California’s merchandise export trade had an exceptionally strong showing in February, although merchandise imports pulled back in the latest numbers, according to a recent Beacon Economics trade report.
Beacon’s analysis of recent U.S. trade statistics released by the U.S. Census Bureau found foreign shipments by California businesses totaled $13.46 billion for the month, a robust 11.0% increase over the $12.13 billion recorded in February 2016.
The state’s exports of manufactured goods in February rose by 15.4% to $8.91 billion from $7.72 billion one year earlier. Exports of nonmanufactured goods (chiefly agricultural products and raw materials) increased 7.5% to $1.57 billion from $1.46 billion. Re-exports, meanwhile, edged up 1.0% to $2.98 billion from $2.95 billion.
By way of comparison, the nominal value of overall U.S. merchandise exports in February rose 4.9%. California accounted for 11.3 % of the nation’s overall merchandise export trade.
The gains were reflected in the increased volume of outbound traffic at the state’s principal international trade gateways. Airborne export tonnage from LAX and SFO was up 19.8% from last February, while the number of outbound loaded containers sailing from the ports of Los Angeles, Long Beach, and Oakland rose by 2.2% over February 2016.
California Imports Fall
The U.S. Department of Commerce has determined that California was the state-of-destination for 18.2% of all U.S. merchandise imports in February, with a value of $29.68 billion, down 5.5% from the $31.41 billion in imported goods in February 2016. Manufactured imports totaled $26.34 billion, a decline of 8.3% from $28.71 billion last year. Nonmanufactured imports in February were valued at $3.35 billion, 24.13% higher than the $2.70 billion recorded a year earlier.
A Closer Look At The Numbers
As always, Beacon Economics cautions against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations can occur as the result of unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., December-February) with the corresponding period one year earlier.
California’s merchandise exports during the latest three-month period totaled $40.77 billion, a nominal gain of 10.4% over the $36.94 billion in the earlier period. Nine of the 10 leading categories of exports saw increases. On the plus side, the top export category of computer and electronic products (computers and peripherals; communication, audio, and video equipment; navigational controls; and electro-medical instruments) grew by 0.1% to $9.89 billion from $9.88 billion.
The state’s exports of transportation equipment (automobiles, trucks, trains, boats, airplanes, and their parts) leapt by 24.8% to $5.07 billion from $4.06 billion. Exports of nonelectrical machinery (machinery for industrial, agricultural and construction uses as well as ventilation, heating, and air conditioning equipment) likewise soared by 26.2% to $3.99 billion from $3.16 billion. Exports of miscellaneous manufactured commodities (a catchall category of merchandise ranging from medical equipment to sporting goods) jumped 6.1% to $3.18 billion from $3.0 billion.
Agricultural exports were up 2.2% to $3.0 billion from $2.94 billion, while foreign shipments of food and kindred goods rose 4.4% to $2.12 billion from $2.03 billion. Exports of electrical equipment and appliances nudged up 4.8% to $1.75 billion from $1.67 billion, while exports of primary metal manufacturing products were 59.7% higher at $1.71 billion from 1.07 billion.
On the downside, chemical exports (including pesticides and fertilizers; pharmaceutical products; paints and adhesives; soap and cleaning products; and raw plastics, resins, and rubber) slipped by 1.5% to $3.03 billion from $3.08 billion.
Mexico remained California’s most important export destination during the last three months, despite sharp gyrations in the value of the peso. Shipments south of the border rose 3.9% to $6.17 billion from $6.04 billion. Exports to China jumped 26.4% to $3.97 billion from $3.14 billion. In third place was Canada (until recently California’s second leading export destination) with $3.63 billion in exports, off 1.9% from $3.70 billion one year earlier. With a major recent surge, Hong Kong moved into the fourth place with $3.41 billion in exports from California, up 52.3% from $2.24 billion. Japan, up 11.2% to $2.99 billion from $2.69 billion, rounded out the list of California’s Top Five export markets.
The state’s export trade with the economies of East Asia increased 23.3% to $16.08 billion from $13.04 billion. By contrast, California’s exports to the European Union moved up by just 5.4% to $7.26 billion from $6.89 billion.
Mexico and Canada, U.S. partners in the North American Free Trade Area, accounted for 24.1% of California’s merchandise export trade in the latest three-month period. Exports to our two neighbors rose a combined 1.7% to $9.81 billion from $9.65 a year earlier. By mode of transport, 47.8% of the state’s $40.77 billion merchandise export trade during the most recent three months went by air, while waterborne transport carried 30.9%. The balance traveled overland to Canada and Mexico.
Per Beacon Economics, economic conditions abroad are looking increasingly more favorable for California exporters. Prospects for growth in both Mexico and Canada are improving, and the peso has been recovering since falling to a record low against the dollar around the time of Donald Trump’s inauguration. Despite a litany of challenges, the European Union’s outlook is also brightening. And China’s economy is growing at rates that, while slower than in recent years, are still much higher than most anywhere else.
Staff Contact: Susanne T. Stirling