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Sharp decline in California’s exports

“August 2009 was a lousy month in an exceptionally dismal year for trade,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
By Patrick Burnson, Executive Editor
October 19, 2010

After nine months of steady recovery, California’s merchandise export trade showed signs of faltering in August.

Although the $11.89 billion in goods shipped abroad this August exceeded the $10.03 billion the state’s exporters sent to foreign markets in August 2009 by 18.5 percent, August’s trade was just 0.2 percent ahead of July’s, according to an analysis by Beacon Economics of international trade data released late last week by the U.S. Commerce Department.

“August 2009 was a lousy month in an exceptionally dismal year for trade,” said Jock O’Connell, Beacon Economics’ International Trade Adviser. “So a nominally healthy year-over-year improvement isn’t all that comforting.”

In an interview with LM, O’Connell noted that the state’s electronics industry may have been one of brighter spots in an otherwise dismal forecast.
“There is some evidence that this sector will remain strong, given the demand for industry-wide reinvestment in IT,” he said.

What troubled O’Connell most was that August’s export trade was barely larger than July’s.

“Over the past decade, California’s export trade each August has exceeded July by an average of 7.0 percent,” he said.  “In that context, the 0.2 percent rise from July to August this year is disconcertingly anemic.” 
“You have to go back to 2006 to find August exports at this year’s level,” he added.

O’Connell warned that the rate of growth in California exports would continue to decelerate through the remainder of this year.

“I’m cautiously pessimistic about the next few months. Worldwide, a combination of tepid consumer spending coupled with government deficit-reduction measures is dampening demand for goods. These forces are acting as a powerful brake on what should be the more salutary impact of moves that have been weakening the dollar and thus making California goods more attractive on the world market.”

California accounted for 11.1 percent of all U.S. merchandise exports in August.

The state’s exports of manufactured products in August 2010 were up by 15.6 percent from last August, while shipments of agricultural goods and other non-manufactured products increased by 8.2 percent.  Re-exports of items previously imported into the state jumped by 34.6 percent.

On the import side of the ledger, the U.S. Commerce Department reports that California’s merchandise import trade totaled $30.35 billion in August, an increase of 26.6 percent over last August. California accounted for 17.8 percent of all U.S. merchandise imports in August. California’s nominal international trade deficit in August amounted to $18.47 billion.

About the Author

Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

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