MexECON Blog

October Export Rise Confirmed

Mexico's October merchandise trade deficit was unrevised at a seasonally-adjusted $595.2 million, according to a report today from the national statistics agency INEGI.  The October figure was much larger than the unrevised deficit of $108.0 million in September, but it was still narrower than the out-sized deficit of $835.4 million in June.  According to today's report, the value of Mexican exports rose 1.4% in October, but the value of Mexican imports rose 3.3%.  On an unadjusted basis, Mexican exports in October were up 19.8% from the same month one year earlier, while imports were up 24.9%.

Manufactured goods make up the vast majority of Mexican exports, and they were up 20.3% year-over-year in October.  For much of the last year, the rise in Mexican manufacturing exports has come in large part from the auto sector.  In October, however, exports of trucks, autos, and auto parts were only modestly stronger than overall manufacturing exports, and they accounted for less than one-third of the year-over-year increase in all manufacturing exports.  Other manufacturing exports posting strong increases included 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 16.3% year-over-year in October.  On a volume basis, Mexican crude oil exports came in at 1.377 million barrels per day, up 11.2% from October 2009.  On a value basis, the average export price for Mexican crude oil rose to $74.30 per barrel, up 7.9% from one year earlier.  Finally, Mexican agriculture exports in October were up 0.3% year-over-year, though the figure masked big differences among key farm products.  For example, exports of fish and shellfish were up 69.8% year-over-year, and exports of onions and garlic were up 37.7%, but foreign sales of shrimp were down 45.1%, and the value of cucumbers sold abroad was down 29.4%.

Comment:  Mexico's year-over-year export growth has been moderating, as the readings now are being compared with higher base figures one year ago.  In addition, the strong peso is probably having some negative impact.  Most important, however, U.S. demand has been moderating.  Until recently, expectations of continued weakening in the U.S. economy pointed to even slower Mexican export growth going forward.  If the U.S. tax deal announced yesterday is implemented, however, U.S. growth is likely to come in significantly better than is currently anticipated, and that could keep the Mexican export sector growing well.  Nevertheless, the Mexican economic recovery will remain on an uncomfortably narrow base until domestic consumption accelerates further and investment starts to rise again.

Patrick Fearon, CFA
Vice President, Fund Management

                Mexico's Merchandise Exports
               Seasonally Adjusted, Million US$
                             Source:  INEGI
Exports 1010 Revised

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