Weakening conditions in key foreign markets mean mixed results for California exports

Despite adverse economic circumstances in much of the world, October saw real growth in exports of goods produced in California.

By ·

Weakening economic conditions in several key foreign markets and outright recessions in others led to mixed results for California exporters during October, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.

The value of goods shipped abroad by California businesses in October totaled $13.87 billion, a nominal increase of just 0.4% over the $13.81 billion recorded in the same month last year. Adjusting for inflation would translate that apparent gain into a real decline of 2.4%.

However, on a decidedly more positive note for California’s economy, exports of manufactured and non-manufactured goods were up in real as well as nominal terms, while re-exports of previously imported goods were down substantially.

“Despite adverse economic circumstances in much of the world, October saw real growth in exports of goods produced here in California,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

Indeed, the Port of Los Angeles had been reporting robust outbound numbers prior to this month’s dockside labor disruptions.

Jordan Levine, Beacon Economics’ Director of Economic Research said that although overall manufacturing employment was down 0.8% in the state in October, the figure masks the manufacturing uptick being experienced across California. “San Jose, Sacramento, Santa Rosa, Modesto, and Stockton all added more than 1,000 new manufacturing jobs over last October, showing that the industry is growing in key parts of the state,” said Levine.

California’s exports of manufactured goods totaled $8.93 billion, a nominal 4.2% gain over the $8.57 billion recorded last October. Non-manufactured exports (chiefly agricultural products and raw materials) rose by a nominal 7% from $1.85 billion to $1.98 billion. Meanwhile, re-exports fell by a nominal 12.7% from $3.39 billion to $2.96 billion.

“Even discounting for inflation, exporters of products of California-origin came out ahead in October,” O’Connell said. “Losses came only in the category of those previously imported goods which California businesses profitably re-sell to foreigners.”

On a year-to-date basis, California remains on track to eclipse the total value of last year’s export trade.

Because more detailed data on specific export commodities and their destinations can vary abruptly from month to month for a variety of factors, Beacon Economics’ analysis compares the latest three months with the corresponding period in the preceding year.

That analysis reveals that exports to Mexico and South Korea declined by 13.4% and 11.8%, respectively. More modest drops were evident in exports to China (-3.65%), Japan (-2.9%), and Canada (-2.1%). Gains were recorded in exports to the United Kingdom (2.3%), Australia (4.7%), Brazil (8.5%), France (16.2%), and Chile (34.1%).

There was a significant (17.7%) fall-off in exports of industrial equipment, including computers during the past three months that reflected a softness in the market for personal computers in the face of rising tablet sales. However, the data also show notable gains in exports of fruits and nuts (10.2%), pharmaceutical products (10.2%), and aircraft and aerospace equipment (22.1%).

On a seasonally-adjusted basis, October’s export trade represented a 7.7% increase over September.

“That is a very positive indicator,” O’Connell said.

Looking ahead, one immediate certainty is that November’s export statistics will reflect the effects of the labor strike, which hobbled operations at the Ports of Los Angeles and Long Beach during the last four days of the month. However, with the exception of some perishable cargoes, the delayed shipments will show up in December’s export figures.

Otherwise, the outlook for the winter months is increasingly ambiguous.

Just last Thursday, the European Central Bank sharply reduced its growth forecast for the 17 euro zone countries to 0.3%. Central Bank president Mario Draghi also warned that the euro zone economy could end up shrinking 0.9% next year.

Despite Europe’s tribulations, however, California exports to both the euro zone and the larger European Union increased by around 3% in October over one year earlier.

The latest forecast from the Organization for Economic Co-operation and Development projects Canada’s economy will grow by 1.5% in the final three months of this year, and advance only 1.8% in 2013. That projection is half a point below the Bank of Canada’s official forecast. Canada accounts for nearly 11% of California’s export trade.

The outlook is more optimistic south of the border where the new Mexican government is forecasting a gross domestic product growth of 3.5% in 2013. Mexico is benefiting from a surge in foreign direct investment, especially in the automotive sector. Although Mexico remains California’s leading export market, California shipments to Mexico have been declining sharply in recent months primarily because of a shrinking demand for personal computers. 

Across the Pacific, indications are that China’s economy is once again on an upward swing. China, together with Hong Kong and Macao, currently accounts for 13.4% of California’s merchandise export trade.


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 [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

Exports · Manufacturing · Trade · All Topics
Latest Whitepaper
Reduce Order Processing Costs by 80%
Sales order automation software will seamlessly transform inbound emailed and printed purchase orders into electronic sales orders that can be automatically processed into your ERP system with 100% accuracy.
Download Today!
From the June 2016 Issue
In the wildly unstable ocean cargo carrier arena, three major consortia are fighting for market share, with some players simply hanging on for survival. Meanwhile, shippers may expect deployment shifts as a consequence of the Panama Canal expansion.
WMS Update: What do we need to run a WMS?
Supply Chain Software Convergence: Synchronization Realized
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Optimizing Global Transportation: How NVOCCs Can Use Technology to Operate More Profitably
Global transportation isn't getting any easier to manage, especially for non-vessel operating common carriers (NVOCCs). Faced with uncertainties like surcharges—but needing to remain competitive when bidding against other providers—NVOCCs need the right mix of historical data, data intelligence, and technology support to make quick and effective decisions. During this webcast you'll learn how Bolloré Transport & Logistics was able to streamline its global logistics and automate contract management.
Register Today!
EDITORS' PICKS
Top 50 U.S. and Global 3PLs 2016: Technology Now the Key Differentiator
Following last year’s merger and acquisition frenzy, the speed of technology implementation by the...
Digital Reality Check
Just how close are we to the ideal digital supply network? Not as close as we might like to think....

Top 25 ports: West Coast continues to dominate
The Panama Canal expansion is set for late June and may soon be attracting more inbound vessel calls...
Port of Oakland launches smart phone apps for harbor truckers
Innovation uses Bluetooth, GPS to measure how long drivers wait for cargo