters, with foreign shipments valued at $46 million, were among the many other auto-related exports that grew very strongly, in this case by 70 percent.

Though gains in laptop exports were more modest ($13 million, an 8% gain), the computer industry was another sector that did very well. It added another $130 million in exports to last year's number, a 57% gain. Canada and Latin America (particularly Colombia) accounted for most of this increase. At the other extreme from high-tech, cotton exports soared 40% to $185 million. Mexico and Turkey were the biggest factor behind this growth. Whiskey, as you might expect, also did quite well. Its 25% gain (to $125 million) was mostly in Europe.

As we said, it gets monotonous. Just about every kind of industrial machinery the state produces had a strong quarter. So did the telephony and aircraft industries, among others.

Though the growth was global, it was centered close to home. Canada, to which the state's exports increased by 37%, accounted for $475 million of Tennessee's quarterly gain, just under one-third of the state's export growth. Mexico's 47% growth added another $250 million. The EU threw in $180 million more. China and Latin America each grew by $150 million. Japan's 43% growth added $100 million, the ASEAN nations another $80 million, and South Korea $60 million. Just about everybody chipped in!

The few nations where Tennessee exporters did not have as much success reveal the continuing importance of a global economic recovery to the state's export fortunes. Exports to Greece fell by a quarter in the wake of its financial crisis. Shipments to Spain and the U.K., both under stringent budget-cutting regimes, were flat. So we are reminded, as if we needed it, that the export recovery, strong as it has been, remains fragile. Tennessee exporters are still living in interesting times.

continued (tables)