The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.
The blog's authors include staff from the Atlanta Fed’s Regional Economic Information Network and Public Affairs Department.
Postings are weekly.
The Sixth District’s Exports to the European Union
The European debt crisis erupted at the end of 2009, after Greece revealed that its government finances were in very bad shape. Stresses in the financial markets, brought on by investor concerns about Greece’s and other European governments’ ability to pay their debts—as well as worries about the banking system—were quickly transmitted to Europe’s economy.
Real gross domestic product in the 27-country European Union (17 countries within that political bloc use the euro as a common currency) began to fall in the fourth quarter of 2011. At the time, a SouthPoint post looked at what the European crisis might mean for the Southeast, given the region’s trade connections with Europe. The conclusion was that Sixth District’s economy was not immune to European problems. Later, in early 2012, a SouthPoint post sifted through the U.S. International Trade Administration’s (ITA) data to determine which District’s states would be more vulnerable to the contracting EU economy.
The recently released ITA state merchandise exports data for 2012 now allow us to quantify how resilient the District’s exporters were to the European crisis last year.
First, let’s put the Southeast data in the national context. In 2012, U.S. merchandise export growth decelerated substantially, to 4 percent from 16 percent in 2011. (Part of the deceleration can be attributed to changes in prices—according to the U.S. Bureau of Labor Statistics, export prices grew 8 percent in 2011 and were virtually unchanged last year.) U.S. exports to the European Union fell 1 percent last year (to $265 billion)—a marked change from the 12 percent growth in 2011. Chemicals (led by pharmaceuticals), transportation equipment (mostly aerospace-related), computer and electronic products, and industrial machinery are the top four U.S. merchandise exports to Europe. Within those categories, growth in exports of pharmaceuticals held up pretty well last year, sales of transportation equipment were mostly unchanged, while U.S. exports to Europe of basic chemicals, semiconductors, and some types of machinery saw notable declines.
As it turns out, the Sixth District did better than the United States as a whole. Exports to the European Union increased 4 percent last year. All the Sixth District states except Mississippi are among the top 20 states that export to the European Union, and only Florida saw its exports to Europe shrink last year. Louisiana’s exports increased 15 percent and Alabama’s rose 8 percent, while sales to Europe were essentially unchanged last year for Georgia, Tennessee and Mississippi.
Looking into the industry mix—which products Europe imports from each state—can help explain the varying export performance across the District. (Another big factor, of course, is the countries within the EU to which states sell their products.)
Let’s start by looking at Louisiana—not only the state where exports to Europe grew at the fastest rate in the District last year, but also the nation’s fifth-largest exporter to the European Union. Louisiana’s biggest export to Europe, as to the rest of the world, is petroleum and coal products. These products accounted for about two-thirds of last year’s growth in the state’s exports to Europe. Most of the rest of that growth came from a 47 percent jump in exports of agricultural products, largely grains and oilseeds.
The industry mix is very different for Alabama, where exports to Europe also grew in 2012. Most of the growth was driven by a 43 percent increase in sales of transportation equipment. For most other industries in Alabama, sales also changed at double-digit rates—both up and down. There was little inching up or edging down; it was more like soaring or plummeting. Chemicals and paper—the state’s two other big exports to Europe—fell by about 25 percent, exports of fabricated metal products rose nearly 60 percent, and Alabama’s sales of wood products to Europe increased more than 80 percent.
Exports of wood products to Europe did even better in Georgia, growing by nearly 500 percent last year to $81 million. As Tom Cunningham—the Atlanta Fed’s regional executive for Georgia—explains, the European Union (and in particular, Germany) is increasingly relying on renewable energy, and there’s been a huge surge in taking Georgia’s readily available pine, pelletizing it, and shipping it off to be burned in Europe. This appears to be a common theme in the South Georgia pine regions. But pellets are still a niche export. Georgia’s total exports to Europe did not grow last year, mostly because the state’s sales of transportation equipment—Georgia’s largest export to the European Union—fell 10 percent.
Growth in exports to Europe also stalled in Tennessee last year. While many of the state’s industries faced a decline in demand from across the Atlantic, total exports to Europe held up because of 15 percent growth in sales of computer and electronic products. Tennessee’s second-largest export to Europe—medical supplies and equipment—also grew, albeit at a much more modest 2 percent.
Similar to Tennessee, but on a much smaller scale, Mississippi’s exports to Europe were boosted by sales of computer equipment and medical supplies and equipment. The aerospace industry also did very well in terms of sales to Europe. However, because of big declines in exports of chemicals and paper, Mississippi’s exports to Europe were essentially the same as in 2011.
While computer and electronics industry fared well in Tennessee and Mississippi, Florida was one of the worst hit in terms of exports to Europe. That industry is the state’s second-largest exporter to Europe, so a 23 percent decline in those exports accounted for a big part of the 7 percent drop in Florida’s total exports to the European Union.
Overall, the Sixth District’s exporters to Europe showed resilience last year, benefiting from the continent’s demand for our energy and agricultural products, certain types of electronic products and medical supplies, as well as a notable increase in prices for some of those products. Still, as European economy stabilizes in 2013, let’s hope for a better year for our exporters.
By Galina Alexeenko, director of the Regional Economic Information Network for the Atlanta Fed’s Nashville Branch
TrackBack URL for this entry:
Listed below are links to blogs that reference The Sixth District’s Exports to the European Union:
- Will Retail Sector Maintain GDP Momentum?
- A Timely Talk with Energy Professionals
- A Closer Look at Earnings in the Southeast
- Has Southeast Manufacturing Found Some Optimism?
- WHAT WAS I THINKING?!?!
- Southeast Commercial Construction Continues Gathering Steam
- Employment Momentum Grows in Florida and the Retail Sector
- Conditions Soften for Southeastern Housing
- Music City Is Playing Your Song
- Signs Point Up for Regional Manufacturing
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- Banks and banking
- Beige Book
- Business Cycles
- Commodity Prices
- Consumer Savings
- Data Releases
- Disaster recovery
- Economic conditions
- Economic Growth and Development
- Economic Indicators
- Fiscal Policy
- Gulf Coast
- Health Care
- Holiday Sales
- Labor Markets
- Local Economic Analysis and Research Network (LEARN)
- Monetary Policy
- Natural Disasters
- New Orleans
- Oil Spill
- Real Estate
- Sales Tax