MexECON Blog

September Export Rise Confirmed

In a new report from INEGI, the national statistics agency, Mexico's September merchandise trade deficit was revised to a seasonally-adjusted $87.5 million, versus $87.3 million in the original estimate.  In spite of the slight upward revision, the figure was still much better than the revised deficits of $238.4 million in August, $314.8 million in July, and $828.2 million in June.  According to the report, the value of Mexican exports fell 0.8% in September, but the value of imports dropped 1.4%.  On an unadjusted basis, Mexican exports in September were up 20.8% from the same month one year earlier, while imports were up 18.5%.

Manufactured goods make up the vast majority of Mexico's exports, and they were up 21.6% year-over-year in September.  Continuing a pattern seen throughout Mexico's current economic recovery, almost two-fifths of the increase in manufactured exports over the last year came from increased exports of trucks, autos, and auto parts.  Those exports alone were up 35.1% in the year to September.  Other manufactured exports posting substantial increases were steel and metal products, food and beverages, and industrial equipment.  Petroleum products are the second-most important category of Mexican exports, and they were up 18.0% year-over-year in September.  Within the petroleum products category, the volume of Mexican crude oil exports came in at 1.337 million barrels per day, up 18.5% from September 2009.  The average export price for Mexican crude oil rose to $69.90 per barrel, up 8.0% from one year earlier.  Finally, Mexican agriculture exports in September were down 7.7% year-over-year, with the decline primarily reflecting lower foreign sales of produce items, such as bell peppers, cucumbers, avocados, and melons.

Comment:  Mexican export growth has slowed from the on-year increases of 40% or more that were common earlier this year, but that was to be expected simply because exports are now being compared to much higher base figures.  The key fact is that the trade deficit has now narrowed for three straight months.  That should help support third-quarter economic growth, and it should give additional upward momentum to the peso.  Nevertheless, Mexico's current economic rebound continues to be narrowly focused on rising exports to the United States, and its reliance on higher sales of autos and auto parts is particularly worrying.  If U.S. growth continues to slow in response to waning fiscal stimulus, the completion of inventory rebuilding, and continued deleveraging by consumers, Mexican exports could soften or even stall.  The Mexican recovery will not be on a truly firm base until the country's consumer spending accelerates further and investment starts to rise again.

Patrick Fearon, CFA
Vice President, Fund Management

                          Mexican Exports
            Seasonally Adjusted, Million US$
                            Source:  INEGI
Exports 1009 Revised

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