MexECON Blog

November Export Rise Confirmed

In a report earlier this week, the official statistics agency INEGI said Mexico's November merchandise trade balance swung to a seasonally-adjusted surplus of $242.1 million, slightly lower than the initial estimate of $244.0 million.  In spite of the slight downward revision, the surplus was the first after six straight months of deficits, and it marked the biggest surplus since December 2009.  According to the report, 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 continue to 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 all 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 32.1% 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 a revised $76.75 per barrel, up 5.9% 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:  The move back into surplus for Mexico's trade balance suggests the country's economic rebound has gotten a second wind, even as domestic consumption has started to pick up and investment is showing some signs of renewed increases.  Because new U.S. tax cuts have just started to kick in, the renewed vigor in Mexico's foreign trade could last through much of 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.  At the same time, the Mexican peso has also been appreciating again, making Mexican exports more expensive in the U.S. market.  Mexican exports are therefore likely to slow later in the year.  Continued expansion in Mexican domestic consumption and investment would help make up for moderating trade results.

Patrick Fearon, CFA
Vice President, Fund Management

              Mexican Merchandise Exports
             Seasonally Adjusted, Million US$
                           Source:  INEGI
Exports 1011 Revised

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