California Sees Slight Gain in Export Volumes

California’s export trade this February represented a modest increase over the same month last year, according to foreign trade data revealed April 5 by the US Commerce Department.

State exports in February 2013 totaled $12.70 billion, is less than the $12.85 billion recorded in February 2012. However, 2012 was a Leap Year, adding an extra trading day to that month.

So when adjusting for both inflation and that bonus trading day last February, California’s February 2013 export trade showed an increase of 1.1 percent over the same month in 2012.

The gain came as the result of a 4.3 percent real increase in shipments of manufactured products and an even more robust 5.9 percent rise in exports of non-manufactured goods – chiefly agricultural commodities and raw materials.  Restraining further growth in the state’s overall export trade was a relatively sharp 9.6 percent drop in re-exported goods.

Analysis reveals that California’s export of manufactured products continues to be slowed by an ongoing decline in shipments of electronic components used in the manufacture of personal computers. In the most recent three-month period, December 2012 through February 2013, exports of these products were down 24.9 percent from the same period a year earlier, according to data from economic consulting firm Beacon Economics.

“The chief culprit here,” Beacon’s international trade adviser, Jock O’Connell said, “is the growing popularity of smartphones and tablets, which has been shrinking consumer demand for PCs and curtailing trade in PC components.”

California’s exports to Mexico, the state’s leading foreign market, were down by 19.2 percent in the latest three-month period, largely because PC components have constituted as much as 30 percent of California’s export trade with its southern neighbor as recently as 2011, according to Beacon.

Shipments to the state’s number two market, Canada, rose slightly by 1.2 percent during the three-month period, while exports to its third largest export market, China, slipped by 1.3 percent.

However, California exports to the European Union were up 3.9 percent over the latest three months, while exports to the Pacific Rim rose by about two percent, according to Beacon’s data.

California Export Market Down, Report Says

California’s merchandise export trade finished 2012 on a weak note, owing largely to a sharp drop in shipments of electronics components to factories in Mexico, according to an analysis of newly released foreign trade data.

According to an analysis by Beacon Economics of foreign trade data released by the US Commerce Department on Feb. 8, California’s merchandise export trade for 2012 fell just short of the mark attained in 2011.

For December, California’s merchandise export trade was valued at $13.36 billion, a decline of 1.3 percent from the $13.53 billion recorded in December 2011. Adjusting for inflation, December exports were down 3.3 percent from the same month one year earlier.

“The December decline in exports was disappointing but not unexpected,” Beacon Economics international trade adviser Jock O’Connell said. “While the economies of several of our principal trading partners had been moving through a sluggish stage, California’s export trade has been severely pummeled by the shrinking worldwide demand for personal computers.”

That analysis reveals that exports to Mexico, California's leading foreign market, fell by 17.2% in the last quarter of 2012.

Significant fourth quarter declines were also observed in California shipments to South Korea (-7.8 percent), China (-6.4 percent), Japan (-3.4 percent) and Canada (-3.3 percent). Gains were recorded in exports to Taiwan (+7.1 percent) and the European Union (+2.6 percent), according to the Commerce Dept. data.

For 2012 as a whole, California merchandise exports totaled $161.7 billion, a gain of just 1.6 percent over 2011’s $159.12 billion.

California Export Trade Down in November

A labor strike at the ports of Los Angeles and Long Beach and weakening demand for personal computers combined to shrink California’s merchandise export trade in November, according to the latest monthly trade report on the state by Beacon Economics.

According to Beacon’s examination of US Commerce Department foreign trade data, the total value of goods shipped abroad by California businesses in November 2012 totaled $13.33 billion, a decline of 5.3 percent over the $14.07 billion in exports recorded in November 2011. Adjusting for inflation, the true decline was 7.5 percent, according to Beacon.

Exports of manufactured products in November amounted to $8.25 billion, down by 3.7 percent from November 2011’s $8.57 billion, while shipments of produce, raw materials and other non-manufactured goods fell by 8.6 percent from $2.14 billion to $1.96 billion. Re-exports were also off by 7.2 percent, from $3.36 billion to $3.12 billion.

The November volumes were marginally affected by a strike by the International Longshore and Warehouse Union, which shut down 10 of 14 container terminals at the Ports of Los Angeles and Long Beach. The strike began the morning of Nov. 27 and was resolved the evening of Dec. 4. Regular port operations resumed the following day.

“While shippers certainly incurred financial losses attributable to delays in moving cargo through the two ports, the strike’s impact on the state’s overall export trade in November is largely an accounting matter,” Jock O'Connell, Beacon Economics’ international trade adviser said. “Cargo that didn't sail in November will more than likely turn up in December’s export statistics.”

Analysis: Good News for California Exporters

Despite the inert and lackluster forward movement of the national economy, exporters in California turned in their 20th consecutive month of vigorous growth in June, according to an analysis by Beacon Economics of foreign trade data released last week by the United States Commerce Department.

California firms moved $13.83 billion in exports shipments during June, a gain of 13 percent over the $12.25 billion reported in June of last year.
"Adjusting for inflation, California’s export trade has firmly returned to its pre-recession peaks," Beacon Economics’ International Trade Adviser Jock O’Connell said.

"More importantly, on a seasonally-adjusted basis, California’s export trade remained on an upward trajectory through the second quarter of 2011, despite the economic and financial tribulations several of our leading trading partners have been enduring," O’Connell said.

According to Beacon's analysis, the importance of this positive news should not be under-estimated: Gearing up to meet export demand is one of the few incentives US corporations have for investing in the domestic economy.

"The primary source of growth for the US over the past year has been through the export sector," Beacon Economics’ Founding Partner Christopher Thornberg said.
"Export trade is key in re-balancing the domestic economy given the massive trade deficit that opened in the middle part of the last decade."

Trade in California traditionally picks up in the second half of the year and Beacon Economics expects continued growth in the state's export trade during this period.
"The upside of a battered dollar is that California products, from farm produce to pharmaceuticals, are at bargain prices in the world market," O’Connell said.
"The recent drop in oil prices doesn't hurt."

However, the analysis pointed out, the picture was not as positive on the import side of the ledger. The number of loaded inbound shipping containers arriving at the state's seaports in June was down by 5.5 percent from June, 2010, while import tonnage through California's airports declined by 11.7 percent.

California Exporters Shine Through Glum Economic Landscape

Despite growing concerns that the plodding and anemic economic recovery may be stagnating, California exporters in May posted their 19th consecutive month of healthy year-over-year gains.

May shipments by state exporters totaled $13.20 billion, a gain of 10.5 percent over the $11.95 billion reported in May of last year, according to an analysis by Beacon Economics of the most recent monthly foreign trade data released by the US Commerce Department.

California's manufactured exports were up by 6.1 percent in May, while non-manufactured exports such as raw materials and agricultural products jumped 24.2 percent. Re-exports, those goods brought into the US and then shipped out again such as through a Foreign Trade Zone, also posted a strong 17.2 percent increase over re-export numbers in May of last year.

"Adjusting for inflation, California’s export trade is as robust as it was prior to the recession,” Beacon Economics’ International Trade Adviser Jock O’Connell said.
Beacon Economics Founding Partner Christopher Thornberg explained that export activity is a key component of both the US and California recovery.

"We opened up a huge deficit in the boom years," Thornberg said. "To get back on solid footing, exports need to continue to rise."

Looking forward, the Beacon Economics analysis forecasts sustained growth in California’s export trade, particularly in the second half of the year when the pace of foreign trade normally picks up.

"With the dollar as cheap as it is, California as well as other US goods are selling at bargain prices on the world market," O'Connell said.

In addition, the recent reprieve from steadily rising oil prices should help exporters, O'Connell said, by keeping transportation costs in check at least through the summer.

Even as most of the state's chief international trading partners are taking steps to battle inflation or curtail budget deficits, Beacon Economics is forecasting that those foreign economies will continue to grow and continue to draw in imports from California.

On the import side of the ledger, the value of foreign shipments entering the US via California's airports, seaports, and border crossings rose by 14.7 percent compared to May, 2010.

As the nation’s primary gateway to the Pacific Rim, California derives ample economic benefits from the import trade.

"As much as we might like to reduce our dependence on imported goods, it’s worth emphasizing that moving imported goods to markets throughout the nation represents a vital source of jobs – many of them well-paying – in a state where unemployment rates remain perilously high," O'Connell said.

California Exporters Buck Economic Trends

Bucking the recent slowing trends in the global economic recovery, California exporters posted an impressive 14.1 percent increase in April over the year-ago period with shipments totaling $12.9 billion, according to an analysis, by Beacon Economics, of foreign trade data released Thursday by the United States Commerce Department.

The April numbers are the most recent released by the Commerce Department.
California's manufactured exports rose by 10.7 percent in April, while non-manufactured exports such as raw materials and agricultural products were up by 21.3 percent over April 2010. Re-exports, those goods brought into the U.S. and then shipped out again such as through a Foreign Trade Zone, posted a 22.4 increase compared to April of last year.

“On an inflation-adjusted basis, California’s export trade in April nearly equaled the pre-recession high for that month achieved back in 2007,” Beacon Economics’ International Trade Adviser Jock O’Connell said.

O'Connell noted that April marked the 18th consecutive month of strong year-over-year gains in California’s merchandise export trade.

The gains, Beacon Economics' Founding Partner Christopher Thornberg said, could have implications for the broader economy.

"Exports are likely to play an important role in the economic boost we expect to see in the second half of this year," Thornberg said.

Imports, while still showing growth in April, did not grow at the strong pace of exports with the value of foreign goods entering the U.S. through California’s seaports, airports and border crossings increasing by just 9.9 percent compared to April 2010.

Beacon Economics predicts that California’s job-generating export trade will continue to expand, albeit at a somewhat more moderate pace through the remainder of the year.

“The economic growth rates of several of our principal trading partners have been decelerating, in some cases like China and India from speeds that were plainly unsustainable over the long-term.” O’Connell said. “That’s apt to shrink but certainly not stifle their appetite for imported goods.”

However, O'Connell added that California exporters should continue to enjoy the competitive benefits of a dollar that has been trading at some of the lowest levels in decades.

Calif. Export Levels Surpass Dot.Com Era Levels In March

California exporters shipped $13.95 billion worth of cargo in March, a 12.8 percent gain over March 2010 and the 17th consecutive month of year-over-year gains, according to an analysis by Beacon Economics of foreign trade data released Wednesday by the U.S. Commerce Department.

Manufactured exports rose by 12.8 percent compared to the year-ago period, according to Beacon, while non-manufactured exports – primarily raw materials and agricultural products – were up by 10.9 percent. Re-exports, those goods brought into the U.S. and then shipped out again such as through a Foreign Trade Zone, increased by 17.9 percent in March.

“On an inflation-adjusted basis, California’s export trade hit a new high for the month of March, even exceeding the level of exports recorded at the height of the dot.com boom a decade ago,” Beacon’s International Trade Adviser Jock O’Connell said.

O'Connell said that it’s remarkable that the latest gains occurred despite the disruption brought to the normal transpacific trading patterns by the March 11 earthquake and tsunami in Japan, California's fourth largest export market.

Beacon analysis experts predict that California’s export trade will continue to see positive growth. The report goes on to state that the chief factors currently aiding California exporters is growth in the state's target markets and the drop of the dollar to its lowest value in decades.

"The importance of these steady gains by exporters to the overall recovery of the U.S. economy shouldn't be underestimated," Beacon founding partner Christopher Thornberg said. "Rebalancing our external accounts is a critical component of healing the economy in the aftermath of the massive financial bubble that hit in the middle part of the last decade."

An apparent reprieve from steadily rising oil prices should also help exporters by keeping transportation costs in check at least through this summer, Beacon's O'Connell said.

Beacon Analysis: California Sets Export Record in October

California exporters turned in their best performance ever for the month of October, beating the previous record set back in October 2007 by 1.1 percent, according to a Beacon Economics analysis of the most recently available foreign trade data from the U.S. Commerce Department.

"Our export trade is now operating at a pace not seen since the onset of the Great Recession," said Jock O'Connell, Beacon Economics' International Trade Adviser.

Golden State businesses shipped $12.91 billion in goods abroad in October, surpassing the $11.08 billion in goods exported in the same period last year by a sizable 16.5 percent margin.

Exports from California manufacturers also jumped in October, climbing 10.7 percent compared to October 2009 and shipments of Golden State agricultural goods and other non-manufactured products increased a significant 34.6 percent over the year-ago period. Re-exports of items previously imported into the state, said the Beacon report for October, also jumped by 25.2 percent.

October, in which California accounted for 11 percent of all U.S. merchandise exports, marked 12 straight months year-over-year increases in the state's export trade.

Loaded export container volumes at the Southern California ports of Long Beach and Los Angeles increased by 11.8 percent from October 2009, while Los Angeles International Airport saw a 31.4 percent increase in exported air freight tonnage.

In the Bay Area, loaded export container volumes at the Port of Oakland rose by just 0.3 percent while exported air freight tonnage through San Francisco International jumped up by 15.8 percent from last October.

Beacon also reports that U.S. Commerce Department data shows that California’s merchandise import trade totaled $28.85 billion in October, an increase of 7.2 percent over last October. The Golden State accounted for 17 percent of all U.S. merchandise imports in October.

Beacon's O'Connell was optimistic about strong employment growth resulting from the increase in export activity.

"At some point, you would naturally expect higher exports to goose the employment numbers," said O'Connell. "However, California firms have made great strides in efficiency, enabling them to do more with less. Bear in mind that, while manufacturing output in this state increased by about 50 percent in this decade, employment in our manufacturing sector declined by one-third."

According to Beacon's analysis of California Employment Development Department data, there are currently about 4,800 fewer workers in the manufacturing sector and 6,800 fewer in the transportation and warehousing sector than there were last October.

"Exporters are also likely to be worried about the outlook for California exports going into the New Year," O'Connell observed. "Austerity measures across Europe, an appreciating Japanese currency, unrest in Mexico, and renewed efforts by Chinese authorities to slow down their economy could all put a serious damper on California exports," he explained.

Beacon: Calif. Export/Import Up in May, Long Term Growth Questioned

California merchandise exports continued a seven-month streak of increases by climbing 25.7 percent in May compared to the same period in 2009, but still fell well short of export levels recorded in May 2008, according to an analysis by Beacon Economics of international trade data released July 13 by the United States Commerce Department.

State exporters shipped $11.9 billion in goods abroad during May, far surpassing the $9.5 billion in exports shipped to foreign markets in May 2009.

“While we should definitely celebrate a $2.4 billion increase in exports over last May, we still have a ways to go before reaching the levels of trade seen before the onset of the global economic and financial crisis,” said Jock O’Connell, International Trade Adviser for Beacon Economics.

O’Connell added that in inflation-adjusted terms, the state’s export trade during May was 7.3 percent below the value of exports reported in May 2008.

Exports of California manufactured products in May were up 25.5 from last May, while shipments of agricultural goods and other non-manufactured products increased 16.5 percent. O’Connell said that re-exports of previously imported items climbed 32.2 percent.

The increases in exports were seen at most of California’s trade gateways, with the Southern California port complex of Long Beach and Los Angeles reporting a 9.4 percent increase in loaded outbound containers over the year-ago period. Loaded outbound box traffic through the Port of Oakland was also up in May, with port officials reporting a 4.5 percent increase over May 2009.

The Commerce Department also reported that California’s merchandise import trade during May increased 29.9 percent over May 2009, climbing to a total reported value of $26.8 billion for the month.

O’Connell warned that despite the increased numbers, the long term outlook for sustained strong growth “is less encouraging now than it had been earlier in the year.”

He pointed to concerns that decisions coming out of the G-20 summit in Toronto seeking to shrink public sector spending will moderate foreign demand for California products through the end of the year.

“The deficit hawks have been gaining the upper-hand in charting fiscal policy in almost every major world economy,” O’Connell said. “As a result, no one is forecasting robust economic growth. Instead, there is a general sense that the tide is going out as we move into a period of slackening demand with the timidity of the private sector now being matched by the austerity of governments worldwide.”