L.A. District Shows Strong Increase in Export Volume.

The volume of exports leaving local ports is ramping up, even as the national economy is cooling down, according to statistics released last week.

"It's another piece of evidence that things are not cooling down here," said Tom Lieser, senior economist with the UCLA Anderson Forecast. "It's an indication that California... will be an exception to what we see elsewhere in the U.S."

For the first eight months of this year, exports out of the Los Angeles Customs District, which extends north to Monterey Bay and east to Las Vegas, totaled $49.8 billion, up 16.7 percent over the same period last year.

The surge is a dramatic reversal from recent years past, when Asia was grappling with its financial crises. For example, export growth in the first eight months of 1999 was a mere 1.6 percent over the same period of 1998. And in the 1998 period, local exports actually fell by 14.8 percent.

The strong increases in exports through LAX, as well as the seaports of L.A. and Long Beach, indicate that overseas demand for California-made high-tech products might very well compensate for any softening of domestic demand for these goods.

This scenario is supported by the Federal Reserve Bank's survey of regional economic conditions, published in the so-called "beige book" released last week. The Fed reported that the 12th District, which includes California, and the New York district were the only two districts showing solid economic growth in September and early October, whereas other parts of the country were showing slow or modest growth.

One of the key factors in the continuing strong economic performance in California is the increase in overseas shipments of high-tech products. This is primarily driven by the rebounding Asian economies, although the European Union and NAFTA trade partners are also showing substantial year-over-year increases.

Regional breakouts

During the first half of this year (the latest available data for California by trading region), exports to East Asia were up 25.8 percent year over year. To NAFTA partners, exports were up 23.1 percent; and to European Union countries by 19.9 percent.

"There has been a particularly strong increase in demand from Asia for high-tech products," said Richard O'Brian, corporate economist with Hewlett-Packard Co. in Palo Alto, which derives about half of its total sales from overseas customers. "The U.S. is still the biggest single market, but you can expect that strong growth in the major overseas markets is going to offset a modest slowdown in the U.S."

The value of shipments to Japan, the second-largest market for California exports, after Mexico, was up by 18.3 percent during the first half of this year, and exports to Korea, the fourth-largest market for California goods, were up by 53.9 percent.

Because the export numbers are based on where the goods leave the country rather than where they originate, the Los Angeles Customs District will tally up many more exports than just those export products that are produced by local manufacturers.

Shipments from all over the Southwestern United States tend to pass through L.A. because both the largest container ports and the largest cargo airport in the U.S. are located here.

Still, it is a fair assumption, given that Los Angeles is also the largest manufacturing center in the U.S., that a substantial part of the increase in exports originates here.