The value of goods exported decreased in 2015 for both the United States and California, but California performed better than the nation, according to newly released foreign trade data from the U.S. Department of Commerce.
A California-specific economic analysis of the department’s data by Beacon Economics, a California consulting firm, found that the value of California’s 2015 merchandise export trade totaled $165.37 billion, a 5% fall-off from the $174.13 billion in exports reported in 2014.
According to the Commerce Department statistics, U.S. exports of goods and services totaled $2.23 trillion in 2015, a 4.8% decrease from 2014. Overall, the United States increased goods exports to 58 international markets, establishing records with 20 global partners, including the United Kingdom, Saudi Arabia, Ireland, and Vietnam. Increased exports to these partners were driven by higher-value products such as civilian aircrafts and pharmaceuticals.
U.S. services exports tallied another record year in 2015, increasing by $5.9 billion from 2014. Many services sectors increased exports in 2015, including other business services; telecommunications, computer and information services; financial services; and travel. Each of these services sectors reached export increases of more than $1 billion.
“Today’s data show that total U.S. services exports set a record for a sixth consecutive year, and goods exports to several major trading partners also eclipsed record levels,” said U.S. Secretary of Commerce Penny Pritzker. “However, we recognize that U.S. exporters faced challenges from slowing global growth. Despite these headwinds, the volume of Made-in-America exports remained relatively unchanged, showing there is a continued demand for U.S. products.
“The Commerce Department is committed to achieving President Obama’s goal to expand U.S. exports and grow our national and local economies while supporting good-paying jobs in communities throughout the United States. Implementing the newly-signed Trans-Pacific Partnership and finalizing negotiations on the Transatlantic Trade and Investment Partnership are critical to achieving this goal.”
The California Chamber of Commerce supports the Trans-Pacific Partnership trade agreement process as an important vehicle for economic integration throughout the Pacific. This regional agreement sets a high standard that will enhance the competitive of the countries that are a part of it, helping facilitate trade and promoting investment between participants in the agreement, increasing their economic growth and development.
Regarding the Transatlantic Trade and Investment Partnership, CalChamber is supportive of Europe and the United States continuing trade talks to deepen the world’s largest trading relationship with a focus on trade and investment initiatives.
In 2015, California exported $165.4 billion to 229 foreign economies. California’s top export markets are: Mexico, Canada, China, Japan and Hong Kong.
Beacon’s analysis shows that California’s exports of manufactured goods in 2015 fell by 5.3% to $106.50 billion from $112.50 billion in 2014. Exports of nonmanufactured goods (chiefly agricultural produce and raw materials) dropped by 11.9% to $19.99 billion from $22.69 billion the previous December. Re-exports meanwhile inched lower by 0.2% to $38.88 billion from $38.94 billion.
“By way of comparison, the value of U.S. merchandise exports in 2015 declined 7.1%, while exports from Texas fell 13.1%. “Not since 2009 have the state’s exports fallen from the previous year,” said Jock O’Connell, international trade adviser for Beacon Economics. “Still, California continues to fare better than most of the nation’s other top five exporting states. Only Washington State’s numbers were less bad.”
Beacon’s analysis goes on to explain that much of the decline in exports was due to prices.
According to Christopher Thornberg, founding partner of Beacon Economics, “The increasingly competitive nature of global markets means that U.S. exports now tend to be priced in the local currencies. So when the dollar appreciates, the nominal value of U.S. exports fall—even though real volumes stay the same.”
Beacon Economics’ analysis finds that some of the fall-off in the dollar value of California’s merchandise exports can be attributed to a decline in commodity prices. For example, almond prices have collapsed by more than 30% in recent months, compounding the impact of a 7.5% drop in the volume of almond exports in December. Beacon Economics’ export price index for California was down by 5.6% in 2015, indicating that the state’s trade was actually flat for the year after adjusting for price changes.
Still, the analysis finds there were some worrying trends at the end of last year. “November’s and December’s declines are not price driven,” said Thornberg. “Rather, the fragile state of the global economy does seem to be having some impact on demand for California produced products.”
State exports in the final month of 2015 totaled $12.83 billion, down 12.9% from the $14.73 billion recorded in December 2014. California exports of manufactured goods in December dropped by 12.7% to $8.33 billion from $9.54 billion one year earlier. Exports of nonmanufactured goods tumbled by 17.7% to $1.49 billion from $1.81 billion the previous December. Re-exports meanwhile declined by 10.8% to $3.01 billion from $3.37 billion.
Beacon’s analysis still finds reason for optimism. While most of the state’s major trading partners continue to experience economic challenges, the dollar has begun giving up some of its value against the currencies of several trading partners, the report states.
Staff Contact: Susanne T. Stirling