Thursday, October 14, 2010

Upward Growth Trend of California Exports Could Be Faltering

Despite nine months of steady monthly increases compared to 2009, California merchandise exports showed signs of faltering in August, according to the latest monthly analysis by Beacon Economics.

The report, which is based on international trade data released this week by the U.S. Commerce Department, found that although August saw $11.89 billion in exported goods from California – an 18.5 percent increase over the $10.03 billion in August 2009 exports – August’s trade was just 0.2 percent ahead of July’s.

“August 2009 was a lousy month in an exceptionally dismal year for trade,” said Jock O’Connell, Beacon Economics' International Trade Adviser. “So a nominally healthy year-over-year improvement isn’t all that comforting.”

O’Connell said he was particularly concerned with the poor month-over-month numbers, given the historical trends of California exports.

"Over the past decade, California’s export trade each August has exceeded July by an average of 7.0 percent," said O'Connell. "In that context, the 0.2 percent rise from July to August this year is disconcertingly anemic. You have to go back to 2006 to find August exports at this year’s level."

O’Connell warned that the California exports, which accounted for 11.1 percent of all US merchandise exports in August, could see a deceleration in growth through the remainder of this year.

"I’m cautiously pessimistic about the next few months," said O'Connell.

"Worldwide, a combination of tepid consumer spending coupled with government deficit-reduction measures is dampening demand for goods. These forces are acting as a powerful brake on what should be the more salutary impact of moves that have been weakening the dollar and thus making California goods more attractive on the world market," said O'Connell.

Beacon also reported that the state's exports of manufactured products in August were up by 15.6 percent from last August, while agriculture and other non-manufactured products increased by 8.2 percent. Beacon also reported that Commerce Department numbers showed re-exports of items previously imported into California were up 34.6 percent.

Merchandise imports into California, according to the Beacon analysis, totaled $30.35 billion in August, an increase of 26.6 percent over last August. California accounted for 17.8 percent of all US merchandise imports in August.