Tennessee Trade Report 3rd Quarter 2019

Tables and Graphs

Largest Export Sectors

Most Rapidly Changing Exports

Most Rapidly Changing Markets

Tennessee's Largest Markets

It was another difficult quarter for the state’s exporters.  The value of Tennessee’s third quarter exports fell by more than $500 million from a year ago, down to $7.8 billion.  This was a 6.6. percent decline, substantially larger than the fall experienced nationally (a 1.7 percent decline). Tennessee, in fact, ranked 37th among the American states in its export performance. Essentially, it is the same story we saw in the year’s second quarter.  Tepid global growth, a slowdown in the auto industry, and the effects of the “trade wars” are proving to be very strong headwinds.  Too strong for many of the state’s export sectors.

The Bright Spot was Medical-Related Exports

Though there were plenty of disappointments, let’s begin with the bright spots.  The biggest were, once again, in the health care area.  Shipments of medical and dental instruments increased by more than $100 million for the quarter, a twenty-three percent gain from the third quarter of 2018.  Orthopedics and artificial joint exports also gained nearly $100 million, for an even larger thirty-five percent gain. Medicaments and pharmaceuticals? A forty-three percent gain (to $76 million).  The only medical-related product that did not perform well was antisera, which did experience a substantial $44 million loss. But there can be little doubt about the global success of Tennessee exporters in this sector of the economy.

But Many Other Sectors Suffered Losses

Elsewhere, unfortunately, things were different. Aircraft shipments dropped nearly $200 million, a forty-three percent loss.  A number of automotive-related exports did not fare well.  Cars themselves were off sixteen percent, a $100 million loss. Aluminum plating was down $50 million.  Engine parts and auto parts were down as well.  For the auto sector, pretty much alone fighting the tide were electric auto batteries and car engines.  Both saw gains of $40 million.  The cellphone industry suffered as well. Its exports were down by over forty percent (to $126 million).  Kraftliner paper, titanium dioxides, bulldozers, and mobile lifters (for tractor trailers) all were down significantly.  Whisky exports, still subject to retaliatory tariffs, lost $75 million in exports for the quarter.  The bottom line is that export losses were across a number of sectors, and often deep.

Shipments were Down Significantly to Both Canada and Mexico

As might be expected from these figures, the losses were spread across many countries. Canada, though remaining by far Tennessee’s largest market, imported $200 million less of Tennessee goods than it did a year earlier. The losses were centered in the cellphone, heavy equipment, and computer sectors.  The loss in shipments to Mexico was also around $200 million. Aluminum plating and car engine parts were two big reasons for this.  Not surprisingly, shipments to “ground zero” of the trade war, China, suffered large declines. (This was despite the increase of Chinese purchases of medical goods.) Elsewhere in Asia, Tennessee exporters lost ground in Korea, Vietnam, and Singapore.  The major exception was Japan. The site of the biggest increases in the state’s medical shipments, Tennessee exports to Japan increased from $488 to $548 million.

Tennessee exports to the euro zone did eke out a $40 million gain (a little over three percent). Medical instruments and orthopedics once again accounted for the lion’s share of the increase.  In Britain, on the other hand, the value of Tennessee exports declined by double the amount of that euro zone gain.  A reduction in aircraft was one major reason.  The other was an astonishing fall-off in whisky exports.  Tennessee’s UK whisky shipments collapsed from $43 million in the third quarter of last year, to but one million this past quarter.  On a final, positive note, nice gains in Brazil and Chile powered Tennessee to a nearly $60 million gain in South America. We will leave you to guess which sector led the way.

...the Headwinds Remain

Tennessee exporters have struggled for several quarters now. It’s not clear when this will end.  There are rumors of an uptick in the global economy, but at the moment there aren’t the facts to support it.  Auto sales continue to slow. The tariff wars don’t look to end soon.  Only when one of these factors reverse can we presume the worst will be over.  We can only hope that will occur soon.