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California's export trade slips again

Published: Friday, Oct. 12, 2012 - 12:00 am | Page 6B

Tepid economic conditions in historically dependable international markets continued to create a drag on California export trade in August.

California businesses shipped goods valued at $13.22 billion in August, down 5 percent from $13.91 billion in August 2011, according to an analysis of Thursday's U.S. Commerce Department trade figures by Beacon Economics, a consulting firm with offices in the Bay Area and Los Angeles. Adjusted for inflation, Beacon said the decline was 7.2 percent.

It was the second straight month that California exports saw a year-over-year decline, although August exports topped July's total of $13.09 billion. July marked the end of a 32-month streak of year-over-year export gains.

"With even our relatively healthier overseas markets turning more sclerotic, August's numbers are hardly surprising," said Jock O'Connell, Beacon's international trade adviser. "It doesn't matter much if you're offering the best products at the most attractive prices. If buyers aren't buying, you're not selling."

Export totals fell across all major segments.

Shipments of manufactured goods, at $8.71 billion, were off by 4.5 percent from a year ago. Non-manufactured exports, chiefly raw materials and agricultural products, declined by 6.8 percent to $1.51 billion; re-exports fell 5 percent to $3 billion.

Still, California remains on pace to exceed inflation-adjusted export numbers of 2008, the peak pre-recession year.

O'Connell said he is guardedly optimistic about the next several months, because, unlike Europe, the economies of key North America trading partners are showing signs of life.

O'Connell said the latest International Monetary Fund report projected Mexico's economic growth at 3.8 percent this year and 3.5 percent in 2013. The IMF forecast 1.9 percent growth in Canada this year and 2 percent next year.

Beacon said Mexico and Canada combined account for 28 percent of California's merchandise export trade.

And China, which takes in nearly 9 percent of California's export trade, is expecting its economy to grow by 7.5 percent this year.

In Europe, however, it's a different ballgame.

"It's definitely not a good omen for Europe when McDonald's feels obliged to cut menu prices in Germany and France," O'Connell said.

On the import side, California took in $32.11 billion in August, down slightly from $32.18 billion in August last year. Some goods entering California go to other states, so exports are considered a more accurate measure of the state's trade health.

Nationally, the U.S. trade deficit widened to $44.2 billion from July to August.

Exports of U.S. goods and services fell 1 percent to $181.3 billion, the lowest level in six months. The Commerce Department said demand for American-made cars and farm goods declined.

Imports fell 0.1 percent to $225.5 billion.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Mark Glover



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