California Export Trade Continues To Slide As PC Demand Dwindles
July 3, 2013 – LOS ANGELES, CALIFORNIA – California’s export trade receded again in May, according to an analysis by Beacon Economics of foreign trade data released today by the U.S. Commerce Department.
The state’s merchandise export trade in May 2013 totaled $13.25 billion, down 4.5% from the $13.88 billion in exports posted in the same month last year.
Exports of manufactured items fell from $9.18 billion last May to $8.56 billion this May. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) rose from $1.70 billion to $1.78 billion, while re-exports declined from $3.00 billion to $2.91 billion.
On a seasonally-adjusted basis, California’s May export trade was also down 1.9% from April’s level.
Year-to-date, California’s overall export trade is down from $66.79 billion last year to $66.70 billion.
Similarly, there was a slight 0.3% decline in the value of U.S. export shipments that departed the country via California’s maritime and aviation gateways in May. “For the most part, the trend lines are abundantly inauspicious,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
Because data on specific export commodities and their destinations can vary abruptly from month to month for a host of reasons, Beacon Economics compares the latest three months with the corresponding period in the previous year.
“Curiously, while Europe’s tribulations are clearly hampering economic growth in China and other export-dependent economies in Asia, California’s merchandise exports to the European Union have actually been up a full ten percent in the past three months,” O’Connell said.
By contrast, the state’s exports to the Far East declined by 3.4% in the last three months, despite a 11.2% rise in the value of shipments to China.
Mexico remains California’s top export market, with Canada, China, Japan, and South Korea rounding out the top five.
As has been the case since late last summer, a very substantial fall-off in exports of personal computer components has been the chief factor in restraining California’s export trade. In the past three months, the state’s exports of those items fell 22% from the same period a year earlier.
“Surging worldwide consumer demand for smartphones and tablets has led to a dramatic restructuring of global supply chains in the electronics components sector,” O’Connell said. “I’m afraid this shake-out has yet to run its course.”
It hasn’t dramatically impacted the tech heavy San Francisco Bay Area economy however. “San Jose and San Francisco continue to be two of the strongest economies in the state,” said Beacon Economics Founding Partner Christopher Thornberg. “Computers and computer parts are really only a small part of what is happening in these locations nowadays. Investment and growth in social media, bio and green tech, and software are all more than able to pick up the slack.”
Beacon Economics’ current outlook for the state’s exporters is not upbeat. Both the International Monetary Fund and the Organization for Economic Cooperation and Development have pared back their expectations of economic growth in most major markets, and there is no compelling reason to doubt such assessments. China’s economic growth is obviously slowing, and once promising major emerging economies such as Brazil and India have lately gone wobbly.
Still, with the US dollar 20% below where it was a decade ago in real terms, the new U.S. competitiveness has allowed exports to remain stable despite grim news on the global front. In the short term the United States and California will have to look internally for growth, which is being helped along by a resurgent housing market and rising worker incomes. “It does seem as if Europe has at least found a bottom, and with Japan continuing to stimulate their economy and better numbers on consumer spending in China, we can hope that export growth will return by next year,” Thornberg said.