Tennessee Trade Report 1st Quarter 2017

Tables and Graphs

Exports and Changing Markets

Tennessee's Largest Markets

Tennessee first-quarter exports were up 3.9 percent from those a year ago.

At $8.129 billion, Tennessee first-quarter exports were up 3.9 percent from those a year ago. This was welcome news, given the declines of the past several quarters. However, the state's performance still lagged quite a bit behind the national average. Overall, American exports were up 7.5 percent. Tennessee ranked only 31st among the states in its export growth.

The primary reason the state could not match the nation's export growth was the sluggishness of several of Tennessee's largest export sectors. The state's largest single exported good, medical instruments, lost $30 million in exports in the first quarter, thanks to significant reductions in shipments to Brazil, Singapore, and Switzerland. Passenger vehicles, the second-largest Tennessee export, fell as well. Large losses in Saudi Arabia, China, and Mexico outweighed gains in Australia and Canada to produce a $20 million decline. The export of cell phones and associated parts also dropped by about $20 million. Shipments in this industry were quite volatile, reflecting some supply-chain shifts. The net loss was due to a steep fall in exports to Mexico, though exports to Hong Kong and the Philippines of these same products increased strongly.

These modest declines were joined by the deep decline in the shipment of electric auto batteries. Exports of these batteries fell by two-thirds, a $60 million dollar loss. (Almost all of this $60 million was in Japan or the U.K.)

The weakness of these industries was enough to take some of the shine off the gains made elsewhere. The largest dollar increase among major industries for the quarter was in the aircraft industry. Its exports grew from $252 million to $379 million, thanks to large purchases from the U.K., Mexico, Singapore, South Africa, and Tunisia. In percentage terms, though, it was the state's silicon producers that made the most dramatic gains. Exports of silicon rose from virtually nothing to $75 million. Almost all of these new exports went to Germany, Korea, Taiwan, or Japan. Cotton, too, had a very good quarter. Though Vietnam cooled off somewhat, Indonesia, China, Bangladesh, and Mexico purchased substantially more cotton or cotton yarn than a year ago. Cotton exports were up over $60 million (a 20 percent gain) for the quarter.

Kraft paperboard, coloring dyes, mowers, pumps, and bulldozers, a rather eclectic assortment of goods, were among the other strong exporters for the quarter.

Geographically, Australia produced the best percentage growth in state exports this past quarter. Auto exports accounted for the lion's share of Tennessee's 12 percent gain in shipments Down Under. Korea was next. Its purchases of Tennessee goods rose about 11 percent, with cars and silicon leading the way. Thanks to cotton and aircraft, Tennessee's shipments to Southeast Asia gained about 10 percent. Exports to Japan were up 7.6 percent, mostly due to automotive parts (and despite the large drop in electric battery shipments). The Euro Area, led by Germany, turned in a 6 percent gain. (Shipments to the U.K., on the other hand, fell about 5 percent.)
Finally, shipments in the NAFTA market were up by 4 percent. Aircraft, tires, and aluminum plating generated a 7 percent gain in Mexico. Increases in car, computer, and bulldozer shipments pushed Canada into positive numbers, but they were countered by a substantial drop in shipments of auto parts, limiting net export growth to Canada to a bit more than 2 percent.

Elsewhere, state exporters at least held their own. The fact that exports did not decline in any major global region might be considered a good sign for the rest of the year. While the world economy may not yet be firing on all cylinders, there appears to be at least modest growth across most of the globe.

In all, it could have been better, and it could have been worse. Tennessee stopped its losses of the past several quarters and turned in very solid numbers for the first quarter. On the other hand, in percentage terms, the state has now lagged behind the rest of the U.S. for the past four quarters. At some point, state exporters need to get their mojo back!