January 11, 2013 - LOS ANGELES, CALIFORNIA - Weakening demand for personal computers and a port strike in Southern California combined to shrink California's merchandise export trade in November, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
The total value of goods shipped abroad by California businesses in November 2012 totaled $13.33 billion, a nominal decline of 5.3% over the $14.07 billion in exports recorded in the same month in 2011. Adjusting for inflation, the real decline was 7.5%.
Exports of manufactured products in November amounted to $8.25 billion, down by 3.7% from the preceding November's $8.57 billion, while shipments of non-manufactured goods (largely agricultural produce and raw materials) fell by 8.6% from $2.14 billion to $1.96 billion. Re-exports were also off by 7.2%, from $3.36 billion to $3.12 billion.
A strike by the International Longshore and Warehouse Union (ILWU), which shut down ten of 14 container terminals at the Ports of Los Angeles and Long Beach, began the morning of November 27 and was not resolved until the evening of December 4. Regular port operations resumed the following day.
"Between sixteen and seventeen percent of California's merchandise export trade moves through these two ports," said Jock O'Connell, Beacon Economics' international trade adviser. "While shippers certainly incurred financial losses attributable to delays in moving cargo through the two ports, the strike's impact on the state's overall export trade in November is largely an accounting matter. Cargo that didn't sail in November will more than likely turn up in December's export statistics."
On a favorable note, November's export trade represented a 8.1% increase over October on a seasonally-adjusted basis.
Meanwhile, California exporters remained on track to eclipse the total value of 2011's export trade.
Because 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.
The assessment reveals that, while Mexico remains the leading destination of California exports, shipments to Mexico declined by 17.9%. However, the fall-off in trade was principally confined to a decline in exports of computer hardware, a trend that has been underway for the past several months. Exports to Canada, California's second largest foreign market, were off by a comparatively svelte 0.6%.
Declines were also evident with exports to most of the state's Asian trading partners: China (-7.6%), Japan (-5.2%), South Korea (-9.2%). On the other hand, gains were recorded in exports to the Taiwan (+6.5%), Singapore (+11.4%), and Australia (+4.7%).
Perhaps ironically, given the notoriety of the European Union's travails, California exports to the EU's 27 members edged up by a nominal 1.8% in the last three months in comparison to the same period one year earlier.
There was a significant (21.8%) fall-off in exports of industrial equipment, a category which notably includes most computer hardware, that reflected a softness in the market for personal computers in the face of rising popularity of tablets and smartphone sales. However, the data also show notable gains in California exports of aircraft and aerospace equipment (43.7%) and edible fruits and nuts (10.0%).
Looking ahead, one immediate certainty is that December's export statistics will receive a bump as those November exports "lost" during the dock strike at the Ports of Los Angeles and Long Beach make their way overseas and become grist for December's trade statistics.
More generally, prospects for growing export trade in the next quarter are looking more positive.
Europe, while still mired in recession, appears to have finally averted what threatened to become an economic free-fall. And California's overall economic rebound continues to be comparatively strong. "During the second half of 2012, California's recovery outpaced the United States in terms of employment, consumer spending, and even the real estate market," said Beacon Economics' Director of Economic Research Jordan Levine.
Moreover, across the Pacific, evidence continues to mount that China's economy is once again on a robust growth track. Together with Hong Kong and Taiwan, China now accounts for 13.5% of California's export trade. Conversely, California's fourth largest foreign market, Japan, has lately embarked on an effort to weaken the yen, a step that will make California products more expensive for Japanese consumers and businesses.