December 4, 2015 –
California’s merchandise export trade fell 5.4% in October from the same month last year, according to a Beacon Economics’ analysis of foreign trade data released this morning by the U.S. Commerce Department.
California has shed roughly 3,000 manufacturing jobs over the past year after seeing relatively positive numbers earlier in 2015.
The state’s exports of goods to foreign markets in October totaled $14.70 billion, down 5.4% from the $15.53 billion recorded in October 2014. By way of comparison, overall U.S. merchandise exports fell by 10.2% over the same period, while exports from Texas shrank by 12.9%.
California’s exports of manufactured goods in October sagged by 1.4% to $9.46 billion from $9.57 billion last year. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) tumbled by 21.7% to $1.86 billion from $2.37 billion the previous October. Re-exports meanwhile dropped by 5.8% to $3.38 billion from $3.59 billion.
“With the economies of Canada, China and Japan (three of our top four export markets) all slowing appreciably, October’s export numbers were less bad than might be expected,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
California’s export trade so far this year is lagging behind last year’s pace by 3.3%.
“This was a disappointing month for the state’s exports. Although the domestic economy continues to gain momentum, troubles abroad have contributed to difficulties for California exporters,” said Jordan Levine, Beacon Economics’ Director of Economic Research. “California has also shed roughly 3,000 manufacturing jobs over the past year after seeing relatively positive numbers earlier in 2015.”
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., August – October) with the corresponding period one year earlier.
California’s merchandise exports during this year’s third quarter totaled $42.07 billion, a nominal decline of 5.4% from the $44.46 billion recorded during the same period last year. The state accounted for 11.1% of total U.S. merchandise exports in the latest three months.
California’s export trade is highly diversified. Ten major categories of goods each accounted for at least $1 billion in exports in the latest three-month period. Performance, however, varied, with only three categories showing year-over-year gains.
Ag Exports Drop 8.4%
Topping the export list was Computer & Electronic Products, down 2.1% to $11.14 billion from $11.38 billion. Transportation Equipment exports gained 1.5% to $4.93 billion from $4.86 billion. Non-Electrical Machinery exports slipped 1.8% to $3.71 billion from $3.78 billion. Exports of Miscellaneous Manufactured Commodities (a catchall category of merchandise ranging from medical equipment to sporting goods) were down 10.9% to $3.26 from $3.66 billion. Chemical exports were off 7.1% to $3.45 billion from $3.71 billion. Exports of Agricultural Products dropped 8.4% to $3.30 billion from $3.51 billion. Food and Kindred Products exports continued to stagger, down 8.4% to $2.24 billion from $2.45 billion. Electrical Equipment exports slipped by 3.4% to $1.73 billion from $1.80 billion. Exports of Fabricated Metal Products rose 3.4% to $1.09 billion from $1.05 billion. Primary Metal Products exports jumped 61.2% to $1.24 billion from $0.77 billion.
Falling out of the ranks of the billion-dollar export category were Petroleum and Coal Products (down 37.1% to $945 million from $1.50 billion) and Waste and Scrap (off 29.1% to $830 million from $1.17 billion).
Mexico continued to rank as California’s single largest export destination during the latest three-month period, with the value of exports rising 2.3% to $6.85 billion from $6.69 billion.
Exports to Canada tumbled by 11.8% to $4.32 billion from $4.90 billion, while shipments to China similarly fell by 11.4% to $3.71 billion from $4.19 billion. Exports to Japan declined by 4.7% to $2.83 billion from $2.97 billion. Shipments to Hong Kong rose 12.3% to $2.73 billion from $2.43 billion. South Korea, which normally figures as one of California’s ‘Top Five’ export markets, received $1.95 billion in California exports, down 2.3% from $1.99 billion.
Regionally, California’s exports to the Asia Pacific region (including Australia and New Zealand) dropped 2.1%, falling from $17.29 billion to $16.92 billion, a dip propelled largely by the fall-off in exports directly to China. California’s exports to the European Union increased 1.0% from $7.29 billion to $7.36 billion. Exports to Latin America and the Caribbean (excluding Mexico) were down by 16.6%, dropping from $2.89 billion to $2.41 billion. California’s exports to South Asia (chiefly India and Pakistan) were off 21.7%, falling from $1.63 billion to $1.29 billion. The state’s exports to Sub-Saharan Africa in the latest three months amounted to just $168 million, down 13.2% from $194 million during the same period twelve months earlier .
By mode of transportation, 46.9% of California’s $42.07 billion merchandise export trade in the latest three months 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 29.9% of the state’s export trade, while 23.2% traveled overland by truck or rail to Canada and Mexico.
The Outlook
Looking ahead, Beacon Economics finds reason to expect that the recent fall-off in California’s export trade will be reversed or at least moderated during the winter months. We anticipate that shipments to Mexico and Europe will continue to grow and that exports to China will at the very least stop declining. In Canada, the economic policies of the new Trudeau government should give a boost to Canadian spending on imported goods, despite the country’s weakened currency.
Beacon Economics’ optimism is tempered, however, by an uncommonly large flock of black swans perched on the horizon. The unprecedented surge of refugees entering Europe poses a range of social and security challenges for the continent that could have very far-ranging economic consequences in both the near and long term. Similarly, having already claimed a Russian airliner, terrorist elements operating in the Sinai could disrupt shipping through the Suez Canal. Across the globe, friction over Chinese claims in the South China Sea could boil over into a military confrontation between China and the United States.
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