California’s export trade faced headwinds in July, but beneath the headline numbers were reasons to remain cautiously upbeat about the growth in international trade, according to an analysis by Beacon Economics of foreign trade data released this morning by the U.S. Commerce Department.
The value of goods shipped abroad by California businesses in the year’s seventh month totaled $13.09 billion, a nominal decrease of 0.5% from the $13.15 billion recorded in July 2011. Adjusted for inflation, the real fall-off was 2.3%. However, growth in the 3-month moving average of exports, a less volatile measure, came in above 5% on a year-over-year basis. This is indeed slower than the double-digit growth rates experienced in 2011, but shows that July’s showing is not a cause for panic.
“With much of Europe in recession and with slowing economic growth in even such relatively healthy foreign markets as China and Mexico, July’s numbers come as no surprise” said Jock O’Connell, Beacon Economics’ International Trade Adviser.
California’s exports of manufactured goods edged up by 0.8% from $8.51 billion last July to $8.58 billion this July. Non-manufactured exports (chiefly raw materials and agricultural products) declined by 5.2% from $1.53 billion to $1.45 billion, while re-exports shrank by 1.9% from $3.11 billion to $3.05 billion.
So far this year, however, California’s exporters continue to exceed (by 3.9%) the inflation-adjusted pace they set in 2008, the peak pre-recession year for the state’s merchandise export trade.
“Serial policy fumbling in Europe lies at the root of the current worldwide march toward malaise,” O’Connell said. “Ever since the eruption of Greece’s sovereign debt crisis three years ago, the inability of European Union leaders to craft a decisive solution to the EU’s fiscal woes has led Europe into recession, roiled financial markets worldwide, and denied vital export opportunities to traders globally.”
“The impact is now being manifested throughout much of the world as an ebbing tide of demand for goods and services is lowering all boats,” O’Connell said. “Even Mexico, California’s single largest export market, has lately seen its economy slowing after several quarters of robust growth.”
Arguably, one piece of good news for the state’s exporters is that the dollar has backed off from its midsummer peak by about 5%, making U.S. products generally less expensive for foreigners to import.