California Exporters Enjoy Slight Gain Over Same Time Last Year As PC Market Continues Its Decline
April 5, 2013 – LOS ANGELES, CALIFORNIA – Even if it isn’t immediately apparent, California’s export trade this February represented a modest increase over the same month last year, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
The state’s exports in February 2013 totaled $12.70 billion, which might appear to be less than the $12.85 billion recorded in February 2012. However, 2012 was a Leap Year, adding an extra trading day to that month.
“Last February saw exporters benefit from the Sadie Hawkins Day Bump,” said Jock O’Connell, Beacon Economics’ international trade adviser. “This February, Sadie sat out the dance.”
When adjusting for both inflation and that bonus trading day last February, California’s February 2013 export trade showed an increase of 1.1% over the same month one year earlier.
The gain came as the result of a 4.3% real increase in shipments of manufactured products and an even more robust 5.9% rise in exports of non-manufactured goods (chiefly agricultural commodities and raw materials). Restraining further growth in the state’s overall export trade was a relatively sharp 9.6% fall-off in re-exported goods.
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 twelve months earlier.
That analysis reveals that California’s export of manufactured products continues to be slowed by an ongoing decline in shipments of electronic components used in the manufacture of personal computers. In the most recent three-month period (December 2012-February 2013), exports of these products were down 24.9% from the same period a year earlier.
“The chief culprit here is the growing popularity of smartphones and tablets, which has been shrinking consumer demand for PCs and curtailing trade in PC components,” O’Connell said.
Interestingly, in terms of employment, the manufacturing sector in California is doing better than initially reported. Recently released 2013 Benchmark revisions by the California Employment Development Department show that the state gained roughly 19,400 more manufacturing jobs through the end of 2012 than originally indicated, with most of the upward revisions coming from durable goods. “Compared to the rest of the nation, manufacturing employment growth has not been a bright spot in California,” said Beacon Economics’ Director of Economic Research Jordan Levine. “But the precipitous declines we were seeing in manufacturing jobs have largely been arrested.”
California’s exports to Mexico, the state’s leading foreign market, were down by 19.2% in the latest three-month period, largely because PC components have constituted as much as 30% of California’s export trade with its southern neighbor as recently as 2011.
Shipments to the state’s number two market, Canada, rose slightly by 1.2%, while exports to its third largest export market, China, slipped by 1.3%.
Perhaps surprisingly, given headlines about Europe’s persistent economic and financial woes, California exports to the European Union were up 3.9% over the latest three months, while exports to the Pacific Rim rose by just 2.2%.
Airborne shipments currently account for 44.3% of all state exports. By contrast, 34.0% of the state’s export trade went by sea, while the remaining 21.7% was transported overland to Mexico and Canada.
The overall outlook for the state’s exporters is mixed, with the rising value of the dollar and the risk of competitive currency devaluations presenting the most evident negatives for California exporters.
“Of course, all of this assumes that Kim Jong-un doesn’t do anything rash in the coming weeks,” said O’Connell.