California’s Export Trade Sees Slight Increase, But Shrinking PC Market Continues To Act As A Drag
March 7, 2013 – LOS ANGELES, CALIFORNIA – California’s export trade began the new year on a mixed but generally positive note, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
State exports in January totaled $12.61 billion, a nominal increase of 1.6% over the $12.41 billion recorded in January of last year. Adjusted for inflation, the increase was negligible.
The overall gain was due entirely to a robust 5.7% increase in shipments of manufactured products, which rose from $7.90 billion in January 2012 to $8.36 billion this January.
However, exports of non-manufactured goods ($1.50 billion) were down 0.5% from January 2012, while re-exports ($2.75 billion) tumbled by 8.5% from the $3.00 reported one year earlier.
Although advancing impressively in January, California’s export trade in manufactured products continued to be dragged down by an ongoing decline in shipments of electronic components used in the manufacture of personal computers.
Demand for PCs continues to suffer as the manufacturers of smartphones and tablets aggressively upgrade their products. As a result, shipments of PC components are falling.
“This trend is likely to persist for some time,” said Jock O’Connell, Beacon Economics’ international trade adviser. “Apparently, there is no app yet for a shrinking PC market.”
This is a concern for the state with the full economic impact yet to be seen. “For the first time in a number of years, California’s export growth is slower than for the nation overall,” said Beacon Economics’ founding partner Christopher Thornberg. “Growth in the tech heavy Bay Area economy is still keeping up, so gains elsewhere in the economy seem to be making up for the loss, but it is certainly something to keep an eye on.”
Because detailed data on specific export commodities and their destinations can vary abruptly from month to month for a variety of factors, Beacon Economics’ analysis compares the latest three months with the corresponding period in the preceding year.
That analysis reveals that exports to Mexico, California’s leading foreign market, were down by 19.8%. Shipments to the state’s number two market, Canada, saw a more modest 1.9% decline, while exports to Greater China (China, Hong Kong, and Macao) rose by 1.9%. Exports to Japan also increased by 1.3% in the latest three-month period over the same period one year earlier.
Perhaps surprisingly, given Europe’s persistent economic and financial woes, California exports to the European Union were up 2.7% over the latest three months.
The overall outlook is mixed, with the rising value of the dollar and the risk of competitive currency devaluations presenting the most evident negative for California exporters.