Total Shipments Dip for State Despite Asia
California’s exports to Asia showed modest signs of recovery early this year, but shipments to the region still fell short of year-ago levels. And this time, Europe and Mexico failed to provide a buffer.
The value of California’s total exports in the first quarter fell 7% from the same period a year ago, to $24.8 billion, according to data released Friday by the Massachusetts Institute for Social and Economic Research. That compares with a drop of 6% in the fourth quarter and a 4% decline in California exports for all of last year.
But the picture improved in Asia, home to almost half of California’s exported goods. Economists said the data suggest that the worst of the Asian crisis is over, although Japan remains mired in recession.
The biggest improvement came in South Korea, where California businesses saw a 44% jump in shipments in the first quarter--a remarkable comeback after last year, when South Korea-bound exports plunged by almost 40%.
California’s exports to Japan, the state’s top trade partner, dropped an additional 10% to $3.6 billion. That was still a smaller decline than recent quarters. Overall, the state’s exports to Asia declined 6% in the first quarter versus a year ago, a significantly slower falloff than the 18% recorded in the fourth quarter.
Yet now that Asia is beginning to recover, California’s exports are being dragged down by economically weak Europe, which for the last two years had been a strong growth market and softened the blow in Asia.
The state’s shipments to the European Union declined by 8% in the first quarter, to $5.1 billion. Exports to the Britain, Germany and the Netherlands--the top three markets--all fell notably after good gains last year.
The emerging-markets crisis in Russia, overexposure to bad loans, the weak euro currency and other factors have contributed to the slowdown in parts of Europe, said Sheldon Engler, a Europe specialist at the San Francisco economic consulting firm of Engler & Davis.
European economists have been downgrading their forecasts for growth this year to 2%, with weakness in Germany of particular concern. Ironically, a falloff in exports to Asia last year helped sow the seeds for Europe’s sluggishness. But recent interest-rate cuts and Asia’s recovery are seen as improving Europe’s outlook.
“I wouldn’t expect a big push from Europe for California [exports] in the short term,” Engler said. But, he added, “We’ll see a mild turnaround in the rest of the year.”
California’s shipments to Mexico, the state’s No. 2 export market last year, dipped 4% in the first quarter. It was the second straight quarter of declines, after several years of exceptional growth. Analysts said the declines reflected the recent slowdown in Mexico’s growth, but most remained bullish.
By industry, exports of electronic equipment dropped 6% in the first quarter, as did transportation equipment. Industrial machinery and computers declined by 10%. Those three categories account for almost two-thirds of California’s exports. Farm goods fell by 12%. Fabricated metal products and rubber products were the only two major industries that saw a healthy rebound in exports.
California’s exports account for more than 10% of the state’s economic output. It is the nation’s largest exporter.
For the nation, exports dropped 4% in the first quarter, the Massachusetts research firm said.
