Beacon Economics releases the California Trade Report each month in collaboration with its International Trade Advisor, Jock O’Connell.
California Exporters Continue To Gain – But Pace of Growth Slows
March 9, 2012 – LOS ANGELES, CALIFORNIA – Despite a slowing global economy, California’s exporters still managed to post their 27th consecutive month of year-over-year gains in January.
The value of goods shipped abroad by California businesses in the first month of 2012 reached $12.41 billion, a nominal increase of 5.7% over the $11.75 billion reported in January 2011, according to an analysis by Beacon Economics of foreign trade data released today by the U.S. Commerce Department.
The state’s exports of manufactured goods edged up by 3.6% from $7.63 billion to $7.90 billion, while non-manufactured exports (chiefly raw materials and agricultural products) grew 7.1% from $1.40 billion to $1.50 billion. Re-exports, meanwhile, improved by 10.8% from $2.71 billion to $3.0 billion.
“Following December’s modest gains in the state’s exports, January’s numbers further confirm Beacon Economics’ earlier forecasts that a sluggish global economy would bring an end to the double-digit growth rates we had been seeing as recently as last November,” said Jock O’Connell, Beacon Economics’ international trade adviser.
While the firm still expects California’s export trade to stay on an overall growth trajectory throughout 2012, it warns that the pace of growth will likely remain suppressed over the next several months.
“The outlook for a resumption of fast-paced export growth is not at all encouraging,” O’Connell said. “European economies are now expected to contract in 2012, China is reining in its growth expectations, Japan is struggling to regain economic momentum, international shipping costs are rising, and a dollar that was cheap through much of last year is now nearly 10% higher in value than it was in August.”
On the plus side, California’s two biggest foreign markets, Mexico and Canada, remain on a more solid economic footing, according to O’Connell. Beacon Economics’ Founding Partner Christopher Thornberg adds that the current job readings for the U.S. economy also help offset some of the slowing growth in export demand. “The state of California exports to the rest of the United States as much, if not more, as it does to the rest of the world,” Thornberg said. “Our expectation is that growth will continue at a decent pace in 2012, and this should help boost the state’s manufacturing sector.”
Detailed data on California’s international trade may be found here.
***Jock O’Connell will be delivering the Key Note Address at the 2012 Decisionmakers Conference on April 26, 2012. Click here for more details