MexECON Blog

June Export Rise Confirmed

In a revised report, the official statistics agency INEGI said Mexico's June merchandise trade balance showed a deficit of $914.1 million after seasonal adjustments, unchanged from the initial estimate.  That was much worse than the revised deficit of $746.8 million in May and a revised surplus of $36.2 million in April.  According to the report, Mexican exports fell 5.2% in June, after a revised decline of 2.6% in May.  The last time the country's exports had fallen for two months in a row was at the end of 2008.  The report also said Mexican imports fell 4.4% in June, marking their first decline since early 2009.  On an unadjusted basis, Mexican exports in June were up 28.8% from the same month one year earlier, while imports were up 29.5%.  Manufactured goods account for the vast majority of Mexico's sales abroad, and Mexican manufactured exports in June were up 36.5% year-over-year, with the increase coming mostly from stronger foreign sales of industrial equipment and autos.  Petroleum products are the second most important category of Mexico's exports, and they were down 7.9% year-over-year in June.  On a volume basis, petroleum exports fell to 1.11 million barrels per day, down 10.2% from June 2009.  The average export price for Mexican oil fell to $67.24 per barrel, but it was up 4.5% from one year earlier.  Finally, Mexican agriculture exports in June were down 7.5% year-over-year.  Several key agricultural exports continued to show year-over-year gains in June, including live cattle (up 27.3%), grapes (up 21.8%), and miscellaneous fruits (up 19.4%).  However, those gains were offset by sharp declines in other categories, such as frozen shrimp (down 92.8%), wheat (down 90.2%), and avocados (down 29.7%).

Comment:  Growing trade deficits and slowing export growth are worrisome signs for the Mexican economy.  To date, the country's economic recovery has stemmed in large part from rising exports to the United States.  Increased sales abroad have prompted stronger industrial activity and hiring.  Now, however, U.S. inventory rebuilding appears to be coming to an end, and consumer and corporate demand north of the border are growing only modestly.  That has raised the risk that Mexico's exports will stall out before other sectors of the economy are growing fast enough to take up the slack.  The renewed increases in the trade deficit also suggest that the peso will likely have a hard time rising much in the near term, and could even come under renewed selling pressure.

Patrick Fearon, CFA
Vice President, Fund Management

                           Mexico's Total Exports
                 Seasonally Adjusted, Million US$
                                   Source:  INEGI
Exports 1006 Revised

0 comment(s) for “June Export Rise Confirmed”

    Leave a Comment