Exports Strengthen California’s Fiscal Rebound

Bolstered by soaring business with Mexico, Canada and several Asian nations, California’s exports of manufactured goods and other products rose 7.7% in last year’s fourth quarter.

Economists said the healthy gain reported Monday signals that the state’s economic recovery packs plenty of momentum and isn’t likely to be derailed even if some key California industries begin to falter.

The product export figures account for about 10% of California’s business activity. They include industries such as computers, agriculture and aerospace, which long have been among the state’s major economic engines. The figures, however, don’t include service businesses such as motion pictures and the red-hot software industry.

California’s fourth-quarter exports amounted to $29.6 billion. They provided the state’s second consecutive quarterly gain after 18 months of declines that stemmed largely from economic tumult in Asia.

For the full year, California’s export total was up 2.36% to $107.4 billion. By comparison, the nation’s gain for 1999 was 1.81%, to $692.8 billion.

Last year’s state exports are the second-highest on record. The peak, achieved in 1997, was $109.5 billion.

Mexico emerged as California’s top export market in 1999, displacing Japan, the longtime No. 1. Last year’s exports to Mexico climbed 11.8% to $14.9 billion. Business with second-place Japan, which is still struggling economically, declined 5.8% to $13.8 billion in 1999.

Other major increases came with third-ranked Canada, and in particular with fourth-ranked South Korea, where the year’s exports soared 51.2% to $6.7 billion.

In recent years, about one-quarter of California’s exports have gone to Europe, while another quarter has headed to Mexico and Canada combined. A big chunk, about 40% of the state’s exports, typically has been shipped to Asia and other Pacific Rim nations, led by Japan.

The main change over the past year has been that “Mexico is picking up the slack from the relatively weak Japanese performance,” said Ted Gibson, chief economist with the state Department of Finance.

“It demonstrates,” he added, “the benefits of our diversity in markets.”

And given the beginning of a rebound in exports to Japan in the fourth quarter, “one of the weak links is starting to come back,” said G.U. Krueger, an economist with the California Assn. of Realtors.

“With the continued strong national economy, where most of our products go, and the recovery in the Pacific Rim, we should do very well this year,” Krueger said.

Gibson said another sign of California’s vigorous economy is that four of the six major categories of export goods tracked by the state finance department showed gains in the fourth quarter.

The biggest category--electronic equipment, which includes computer components and communications gear--was up 12.7% to $8.5 billion.

Next came industrial equipment, including assembled computers, which was up 17.3% to $7.8 billion. The declines came in agriculture and transportation equipment, but Gibson said those sectors, too, show signs of bouncing back.

Gibson noted that the California economy kept growing during 1998 and the first half of 1999 despite declining product exports. As a result, he said, “even if we do get some slowdown in computer services and other areas, the pickup in California exports will help maintain our growth this year.”