But Shrinking Public Sector Spending May Dampen Overseas Demand For State's Goods
July 13, 2010—SAN RAFAEL, CALIFORNIA—California's merchandise export trade in May showed an impressive 25.7% gain over May of last year, but still fell well shy of export levels recorded two years ago.
The $11.9 billion in goods shipped abroad this May easily exceeded the $9.5 billion the state's exporters sent to foreign markets in May 2009, according to an analysis by Beacon Economics of international trade data released this morning by the U.S. Commerce Department.
May marked the seventh consecutive month of year-over-year increases in California's export trade, according to Jock O'Connell, Beacon's International Trade Adviser.
"While we should definitely celebrate a $2.4 billion increase in exports over last May, we still have a ways to go before reaching the levels of trade seen before the onset of the global economic and financial crisis," he said.
In inflation-adjusted terms, California's export trade in May 2010 was 7.3% below the value of exports reported in May 2008, he noted.
California's exports of manufactured products in May 2010 were up by 25.5% from last May, while shipments of agricultural goods and other non-manufactured products increased by 16.5%. Re-exports of previously imported items jumped by 32.2%.
May's rise in the state's export trade was reflected at most of California's major international trade gateways. The number of loaded shipping containers leaving the Ports of Los Angeles and Long Beach were up by 9.4% over last year. Export growth through the Port of Oakland was more sluggish, with the number of outbound, loaded shipping containers edging up by just 4.5% from last May's totals.
At the state's two primary international airports, export tonnage in May rose by 20% at Los Angeles International and by 48.7% at San Francisco International. Historically, the two airports have accounted for just over half of California's exports in dollar terms.
"That huge jump in exports through SFO was primarily indicative of a sharp increase in shipments of high-value electronics products by Silicon Valley firms," O'Connell observed.
California accounted for 11.3% of all U.S. merchandise exports in May.
On the import side of the ledger, the U.S. Commerce Department reports that California's merchandise import trade totaled $26.8 billion in May, an increase of 29.9% over last May ($20.6 billion).
California accounted for 17.2% of all U.S. merchandise imports in May.
California's nominal international trade deficit in May amounted to $14.8 billion.
Despite all the increases, the outlook for sustained strong growth in trade is less encouraging now than it had been earlier in the year, O'Connell cautioned. He specifically expressed concern that the decisions taken at the recent G-20 summit in Toronto to shrink public sector spending will dampen overseas demand for California products through the rest of this year.
"The deficit hawks have been gaining the upper-hand in charting fiscal policy in almost every major world economy," he said. "As a result, no one is forecasting robust economic growth. Instead, there is a general sense that the tide is going out as we move into a period of slackening demand with the timidity of the private sector now being matched by the austerity of governments worldwide."
Detailed data on California's international trade may be found here.