MexECON Blog

July Exports Rise 29.5 Percent YOY

In a preliminary report, Mexico's July merchandise trade deficit narrowed to a seasonally-adjusted $380.9 million, significantly better than the revised deficits of $867.5 million in June and $772.2 million in May.  According to the report, Mexican exports rose 4.2% in July, after two straight months of declines.  Imports rose 2.1%, after falling sharply the previous month.  On an unadjusted basis, Mexican exports in July were up 29.5% from the same month one year earlier, while imports were up 26.5%.

Manufactured goods make up the vast majority of Mexican exports, and they were up 32.1% year-over-year in July.  That rise stemmed primarily from big increases in the value of exported metal goods, industrial equipment, and autos.  Petroleum products are the second most important category of Mexico's exports, and they were up 17.1% year-over-year in July.  On a volume basis, Mexican petroleum exports rose to 1.386 million barrels per day, up 6.0% from July 2009.  The average export price for Mexican oil rose to $68.26 per barrel, up 12.0% from one year earlier.  Finally, Mexican agriculture exports in July were up 19.2% year-over-year.  The rise in agricultural exports came in large part from a 64.8% increase in the value of tomato exports and a 42.0% rise in cattle exports.

Comment:  Mexico's narrower trade deficit in July suggests the country's strong economic growth during the second quarter may be carrying over into the third quarter as well.  That is a welcome development, given that a pullback in some indicators during late spring and early summer had suggested the Mexican economic recovery might be slowing.  Continuing growth in exports are key for Mexico, given that strong sales abroad over the last year have spurred industrial activity and helped bring down unemployment.  Mexican auto exports have been particularly strong (up 64.5% year-over-year in July), which is consistent with other data showing a continuing recovery in the U.S. auto market.  Nevertheless, if U.S. inventory rebuilding peters out and U.S. corporate and consumer demand fail to accelerate soon, Mexican exports could stall out before other sectors of the economy are growing fast enough to take up the slack.

Patrick Fearon, CFA
Vice President, Fund Management

                                    Mexican Trade Balance
                            Seasonally Adjusted, Million US$
                                          Source:  INEGI
Trade Balance 1007

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