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California Exporters Continue Search For Light

September 2, 2016 –

Screen shot 2012-06-15 at 12.12.22 PM July brought no relief from the negative numbers that have dogged California’s merchandise export trade for well over a year now.

According to Beacon Economics’ analysis of U.S. trade statistics released this morning by the Census Bureau, the nominal value of shipments by California businesses to foreign destinations totaled $13.51 billion for the month, 2.1% below the $13.80 billion recorded in same month last year.

Not since April 2015 has the state’s merchandise export trade shown a nominal year-over-year improvement. Notably, however, the nominal decline belies the fact that prices of both imports and exports have deceased, potentially making the nominal export totals look worse than they really are.

The state’s exports of manufactured goods in July fell by 4.7% to $8.55 billion from $8.97 billion one year earlier. On the other hand, exports of non-manufactured goods (chiefly agricultural products and raw materials) did rise by 5.4% to $1.56 billion from $1.48 billion the previous July. Re-exports also edged up by 1.5% to $3.40 billion from $3.35 billion.

California accounted for 11.6% of the nation’s merchandise export trade in July. By way of comparison, the value of overall U.S. merchandise exports in July dropped by 6.5%, while exports from Texas fell 17.0%.

Year-to-date, California’s $92.18 billion merchandise export trade lagged last year’s $97.61 billion total over the same period by 5.6%. “The numbers are hardly surprising considering the condition of most of our top trading partners,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

California’s top two export markets — Mexico and Canada – saw their economies shrink during the second quarter, while Japan’s economy came close to stalling. China, while officially insisting it is enjoying robust growth, also remains a less reliable market for California goods than in recent years.

On a more optimistic note, this month’s trade numbers aren’t necessarily as lackluster as they first appear. Adjusting for seasonal variations, there has actually been an improvement underway in the state’s export trade since February. “We’ve been digging out of a hole,” O’Connell said.

California Imports

On the import side of the trade ledger, the U.S. Department of Commerce has determined that California was the state-of-destination of 18.4% of all U.S. merchandise imports in July, with a value of $33.47 billion, down 4.0% from the $34.86 billion in imported goods in July of 2015. Manufactured imports totaled $30.64 billion, off 2.4% from $31.40 billion last year. Non-manufactured imports in July were valued at $2.83 billion, down 18.2% from $3.46 billion one year ago. California’s imports exceeded the 2.4% year-over-year fall-off in U.S. merchandise imports in July.

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 June occur as the result of unusual developments or exceptional one-off trades and June not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., April-July) with the corresponding period one year earlier.

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