August 7,2015-
California’s export trade in June declined in value 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.
The state’s exports of goods to foreign markets in June totaled $15.11 billion, down 4.2% from the $15.77 billion recorded in June 2014. By way of comparison, overall U.S. merchandise exports fell by 5.3% over the same period, while exports from Texas shrank by 10.2%.
California’s exports of manufactured goods in June dropped by 5.5% to $9.42 billion from $9.96 billion last year. Exports of non-manufactured goods (chiefly agricultural produce and raw materials) tumbled by 12.5% to $1.71 billion from $1.95 billion the previous June. Re-exports rose by 3.1% to $3.99 billion from $3.86 billion.
“Given the condition of the global economy right now, California’s June export numbers certainly could have been a lot worse,” said Jock O’Connell, Beacon Economics’ International Trade Adviser. “The economy of China, our third largest overseas customer, has been decelerating at a much steeper pace than the official figures out of Beijing would indicate. Europe continues struggle to find a path to sustained growth, and a collapse in commodity prices have sent major developing economies like Brazil and Indonesia teetering.”
California’s export trade so far this year is lagging behind last year’s pace by 2.7%.
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., April – June) with the corresponding period one year earlier.
California’s merchandise exports during the April-June period totaled $43.62 billion, a nominal decline of 0.9% from the $44.03 billion recorded during the same period twelve months earlier. The state accounted for 11.5% of total U.S. merchandise exports in the latest three months.
California’s export trade is highly diversified. Eleven major categories of goods each accounted for at least $1 billion in exports in the latest three-month period. Among the top ten categories, performance was variable in the latest quarter with only four categories showing growth.
On the plus side, topping the export list was Computer & Electronic Products, up 6.6% to $10.89 billion from $10.22 billion. Transportation Equipment exports rose 7.5% to $4.76 billion from $4.43 billion. Non-electrical Machinery exports jumped 12.2% to $4.14 billion from $3.69 billion, and exports of Agricultural Products rose 6.2% to $3.42 billion from $3.22 billion.
On the downside, exports of Miscellaneous Manufactured goods fell 5.1% to $4.15 billion from $4.37 billion. Chemical exports were off 3.3% to $3.37 billion from $3.48 billion. Exports of Food and Kindred Products plummeted by 14.9% to $2.47 billion from $2.90 billion. Electrical Equipment exports slipped by 0.8% to $1.77 billion from $1.78 billion. Exports of Petroleum and Coal Products dropped by 25.6% to $1.37 billion from $1.84 billion. Fabricated Metal exports fell 14.0% to $1.06 billion from $1.23 billion. Finally, exports of Waste and Scrap dipped 11.6% to $1.10 billion from $1.15 billion.
Mexico continued to rank as California’s single largest export destination during the latest three-month period, with the value of exports jumping 13.3% to $7.11 billion from $6.27 billion. Exports to Canada slipped by 1.7% to $4.33 billion from $4.41 billion, while shipments to China dropped by 10.5% to $3.76 billion from $4.21. Exports to Japan also declined by 2.4% to $3.10 billion from $3.08 billion. South Korea, up 11.0% to $2.37 billion from $2.14 billion, rounded out California’s ‘Top Five’ national export destinations in the April-June quarter.
Regionally, California’s exports to the Asia Pacific region (including Australia and New Zealand) dropped 3.5% to $16.37 billion from $16.96 billion, a dip propelled largely by the fall-off in exports to China. California’s exports to the European Union slipped by 1.3% to $7.48 billion from $7.58 billion.
California’s exports to Latin America and the Caribbean (excluding Mexico) were down by 19.5% to $2.35 billion from $2.92 billion. California’s exports to South Asia (chiefly India and Pakistan) were up by 28.3% from $1.08 billion to $1.39 billion. The state’s exports to Sub-Saharan Africa in the latest three months amounted to just $210 million, up 8.3% from $194 million during the same period twelve months earlier.
By mode of transportation, 46.3% of California’s $43.62 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 30.4% of the state’s export trade, while 30.7% traveled overland by truck or rail to Canada and Mexico.
The Outlook
Beacon Economics’ outlook for California’s merchandise export trade remains guarded. We are not encouraged by recent actions by Chinese authorities and expect exports to China (the state’s third largest export market) to continue to decline through the balance of this year.
Exports to Canada (California’s second largest export destination) have been ebbing lately, largely as a result of increasingly unfavorable exchange rates. While we expect modest growth in the state’s exports to Europe later this year, the biggest gains are likely to be seen in California’s exports to Mexico. As we have noted previously, a very sizable portion of California’s export trade with Mexico involves factories south of the border that export the vast majority of their output to the United States. In that way, California’s export trade with Mexico tends to rise or fall in tandem with economic activity in the U.S. rather than in Mexico.