MexECON Blog

May Export Rise Confirmed

In a revised report, the official statistics agency INEGI said Mexico's May merchandise trade balance worsened to a seasonally-adjusted deficit of $752.2 million, virtually unchanged from the initial estimate.  In April, the trade balance had posted a revised surplus of $140.8 million.  According to today's report, Mexican exports fell 2.7% in May, marking their first significant decline in twelve months.  Imports rose 0.8%, marking their twelfth straight increase.  In unadjusted terms, Mexico's exports in May were up 43.9% from the same month one year earlier, while imports were up 46.7%.  Manufactured goods make up the vast majority of Mexican exports, and they were up 41.9% year-over-year in May, with the increase coming mostly from metal products, industrial equipment, and autos.  Petroleum products are the second most important category of Mexico's exports, and they were up 58.8% year-over-year.  On a volume basis, Mexican petroleum exports yet again bucked their recent trend by rising to 1.591 million barrels per day, up 35.6% from May 2009.  The average price for Mexican oil fell to $68.30 in May, but that was still up 21.0% from one year earlier.  Mexican agriculture exports in May were up 21.3% year-over-year.  That increase came in large part from a 63.9% rise in the value of Mexico's tomato exports, a 61.2% increase in cattle exports, and a 57.2% increase in miscellaneous fruit exports.

Comment:  Mexico's move to a trade deficit should be no surprise.  Mexico relies heavily on imported intermediate goods and, to a lesser extent, on imported raw materials.  Therefore, when Mexican exports are in a strong uptrend, as they have generally been over the last year, imports also start rising and eventually total even more than the exports.  Nevertheless, the renewed trade deficit in May bears watching because other recent data suggest Mexico's economic recovery is hitting a speed bump.  For example, unemployment has started rising again, and it is almost back up to this cycle's peak.  On balance, however, Mexico's economic recovery still looks more likely to continue than to peter out.

Patrick Fearon, CFA
Vice President, Fund Management

                          Mexico's Total Exports
                  Seasonally Adjusted, Million US$
                                   Source:  INEGI
Exports 1005 Revised

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