1st Quarter 2011

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tennessee trade-weighted dollar index graph

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tennessee monthly exports graph

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Tennessee International Trade Report

No major market declined in the quarter.

by Steven G. Livingston

The combination of economic recovery, a falling dollar, and record commodity prices have produced surging exports thus far in 2011. Tennessee exports for the first quarter of the year rose just over $1.5 billion from a year ago to $7.354 billion. The state's rate of export growth over this period, 25.4%, was 13th best among the American states, substantially ahead of the national figure (18.4%). Export gains were broad and deep. Only two substantial state exports, laptop computers and SUVs, saw their foreign shipments decline. And no major market declined over the quarter.

The state's leading export was again the medical instrument sector. Exports of these products grew just under 16% to $570 million for the quarter. The gains were global, including Europe, Australia, and both East and Southeast Asia. Other medical-related sectors also had strong quarters. Orthopedics and artificial joint exports grew to $232 million, a greater than 50% increase from 2010, thanks to large increases in Japan, the Netherlands, and Australia, among other nations.

If SUV sales were off, mostly due to sales declines in the Middle East, most automotive products had a good quarter. Motor vehicle parts exports were up about 40% as were automotive body parts. Cars grew at a more modest 7.6%, but car-engine exports soared more than 80% to $207 million. This was perhaps the best performing of the state's manufactured exports. Most of the latter gain came in Canada and Mexico. Other automotive products such as gear boxes and steering wheel assemblies also saw their foreign shipments rise markedly.

Among exports from other sectors, we might cite aircraft, which climbed 30% for the quarter, to Canada, Singapore, and the U.K., and plastics, which increased by $120 million for the quarter, also a 30% gain. Though laptops did not fare well last quarter, with lost sales in Canada and Colombia, other computer equipment, including desktops, more than made up the slack. Overall, computer exports were up nearly 17% for the quarter to just under $400 million. Among smaller industries, two that stood out were video games, whose foreign sales more than centupled to $38 million, and trade advertising publications, sextupling to $19 million. Both of these sectors export primarily to Canada.

The quarter's most spectacular export growth, however, was in cotton. Cotton exports increased from $153 million in the first quarter of 2010 to over $414 million this past quarter, a gain of more than $260 million. China accounted for about a quarter of this increase. Mexico, Turkey, Thailand, Vietnam, India, and Brazil were the other large purchasers. This huge increase, however, is a little less impressive when we remember that the price of cotton had reached all-time record highs in the first part of the year. With that price now falling, it may be hard to reproduce these numbers in future quarters.

Readers might be surprised to learn that the major global events witnessed in the first part of the year did not have a substantial impact on state exports. Neither the uprisings of the Arab Spring nor the set of disasters that have afflicted Japan led to losses in exports. First-quarter exports to Egypt, for example, actually more than doubled those of last year. This made it one of the fastest-growing markets for Tennessee. The state's $23 million in shipments to Egypt were mostly cotton and artificial filaments, both headed for the country's apparel industry. Exports to Japan were also surprisingly strong, gaining $61 million for the quarter (more than 18%). Today the Japanese market has become, at least for Tennessee, increasingly centered on health and healthcare products. The top five products sent to Japan from Tennessee were all medical-related. We need to remember, however, that the events in Japan occurred in March, and so we may not see their impact until the second quarter figures arrive.