California Trade Declines; Exports Of Both Manufactured and Non-Manufactured Goods Fall
May 2, 2013 – LOS ANGELES, CALIFORNIA – California’s merchandise export trade stumbled in March, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
The state’s exports of goods in March 2013 totaled $14.07 billion, down a nominal 3.7% from the $14.62 billion recorded in the same month onea year earlier. Adjusted for inflation, the decline was just over 5%.
“This was not, unfortunately, an unanticipated set of numbers,” said Jock O’Connell, Beacon Economics’ International Trade Adviser. “March’s malaise merely punctuated a trend we’ve been observing since last fall.”
The fall-off in trade between March 2012 and March 2013 was felt across the board. Exports of manufactured items slipped by a nominal 1.4%, from $9.38 billion to $9.25 billion. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) declined by 6.4% from $1.90 billion to $1.78 billion, while re-exports tumbled 8.7% from $3.37 billion to $3.05 billion.
Because 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 overall export trade in the first quarter of this year was off by 1.3% from the same period last year.
The chief culprit continues to be an ongoing decline in shipments of electronic components used in the manufacture of personal computers. In the first three months of this year, exports of these items were down 22.9% from a year earlier.
While Mexico remains the leading destination for California’s exports, first-quarter exports to Mexico were down by 21.2%, largely because of a 64.9% drop in shipments of electronics components, which constituted as much as 30% of California’s export trade with its southern neighbor as recently as 2011.
Exports to the state’s number two market, Canada, rose slightly by 1.6%.
Remarkably, California’s exports to the much-troubled Eurozone were up a fairly robust 5% in the first quarter, while shipments to the entire European Union increased by 4.4%.
The state’s exports to Pacific Rim nations rose by 3.3%, with a modest 1.5% bump in the value of California goods shipped to China.
Airborne shipments accounted for 45.6% of the value of the state’s first-quarter export trade. By contrast, 32.9% of the state’s export trade went by sea, while the remaining 21.5% was transported overland to Mexico and Canada.
“While we almost instinctively associate foreign trade with the operations of seaports, our airports actually play a more vital role in transporting California products to markets around the globe,” O’Connell said.
The current outlook for the state’s exporters is not especially encouraging. The latest forecast revisions from the International Monetary Fund have dialed back economic growth rates throughout much of the world. The fall-out from shrinking demand for desktop and laptop computers has yet to play out. And, although California looks to be an outlier, Europe’s financial and economic tribulations will continue to cast a shadow, especially on those nations that had thrived on European demand for imported goods.
Additionally, the decline in manufactured goods may have some implication for manufacturing employment in California, which continues to lag the nation. The United States has seen a mini-renaissance in manufacturing employment during the recovery, but manufacturing jobs in California continued to decline in March, posting a 0.9% (10,900 job) decrease over past year. “On the whole, we believe that the anti-business reputation California has acquired is somewhat overblown,” said Beacon Ecnomics’ Director of Economic Research Jordan Levine. “But this weakness in manufacturing does suggest that certain industries are more affected by California’s tax and regulatory environment than others.”
“If there is reassuring news on the economic front, it’s that one very large market that had been in much distress now appears to be on a firm growth path,” O’Connell said. “Unfortunately, it’s one we can’t, at least technically speaking, export to – because it’s us.”