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California Exporters Color An Otherwise Gray Economic Picture

October 13, 2011—LOS ANGELES, CALIFORNIA—California exporters recorded another month of brisk double-digit growth in August - the 22nd consecutive month in which the state’s export trade increased on a year-over-year basis.

Goods exported by California businesses in August were valued at $13.91 billion, a nominal gain of 17% over the $11.89 billion reported in the same month last year, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.

The state's gain was slightly larger than the 16.6% year-over-year increase in overall U.S. merchandise exports.

California’s manufactured exports rose 14.6% from $7.96 billion to $9.12 billion, while non-manufactured exports (chiefly raw materials and agricultural products) jumped 27.6% from $1.27 billion to $1.63 billion. Re-exports, meanwhile, were up 19.2% from $2.95 billion to $3.16 billion.

On a seasonally-adjusted basis, California’s export trade in August was up marginally over July.

“Adjusting for inflation, we are firmly operating at pre-recession levels of exporting,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.

"This is great news for the California economy," added Christopher Thornberg, Beacon Economics' Founding Partner. "One of the reasons the state suffered more than most during the recent downturn was its exposure to the collapse in exports in business and consumer products. Expanding exports has helped stabilize the economy despite ongoing issues in construction and domestic business investments."

Still, while Beacon Economics expects continued gains in California’s export trade through the remainder of the year, it warns that the rate of growth is likely to be more modest.

“We will continue to see growth in exports, just not as robustly as we might like,” O’Connell said.

One reason is that many of the state’s leading trading partners have been throttling back on private consumption and public expenditure. Europe’s sovereign debt crisis also clouds the outlook.

“Europe’s leaders have been displaying all of the resolve of Hamlet in a financial drama that has gone on for way too many acts,” O’Connell said. “Even though less than one-fifth of California’s export trade involves European nations, this issue plagues the global financial system.”

One result has been a lately resurgent dollar.

“With the euro under siege, the greenback has gained appreciably in value since the end of August,” O’Connell observed. “That may be good news for U.S. importers and for American tourists travelling overseas, but it does tend to constrain our export trade by making our goods more expensive in foreign markets.”

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