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California export trade continues to grow

by Chris Hinyub, published

California continues to buck the national export trend with May marking the 19th consecutive month of growth for the state. This according to an analysis of new U.S. Commerce Department figures by Beacon Economics. Their report indicates that international trade will continue to furnish the state with a much needed economic boost amid weak job growth.


The total value of merchandise shipped out of California for the month of May reached $13.2 billion, a 10.5 percent increase from May 2010. Growth in the manufactured goods sector was 6.1 percent year-over-year. But it was non-manufactured exports including farm products and raw materials that really shined, rising 24.2 percent from last year.


     “Adjusting for inflation, California’s export trade is as robust as it was prior to the recession,” said Jock O’Connell, Beacon Economics’ International Trade Adviser in his monthly California Trade Report.


Beacon analysts attribute the gains to a weak dollar (cheapening exports and raising demand) and a reprieve from rising oil prices. But according to Susan Corrales-Diaz, chair of the California Chamber of Commerce Council for International Trade, federal policy and a push for new free trade agreements (FTA's) have also helped California achieve its top spot among US exporters.


In his 2010 State of the Union Address, President Obama called for a National Export Initiative to increase access to export markets for businesses, small and large. A subsequent executive order directed the U.S. Commerce Department, the Office of the U.S. Trade Representative, the U.S. Small Business Administration, the Export-Import Bank and other federal agencies to increase export promotion and develop strategies to help more Americans succeed financially through trade. The President's goal was to double U.S. exports and create 2 million new jobs in 5 years.


U.S. Trade Representative Ron Kirk offered a status report on the initiative when he addressed the International Trade Association in April:


     “We are working to meet President Obama’s National Export Initiative goal of doubling exports by the end of 2014. I’m pleased to report our efforts are getting results. Exports were up 17 percent last year. Increased exports have contributed to 13 straight months of overall private sector job growth, which has added a total of 1.8 million overall private sector jobs.”


However, not all of the Commerce Department data was reassuring. Nationally, a spike in oil imports resulted in a sharp rise in the U.S. trade deficit in May. April to May saw the largest trade imbalance in over two and half years. The deficit increased 15.1 percent (to $50.2 billion) during that month. Total U.S. exports stood at $174.9 billion in May, a decrease of 0.5 percent from April.


On the import side of things, shipments of goods into California in May totaled $28.72 billion, increasing more than 7 percent from May 2010. U.S. imports were up 2.6 percent from April, totaling $225.1 billion.


While over-reliance on the import trade can lead to detrimental deficits for most states, O'Connell reminds us that California is the primary gateway to the Pacific Rim. The Golden State acts as a distribution center for many of these products, providing economic benefits to the state:


     “As much as we might like to reduce our dependence on imported goods, it’s worth emphasizing that moving imported goods to markets throughout the nation represents a vital source of jobs -- many of them well-paying -- in a state where unemployment rates remain perilously high,” O'Connell said.

In 2010, California exported $143 billion worth of goods to 226 foreign economies. This is $23 billion more than it delivered in 2009. It remains among the top exporting states, accounting for nearly 11 percent of the nation's total exports.


Beacon forecasters say that California’s export trade will continue to experience sustained growth especially in the latter half of the year when the pace of foreign trade generally increases.

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