Welcome to the California Trade Report, Beacon Economics’ monthly analysis of California’s international trade activity. This report analyzes data released by the U.S. Census Bureau’s Foreign Trade Division and pinpoints important trends in the state’s import/export industry, identifying potential effects on the state’s economy. The report is only a sampling of the kind of economic research and data analysis available from Beacon Economics.
California’s Exports Regain Momentum
April 3, 2014 – California’s exporters turned in a strong showing in February, surging ahead by 8.3% over the same month one year earlier, according to a Beacon Economics’ analysis of foreign trade data released this morning by the U.S. Commerce Department.
“After a languid January, California’s export trade accelerated back to the sprightly growth rates we saw all through the second half of last year,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
For the month of February, the state’s merchandise export trade totaled $13.76 billion, up from the $12.70 billion in exports recorded in February 2013. By comparison, overall U.S. merchandise exports increased by just 0.3% during the same period.
February saw a 7.9% jump in California’s manufactured exports, which totaled $9.02 billion, up from $8.37 billion one year earlier. Leading the way was the state’s aerospace sector, manufacturers of communications gear, and oil refineries.
Meanwhile, the state’s exports of non-manufactured goods (chiefly agricultural produce and raw materials) in February totaled $1.87 billion, up 12.7% from $1.66 billion in February 2013. Re-exports grew by 7.1% to $286 billion from $2.67 billion.
“This is great news on many fronts,” said Christopher Thornberg, Founding Partner of Beacon Economics. “These numbers just represent physical goods more or less produced in California and shipped abroad – they miss service exports, such as software, royalties on movies and other entertainment products, and in-bound tourism.” Thornberg explained that “all these items are highly correlated with goods exports over time, implying that the boost to California’s economy is larger than the already impressive numbers imply. The return to global growth is good for us,” he said.
A Closer Look at the Numbers
As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations may occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends.
For that reason, Beacon Economics compares the latest three months for which data are available (i.e., December 2013 –February 2014) with the corresponding period one year earlier.
California’s merchandise exports during the latest December-February period totaled $41.23 billion, a nominal increase of 6.4% over the same period one year earlier.
Computer and Electronics Products remains by far the single largest category of California exports, accounting nearly one-quarter of the state’s merchandise export trade. In the most recent three-month period, exports of Computer and Electronics Products totaled $10.19 billion, up 2.3% from the same period one year earlier.
Exports of Transportation Equipment meanwhile increased by 19.7% to $4.51 billion, largely powered by a shipments of aerospace equipment to Canada, Japan, Taiwan, and Kuwait.
Other sizable gains were recorded in the latest three-month period for agricultural produce, up 7.1% to $3.37 billion and processed food products, up 12.4% to $2.62 billion. Exports of petroleum products continued to rise sharply, soaring by 49.2% to $2.05 billion.
Mexico remained California’s single largest export market during the latest three-month period, with the value of exports edging up by 8.0% to $5.80 billion. Exports to Canada rose by 16.0% to $4.54 billion, while shipments to China surged by 23.0% to $4.12 billion. Japan (down 7.1% to $2.98 billion) and the Republic of Korea (up 13.2% to $2.12 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) edged up only 2.6% to $15.94 billion, despite surges in shipments to China and South Korea. Exports to the European Union rose by 7.4% to $6.96 billion. California exports to Latin America and the Caribbean (excluding Mexico) increased by 6.2% to $2.74 billion.
California’s export trade with sub-Saharan Africa totaled a comparatively negligible $186.9 million in the latest quarter.
California exports to Ukraine during the last three-month period ($35.1 million) were down by more than half from the same interval one year earlier. Meanwhile, the state’s merchandise exports to Russia during the latest three-month period totaled $238.4 million, off 4.5% from one year earlier.
California accounted for 10.8% of total U.S. merchandise exports over the past three months, up from its 10.3% share in the same period one year earlier.
By mode of transportation, 43.1% of California’s $41.23 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 34.03% of the state’s export trade, while the remaining 22.9% of the state’s exports of goods traveled overland by truck or rail to Canada and Mexico.
Beacon Economics’ outlook for exports anticipates healthy growth over the next several months. “Although we are fully cognizant of the challenges affecting merchandise trade worldwide, our confidence in the resourcefulness of California’s exporters remains undiminished,” O’Connell said.