MexECON Blog

August Export Rise Confirmed

INEGI, the official statistics agency, today confirmed that Mexico's August merchandise trade balance swung to a seasonally-adjusted surplus of $71.1 million, after four straight months of deficits.  According to the report, Mexican exports dropped 3.2% in August, following a flat reading the previous month and modest gains in the two months before that.  Imports plunged 4.3%, after four straight monthly increases.  On an unadjusted basis, Mexican exports in August were up 17.0% from the same month one year earlier, while imports were up 16.9%.

Manufactured goods make up the vast majority of Mexico's merchandise exports.  In August, they were up 11.7% year-over-year.  The major manufacturing categories showing the strongest export growth in August were steel and metal products, chemicals, and plastics.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 41.4% year-over-year in August.  On a volume basis, Mexican crude oil exports totaled 1.44 million barrels per day, up 6.6% from August 2010.  On a value basis, the average export price for Mexican crude was $98.63 per barrel, up 41.3% from one year earlier.  Finally, Mexican agriculture exports in August were up 52.6% year-over-year.  Rising global demand and recent poor harvests in many countries continue to keep coffee prices near 15-year highs.  As a result, Mexican coffee exports in August were up a whopping 170.7% year-over-year.  Other agricultural products showing strong gains were avocados (up 85.0%), mangoes (up 73.8%), and tomatoes (up 58.7%).

Comment:  The sharp decline in exports and imports during August is a reminder that a continued slowdown in economic growth abroad would probably have a significant negative impact on Mexico's international trade.  Incoming data from the United States and other developed economies suggest they could avoid a renewed recession.  For example, U.S. payroll growth in September and German exports in August were better than anticipated.  Nevertheless, the key developed economies are not out of the woods yet, and Mexican exports remain at risk of further slowing in the coming months, in spite of the recent plunge in the value of the peso.

Patrick Fearon, CFA
Vice President, Fund Management

                     Mexico's Merchandise Exports
                    Seasonally Adjusted, Million US$
                                   Source:  INEGI
Exports 1108 Revised

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