November 10, 2011 - LOS ANGLES, CALIFORNIA - California exporters recorded yet another month of vigorous growth in September, the 23rd consecutive month in which the state’s export trade has increased on a year-over-year basis.
The value of merchandise California businesses shipped abroad in September totaled $13.49 billion, a nominal gain of 9.5% over the $12.32 billion reported last September, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
The state’s exports of manufactured goods edged up 3.2% from $8.31 billion to $8.58 billion, while non-manufactured exports (chiefly raw materials and agricultural products) jumped 21.0% from $1.38 billion to $1.67 billion. Re-exports, meanwhile, rose by 22.8% from $2.63 billion to $3.23 billion.
“Adjusting for inflation, we are on a pace to see the best year ever for California exports,” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
And expanding export trade provides a boost for California’s larger economy. "The state has shown surprising economic strength in recent months including job growth that has totaled 1.8% over the year, rising taxable sales, and falling industrial vacancies," said Beacon Economics' Founding Partner Christopher Thornberg. "This can be traced back in part to the strength of the export boom."
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 apt to slow.
A possible harbinger of that trend could seen in a slight 1.5% fall-off in the seasonally-adjusted value of California’s exports from August to September, although Beacon Economics advises against reading too much into monthly variations in the data.
“Make no mistake: There will be growth in California exports, but just not at the pace we might prefer,” O’Connell said.
The principal reason for decelerating growth is the recent increase in the value of the dollar, which can be traced back to the European financial crisis. While Europe is not a major trading partner for California (far below Mexico, Canada, and Asia), it has a direct impact on the competitiveness of locally produced products through the exchange rate, according to Thornberg. "If Europe's efforts keep moving in the right direction, expect the dollar to fall back to its previous levels," he said.
On the import side of the ledger, it is becoming increasingly evident that U.S. retailers intend to keep inventories tight this holiday season.
California’s three major seaports, which together handle about 40% of the nation's containerized trade, saw 4.1% fewer inbound containers in September than they had a year earlier, while import tonnage at the state’s two principal international airports was down by 13.0% over the same period.
“With the National Retail Federation forecasting lower volumes of containerized imports in October and November, shoppers should probably not count on the drastic holiday discounting of the last couple of years,” O’Connell warned.