California’s Export Trade Growth Stumbles, But Still Edging Upwards
March 7, 2014 – After a six-month streak of robust, often double-digit growth, California’s export trade slowed considerably in January, edging ahead just 2.1% over the same month a year earlier, according to a Beacon Economics’ analysis of foreign trade data released this morning by the U.S. Commerce Department.
“2014 began with a stumble but not a fall,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
For the month of January, the state’s merchandise export trade totaled $12.87 billion a nominal 2.1% increase over the $12.61 billion in exports recorded in January 2013. By comparison, overall U.S. merchandise exports increased by 3.4% over the same period.
January saw a 1.2% fall-off in manufactured exports, which totaled $8.26 billion, down from $8.36 billion a year earlier. While growth was flat across most commodities, shipments of aviation industry products and jewelry were down by 7.6% and 33%, respectively. On the other hand, exports of petroleum products showed a 27.4% gain.
Meanwhile, California’s exports of non-manufactured goods (chiefly agricultural produce and raw materials) in January totaled $1.69 billion, up 12.8% from $1.50 billion in January 2013. Re-exports increased 6.4% to $2.93 billion from $2.75 billion.
A Closer Look at the Numbers
As always, Beacon Economics’ foreign trade analysis cautions against reading too much into month-to-month fluctuations in state export statistics. Significant variations may occur as the result of unusual or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months (i.e., October-December) for which data are available with the corresponding period in the previous year.
California’s merchandise exports during the latest November-January period totaled $42.69 billion, a nominal increase of 8.3% over the same period a year earlier.
“We are wary about reading too much into the weak January numbers seen in many economic indicators,” said Christopher Thornberg, Founding Partner of Beacon Economics. “The seasonality issues at play after the holidays combined with inclement weather both in the U.S. and other parts of the world, suggest that these numbers are more likely to be a blip than a true slowing of economic activity.” Thornberg went on to say that overall, “the work economy is clearly on a bit of an upswing, and the dollar still quite weak compared to other currencies.”
Computer and Electronics Products remains by far the single largest category of California exports, accounting just over one-fourth of the state’s merchandise export trade. In the most recent three-month period, exports of Computer and Electronics Products totaled $10.98 billion, up 1.4% from the same period a year earlier.
Exports of Transportation Equipment meanwhile increased by 15% to $4.40 billion, largely powered by a resurgence of exports from the civilian aviation sector.
Other sizable gains were recorded in the latest three-month period for farm produce, up 20.4% to $4.09 billion and processed food products, up 14.7% to $2.68 billion. Exports of petroleum products were up sharply, soaring by 62.5% to $2.28 billion.
Mexico remained California’s single largest export market during the latest three-month period, with the value of exports edging up by 8.3% to $5.90 billion. Exports to Canada rose by 16.8% to $4.89 billion, while shipments to China surged by 26.8% to $4.38 billion. Japan (down 4.1% to $3.12 billion) and the Republic of Korea (up 21.1% to $2.26 billion) rounded out California’s ‘Top Five’ export destinations in the latest three-month period.
Regionally, California’s exports to the Asia Pacific region (including Australia and New Zealand) grew by 8.7% to $16.71 billion. And despite Europe’s economic and financial tribulations, exports to the European Union rose by 8.1% to $7.09 billion. California exports to Latin America and the Caribbean (excluding Mexico) increased by 12.7% to $2.95 billion.
California’s export trade with sub-Saharan Africa was comparatively negligible $197.6 million over the latest quarter. California exports to Ukraine during the last three-month period ($37.2 million) were down by 49.6% from the same interval a year earlier. Exports to Russia during the latest three-month period totaled $244.5 million, off 41.5% from a year earlier.
California accounted for 10.8% of all U.S. merchandise exports over the past three months.
By mode of transportation, 44.5% of California’s $42.69 billion merchandise export trade in the most recent three-month period was shipped by air, with Los Angeles International and San Francisco International Airports accounting for the vast majority of the state’s airborne trade. Seaports handled 33.3% of the state’s export trade, while the remaining 22.2% of the state’s exports of goods traveled overland by truck or rail to Canada and Mexico.
Beacon Economics’ outlook for exports anticipates modest rates of growth over the next few months. “While we continue to have confidence in the resourcefulness of California’s exporters, we are nonetheless cognizant of the sluggish growth being seen in merchandise trade worldwide,” O’Connell said.