Full text of Pieces of Eight : Business : An Eighth District Perspective, Winter 1987/88

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Business
AN EIGHTH DISTRICT PERSPECTIVE
WINTER 1987/88

How Important Are Manufactured Exports to
the District Economy?
The nation's large and persistent balance of trade deficits
in recent years has focused national attention on the causes,
consequences and cures of these deficits. The trade balance
of manufactured goods has changed from a $5.3 billion
surplus in 1981 to a $145.1 billion deficit in 1986. While
international trade is often viewed from a national
perspective, it has important ramifications at the regional
level as well. The rapid expansion of state programs to
increase exports reflects the recognition that export growth
can stimulate economic development.
This article focuses on manufactured exports from the
Eighth Federal Reserve District.1 First, the regional shift
of exports in recent years is highlighted. Second, the
economic importance of exports in the Eighth District,
especially in terms of jobs, is identified. Finally, the
industrial composition of the District export sector is
described.

The Geographical Shift of Exports

share of the nation's exports, however, increased slightly.
In 1971, the value of exports produced in District states
accounted for 5.5 percent of the national total. By 1984 (the
most recent year of the U.S. Census Bureau's Annual Survey
o f Manufacturers, Origin o f Exports o f Manufactured
Products), the District share was 6.3 percent. Arkansas,
Kentucky and Missouri marginally increased their shares
of the export market, while Tennessee’s share edged
downward.

Importance of Manufactured Exports
The District's economy mirrors the nation’s in terms of
exports as a share of manufacturing shipments. In 1971, 4.8
percent of the nation’s manufacturing shipments were
exported. This proportion increased to 8.1 percent in 1981,
but dipped to 6.7 percent by 1984. District exports accounted
for 4.2 percent of District manufacturing shipments in 1971.
This figure increased to 7.5 percent in 1981. In 1984, District
exports totalled $9.4 billion, 5.8 percent of manufacturing
shipments. The slowdown in the early 80s of exports relative
to total shipments is attributed by some analysts to sluggish
economic growth abroad and a general slowdown in world
trade.

The geographical shift of manufacturing exports in this
nation has followed the general movement of manufacturing
activity towards the far West and South. In the early 1970s,
the northern Midwest dominated the nation’s exports,
producing well over one third of the nation’s direct exports.
By the early 1980s, this share had dropped to a little more
Export-Related Employment
A complementary viewpoint to the shipments data is
than one quarter. Meanwhile, states located in the West and
South, especially California and Texas, increased their
provided by employment data. Export-related manufacturing
shares.
jobs—both those involved in producing
Total manufacturing shipments from the
exports and those involved in supplying
District, including those sold domestically,
materials and parts for exports—accounted
accounted for close to 7 percent of the
for 9.5 percent of all District manufacturing
national total during 1971-1984. The District’s
jobs
in 1984, compared with 11.4 percent
THE
FEDERAL
nationally.
RESERVE
'The Eighth District includes Arkansas and parts of Illinois.
The total number of workers dependent on
RANK of
ST. LOUIS
Indiana. Kentucky. Mississippi. Missouri and Tennessee. Due
manufactured exports, however, goes beyond
to data limitations, data from Arkansas. Kentucky. Missouri
these manufacturing workers. Workers
and Tennessee are used to represent the District.




WINTER 1987/88

FEDERAL RESERVE BANK OF ST. LOUIS

providing services to export producers, as well as wholesale
and transportation workers who move the export goods to
ports for international shipping, are dependent on exporting.
For a broader view of the economy’s reliance on exports,
total export related employment can be compared with total
civilian employment. In 1984, 4.1 million U.S. jobs were
export related, or 3.8 percent of the total civilian workforce.
There was considerable variation among states in the
dependence of employment on exports, ranging from 1.2
percent of total civilian employment in Nevada and Hawaii
to 6 percent in Connecticut. Highly industrialized states in
New England and the Midwest tended towards export
specialization.
As was true of the District’s manufacturing sector, the
reliance of the District’s total civilian workforce on exports
was similar to the national average. In 1984 there were
243,900 export related jobs in the region, accounting for
3.5 percent of total civilian employment. In both the nation
and the District, a little more than half these workers were
in the manufacturing sector. Of the nonmanufacturing jobs,
the trade sector accounted for the largest number related
to exports. Interestingly, the nonmanufacturing share of jobs
related to manufactured exports has increased in recent
decades, paralleling the shift in the overall economy towards
nonmanufacturing jobs.

Composition of Regional Exports
Although the importance of exports for the District
manufacturing sector in 1984 was similar to that for the
nation’s, the industrial composition of the exporters in the
District differed substantially. Among the larger export
industries, District exports were more heavily concentrated
in transportation equipment and food products, and less
concentrated in chemical products, electrical equipment and
nonelectrical machinery.
Nationally, nonelectrical machinery, a major capital
equipment grouping, is the largest exporter of the 20 major
industry groups. In 1984, its exports were valued at $32.2
billion, or 21.4 percent of the nation's total manufactured
exports. In the District, this sector's $1.1 billion in exports
accounted for only 11.5 percent of the District’s exports. The
smaller proportion of exports in the District reflects the
sector’s relatively small proportion of District manufacturing
activity in general. In addition, the District nonelectrical
machinery sector is relatively less oriented towards exports

than nationally. The individual industries that dominate the
nation’s nonelectrical machinery exports—computing
equipment, oil field machinery and construction
equipment—play a relatively minor role in the District.
The transportation equipment sector was the nation’s
second-largest exporter in 1984, producing a little less than
one-fifth of the nation’s exports. This industry ranked first
among District sectors with $2.7 billion in exports accounting
for 29 percent of total District exports. The transportation
equipment sector in the region has been dominated by
production in Missouri, where aircraft are produced and each
of the top three domestic auto makers operate plants. A
sizable portion of transportation equipment exports from
Missouri is shipped to Canada in the form of motor vehicle
parts and aircraft and aircraft parts.
The food and kindred products industry group was the
District’s second-largest export industry, producing almost
12 percent of the region’s exports, far exceeding the nation’s
7.1 percent. The importance of the industry’s exports in the
region is due largely to poultry-processing plants, mainly
located in Arkansas, and to makers of liquor in Kentucky.

Summary
The reliance on manufactured exports by the District’s
manufacturing sector and overall workforce has been similar
to the national average; 3.5 percent of the District’s civilian
jobs and 3.8 percent of the nation’s are related to
manufactured exports. Thus, the District’s stake in continued
export growth as a source of economic growth is roughly
the same as the nation’s.
From the early 1970s through 1984, District manufactured
exports grew at approximately the national pace, allowing
the District to produce a stable proportion of the nation’s
exports. Nationally, the value of manufactured exports grew
at a sluggish 1.9 percent rate from 1984 to 1986 but showed
renewed strength more recently. In the first three quarters
of 1987, manufacturing exports were up 13.4 percent from
a year earlier. Although information regarding District
manufactured export trends since 1984 is not available, to
the extent that historical relationships have persisted, District
exports have also accelerated recently, contributing to the
District’s economic expansion.
—Thomas B. Mandelbaum

Business—An Eighth District Perspective is a quarterly summary of business conditions in the area served by the Federal Reserve
Bank of St. Louis. Single subscriptions are available free of charge by writing: Research and Public Information Department,
Federal Reserve Bank of St. Louis. P.O. Box 442. St. Louis, Missouri 63166. Views expressed are not necessarily official
positions of the Federal Reserve System.
2



FEDERAL RESERVE BANK OF ST. LOUIS

WINTER 1987/88

EIGHTH DISTRICT BUSINESS DATA
Rates of Change1
C u rre n t Q u a rte r
G e n e r a l B u s in e s s In d e x e s 2
A rk a n s a s
K e n tu c k y
M is s o u ri
T ennessee

P a y ro ll E m p lo y m e n t
U n ite d S ta te s
D is tric t
A rk a n s a s
L ittle R o c k
K e n tu c k y
L o u is v ille
M is s o u ri
S t. L o u is
Tennessee
M e m p h is
M a n u fa c tu r in g E m p lo y m e n t
U n ite d S ta te s
D is tric t
A rk a n s a s
K e n tu c k y
M is s o u ri
T ennessee
R e ta il S a le s 3

6 .3 %
0 .4
4 .4
1.3

0 .2 %
2 .4
1.8
5 .0

1 .0 %
0 .8
3 .0
3 .6

2 .9 %
4.1
4 .8
5 .3

2 .0 %
2 .5
2 .5
0 .7
2 .3
2 .9
1.5
1.2
3 .6
4 .2

2 .7 %
2 .5
1.7
2 .9
2 .3
2 .4
2.1
2 .3
3 .2
3.1

4 .5 %
4 .5
3 .8
3 .6
5 .3
4 .0
4 .7
4 .3
4 .2
5.1

-0 .9 %
-0 .2
2 .4
-0 .4
-3 .0
1.1

- 1 .8 %
- 1.6
- 1.6
-2 .0
- 1.4
- 1.6

3 .2 %
3 .3
2 .6
4 .7
3 .5
2 .6

6 .3 %
2 .2
-2 .4
2 .6
6 .5

6 .4 %
2 .2
1 2 .6
3 .3
9 .4

7 .3 %
2 .4
0.1
9 .6
1 0 .5

5 .6 %
5 .4
5 .4
4 .0
5.1
6 .7

6 .9 %
6 .2
6 .5
4 .3
6 .4
7 .2

8 .3 %
8 .6
8.1
7 .9
8 .7
9.1

111/1987
2 .2 %
2 .3
3 .2
2 .3
0 .9
0 .4
2 .5
0 .5
2 .6
-0 .1
111/1987
2 .6 %
4 .6
8 .6
4 .3
6 .0
2 .0
111/1986
8 .1 %
-3 .5
4 .5
-1 0 .7
0 .2

P e r s o n a l In c o m e

11/1986
5 .0 %
3 .8
-0 .3
7 .4
1.9
5 .4

District Employment1
K e y In d u s tr ie s
F a b ric a te d M e ta l P ro d u c ts
E le c tric a l a n d E le c tro n ic E q u ip m e n t
N o n e le c tric a l M a c h in e ry
T r a n s p o r ta tio n E q u ip m e n t
F o o d a n d K in d re d P ro d u c ts
T e x tile a n d A p p a re l
P rin tin g a n d P u b lis h in g
C h e m ic a ls a n d A llie d P ro d u c ts
C o n s tru c tio n




19 84

1 9 85

111/1987

U n ite d S ta te s
A rk a n s a s
K e n tu c k y
M is s o u ri
Tennessee

U n ite d S ta te s
D is tric t
A rk a n s a s
K e n tu c k y
M is s o u ri
Tennessee

1986

Prices1

C u rre n t Q u a rte r

C u rre n t Y ea r

C u rre n t Q u a rte r

C u rre n t Y e a r

111/1987

111/1986 - 111/1987

111/1987

111/1986 - 111/1987

-3 .7 %
0 .4
- 1.2
-4 .7
3 .4
3 .8
0.1
0 .2
3 .3

3 .7 %
2 .3
1 .6
-2 .8
1.2
4 .8
2 .9
4 .7
4 .8

-8 .7 %
7 .8
-2 .1
0 .0
1 0 .2
6 .4
-0 .4
2 .9
2 0 .3

1 .7 %
1 .2
1 .3
2 .2
1 .8
2 .3
4 .0
5 .4
2 .0

3

EIGHTH DISTRICT BUSINESS DATA

U n e m p lo y m e n t R a te
U n ite d S ta te s
D is tric t
A rk a n s a s
L ittle R o c k
K e n tu c k y
L o u is v ille
M is s o u ri
S t. L o u is
Tennessee
M e m p h is

C o n s tr u c tio n C o n tr a c ts 4
(m illio n s o f d o lla rs )

Current
Quarter

Previous
Quarter

111/1987

11/1987

6 .0 %
7 .2
8 .2
7 .3
8 .3
6 .8
6 .5
6 .9
6 .8
6.1

Average
1986

Average
1985

6 .2 %
7 .4
8 .2
7 .3
9 .5
7 .5
6 .2
7 .3
6 .9
5 .9

7 .0 %
7 .7
8 .8
6 .9
9 .2
7 .0
6.1
7 .0
8 .0
6 .8

7 .2 %
7 .9
8 .7
6 .4
9 .5
8 .0
6 .4
7 .5
8 .0
6 .6

Current
Quarter

Previous
Quarter

Same Period
1986

111/1987

11/1987

111/1986

111/1985

$ 5 0 0 .5
5 3 .3
10 2 .9
1 5 5 .7
1 8 8 .6

$ 5 2 6 .2
5 3 .4
1 1 4 .4
161.1
1 9 7 .2

$ 5 3 2 .3
6 3 .2
1 0 8 .7
1 5 2 .3
20 8 .1

$ 4 6 7 .8
5 8 .4
87.1
1 4 4 .4
1 7 7 .9

$ 4 2 6 .2
3 2 .2
9 6 .9
14 8 .9
1 4 8 .2

$ 4 6 8 .8
60.1
1 0 0 .6
1 6 7 .3
1 4 0 .8

$ 3 9 8 .3
5 4 .0
1 1 2 .0
1 2 7 .0
1 0 5 .3

$ 3 4 5 .9
3 5 .5
8 5 .3
1 0 9 .5
1 1 5 .6

Same Peric
1985

R e s id e n tia l C o n s tr u c tio n
D is tric t
A rk a n s a s
K e n tu c k y
M is s o u ri
Tennessee
N o n r e s id e n tia l C o n s tr u c tio n
D is tric t
A rk a n s a s
K e n tu c k y
M is s o u ri
T ennessee
NO TE: With

the exception of employment and prices in key industries, all data are seasonally adjusted. Data for Arkansas,
Kentucky, Missouri and Tennessee are used to represent the District.
1 All growth rates are compounded annual rates of change. The 1984 through 1986 growth rates compare the fourth quarter of
the year listed with the fourth quarter of the previous year.
2Although each index is a comprehensive measure of economic activity, the Arkansas and Missouri indexes, computed by Southwestern
Bell, are not strictly comparable to the Kentucky and Tennessee indexes, which are computed by South Central Bell.
3Sources: Arkansas from Southwestern Bell, Kentucky from the Kentucky Revenue Department, Missouri and Tennessee from the U.S.
Department of Commerce.
4Excludes nonbuilding construction. Source: F. W. Dodge Construction Potentials, proprietary data provided by special permission.