MexECON Blog

November Exports Rise 25.9 Percent YOY

In an initial estimate, Mexico's November merchandise trade balance swung to a seasonally-adjusted surplus of $244.0 million.  In addition, figures for each of the previous four months were revised to show narrower deficits than earlier believed.  According to the report, from the national statistics agency INEGI, Mexican exports rose 2.9% in November, accelerating from a revised increase of 1.7% in October.  Imports rose just 0.1%, slowing from a revised increase of 3.4% in the previous month.  On an unadjusted basis, Mexican exports in November were up 25.9% from the same month one year earlier, while imports were up 25.6%.

Manufactured goods make up the vast majority of Mexican exports, and they were up 25.1% year-over-year in November.  For much of the last year, the rise in Mexican manufacturing exports has come in large part from the auto sector.  In recent months, however, exports of trucks, autos, and auto parts have been only modestly stronger than overall manufacturing exports.  In November, they accounted for less than one-third the year-over-year increase in manufacturing exports.  Other manufacturing exports posting strong increases included steel and metals, plastic and rubber products, home appliances, and industrial equipment.  Petroleum products are the second-most important category of Mexican exports, and they were up 32.2% year-over-year in November.  On a volume basis, Mexican crude oil exports totaled 1.617 million barrels per day, up 32.5% from November 2009.  On a value basis, the average export price for Mexican crude oil rose to $76.79 per barrel, up 6.0% from one year earlier.  Finally, Mexican agriculture exports in November were up 15.4% year-over-year.  Among the agriculture products showing the best gains, foreign sales of fish and shellfish were up 102.3% year-over-year, while foreign sales of cattle were up 46.4%. 

Comment:  In recent months, Mexican export growth has accelerated, and the country's trade deficit has narrowed, in spite of widely-held expectations of slower demand from the United States.  That suggests Mexican competitiveness and U.S. demand may be in somewhat better shape than some observers believe.  In fact, with the recent passage of new U.S. tax cuts and continued stimulus payments, demand from north of the border could easily surprise on the upside during the first half of 2011.  Nevertheless, U.S. inventory rebuilding appears to have been largely completed, and many U.S. stimulus programs are winding down.  Therefore, Mexican exports are likely to slow at some point in the New Year.  Some of that slowing looks like it will be offset by consumer spending.  Yesterday's updated estimate of Mexico's third-quarter economic growth showed accelerating consumption, while other recent reports have shown rising retail sales and generally improved consumer confidence.  However, to fully compensate for the expected easing in foreign trade, Mexican investment still needs to accelerate.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexico's Trade Balance
                         Seasonally Adjusted, Million US$
                                        Source:  INEGI
Trade Balance 1011

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