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California exports recover

from Beacon Economics 

Screen Shot 2015-07-07 at 2.26.54 PMJanuary 10,2018- – California’s export trade rebounded in November, according to a Beacon Economics’ analysis of U.S. trade statistics released this morning by the U.S. Census Bureau. Foreign shipments by California businesses totaled $15.33 billion for the month, a nominal 6.4% gain over the $14.41 billion recorded in November 2016.
The state’s exports of manufactured products in November rose 5.0% to $9.36 billion from $8.91 billion one year earlier. Exports of non-manufactured goods (chiefly agricultural products and raw materials) jumped by 9.9 % to $2.32 billion from $2.11 billion. Re-exports, meanwhile, rose by 7.8% to $3.65 billion from $3.39 billion.
“Favorable economic conditions abroad combined with a weakening dollar helped California’s exporters regain their stride after momentarily stumbling in October,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
California accounted for 11.3% of the nation’s overall merchandise export trade in November. Through the first eleven months of 2017, the state’s exports are running 4.7% ahead of 2016.
“With signs pointing to continued growth in the U.S. in the year ahead, and with our trade partners also seeing gains, the trade picture should be good in 2018,” said Robert Kleinhenz, Beacon Economics’ Executive Director of Research. “But there continues to be uncertainty regarding U.S. trade policy, with NAFTA being the biggest wildcard for both the U.S. and California.”
California Imports Surge on Inventory Stockpiling
The U.S. Census Bureau reports that California was the state-of-destination for 20.3% of all U.S. merchandise imports in November, with a value of $42.17 billion, 11.1% higher than the $37.96 billion in imported goods in November 2016. Manufactured imports totaled $38.43 billion, up 9.7% from $35.02 billion. Non-manufactured imports were valued at $3.74 billion, fully 27.2% higher than the $2.94 billion recorded one year earlier.
Beacon Economics attributes the sharp increase in imports to importers hedging against tariffs that the Trump administration is threatening to impose against a range of foreign-made products by building up their domestic inventories of those items, many of which arrive in the United States via California’s seaports and airports.
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 can 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., September-November) with the corresponding period one year earlier.
Leading Export Commodities
California’s merchandise exports during the September-November period totaled $44.34 billion, a nominal gain of 2.6% over the $43.24 billion in the same period the previous year. Of the state’s leading categories of exports, the majority saw increases.
On the plus side, shipments of Computer & Electronic Products (computers and peripherals; communication, audio, and video equipment; navigational controls; and electro-medical instruments) edged up by 0.3% to $11.32 billion from $11.28 billion.
Exports of Non-Electrical Machinery (machinery for industrial, agricultural and construction uses as well as ventilation, heating, and air conditioning equipment) improved by 11.2% to $4.05 billion from $3.65 billion.Chemical exports (including pesticides and fertilizers; pharmaceutical products; paints and adhesives; soap and cleaning products; and raw plastics, resins, and rubber) gained 5.7% to $3.55 billion from $3.55 billion.
Shipments abroad of Food & Kindred goods moved up 1.0% to $2.28 billion from $2.26 billion. Exports of Electrical Equipment and Appliances grew by 5.7% to $1.85 billion from $1.75 billion. Exports of Fabricated Metal Products were up by 1.6% to $1.06 billion from $1.04 billion. Exports of Petroleum and Coal Products surged by 106.0% to $1.24 billion from $601 million. Waste & Scrap exports jumped by 35.5% to $1.19 billion from $875 million.
On the downside, the state’s exports of Transportation Equipment (automobiles, trucks, trains, boats, airplanes, and their parts) were down by 7.3% to $4.72 billion from $5.09 billion. Shipments of Miscellaneous Manufactured Commodities (a catchall category of merchandise ranging from medical equipment to sporting goods) fell by 6.0% to $3.50 billion from $3.72 billion.
Agricultural exports edged lower by 1.5% to $4.14 billion from $4.20 billion, and exports of Primary Metal Manufacturing products tumbled by 23.8% to $822 million from $1.08 billion.
Destinations
Mexico handily kept its position atop the list of California’s most important export destinations during the latest three-month period. Shipments south of the border grew by 7.9% to $7.21 billion from $6.68 billion. Canada was the state’s second largest export market, growing 6.0% to $4.50 billion from $4.25 billion. Exports to China rose 9.4% to $4.05 billion from $3.70 billion. In fourth place was Japan, which imported $4.05 billion worth of California goods, an increase of just 0.9% from $3.16 billion during the same period a year earlier. Hong Kong (down 1.5% to $3.01 billion from $3.06 billion) rounded out California’s Top Five export destinations during the latest three-month period.
The state’s export trade with the economies of East Asia edged up by a mere 0.6% to $16.01 billion from $15.91 billion.  By contrast, California’s exports to the European Union rose by 7.2% to $7.99 billion from $7.45 billion.
Mexico and Canada, America’s partners in the North American Free Trade Area, alone accounted for 26.4% of California’s merchandise export trade in the latest three-month period, up from 25.3% one year earlier.
Mode of Transport
During the most recent three months, 46.3% of the state’s $44.34 billion merchandise export trade went by air, while waterborne transport carried 30.4% of the outbound trade. The balance of exports travelled overland to Canada and Mexico.
The Outlook
In Beacon Economics’ estimation, the near-term outlook for California’s exporters remains generally upbeat, if only because global economic fundamentals continue to appear so encouraging. Moreover, the dollar that has weakened steadily throughout 2017 should continue to prove advantageous to the state’s exporters.
It is on the policymaking front that trading conditions risk deteriorating, possibly abruptly. President Trump continues to inveigh against the terms of the North American Free Trade Agreement (NATO) despite ample evidence that a breech in our economic ties with Canada and Mexico would be harmful to a range of U.S. industries from agriculture to auto manufacturing. As the data cited above emphasize, California’s exporters are especially reliant on customers both north and south of the border.

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