Following up on the Oregonian’s article regarding second quarter exports, we take a deeper look into the numbers.
Overall, Oregon exports did decline from the first to the second quarter, however exports still have increased 31 percent on a year-over-year basis. Exports have regained the majority of the decline due to the global recession and subsequent international trade collapse. In terms of historical rankings, Q2 2010 in Oregon was the sixth largest (Q1 2010 was the fourth largest). Through the first six months of 2010, Oregon exports have increased 36 percent compared to the first half of 2009, while the US overall has increased 23 percent. Oregon’s 36 percent increase ranks 11th best among all states. The quarter-over-quarter decline is a little worrisome, however, short term fluctuations are normal and expectations are for renewed growth in the coming quarters, albeit at a slower rate.
Exports by Industry
The major driver for the increases in the past year or so has been Computer and Electronic Product exports (top line in the graph below). This industry continues to do extremely well, evidenced by national semiconductor sales and also recent financial statements by companies such as Intel, and Q2 2010 was the second largest export quarter in history for the industry in Oregon. Computer and Electronic Products have typically accounted for around 45 percent of all Oregon exports, with more than half of these exports going to China and Malaysia in recent years. Oregon’s second largest export industry, Agricultural Products, has declined in the two most recent quarters, however a significant portion of the industry’s fluctuation in recent years is due to price level changes, as opposed to quantity level changes. For example, the steep increases in commodity prices back in 2008 sharply increased the dollar value of agriculture exports, which then subsequently crashed following the financial crisis.
Exports by Country
Exports to China decreased in the most recent quarter, however they remain at extremely high levels. Exports to China now account for 25 percent of all Oregon exports (over 70 percent of which are Computer and Electronic Products). A decrease in Agricultural Products and Machinery to China led to the overall decline in exports to the country, even as Computer and Electronic Product exports continued to increase. The recent, sizable increases in exports to Canada are welcomed news. The country had been Oregon’s top export destination for much of the past decade, but fell considerably during the recession. Exports have increased in every major industry to Canada, driven mostly by Machinery and Primary Metal Manufacturing, which account for 55 percent of the increase the past two quarters.
Price Level Adjustments
One of the common questions/issues with export data is the fact that exports are reported in current dollar amounts (nominal) and typically not in real (inflation adjusted) dollar amounts or in physical quantities. As alluded to above regarding Agricultural Products, price level changes can play a large role in export changes, even if the quantity of exports has not changed. The graph below tries to adjust for some of the price level changes to get a sense of the real export levels in Oregon. Using national export price indexes by industry, one can control for price changes over time. Price level data, especially historical data, is not available for all industries, so the graph below encompasses industries that data is available for and added together, account for about 80 percent of all Oregon exports. Overall, adjusting for price levels does not change the total export picture very much. The reason for this is Oregon exports are heavily dependent upon Computer and Electronic Products, which have experienced general price declines in the past decade (Harmonized System Code 85, for those interested in the price index), while most other products and industries have seen increases in prices. Combining the price declines in Oregon’s largest industry with gains in all other industries, leads to not much net change. With that being said, the difference in the two series in 2008 is primarily attributable to Agricultural Products, specifically grains.
Please note that the graph is monthly exports through May 2010 and not quarterly data as the previous graphs are and that the price adjusted dollar amounts are measured in May 2010 dollars.