MexECON Blog

September Exports Rise 13.7 Percent YOY

In an initial estimate, Mexico's September merchandise trade balance swung to a massive deficit of $1.162 billion.  The deficit in September was the fifth in the last six months, but most of the recent deficits were much more modest.  The deficit in September was several times larger than the recent deficits, and it was the biggest shortfall since February 2009.  According to the report, from the official statistics agency INEGI, Mexican exports rose 0.3% in September, reversing only a small part of their revised 3.3% decline in August.  Imports surged 4.4%, after a 4.5% decrease in the previous month.  On an unadjusted basis, Mexican exports in September were up 13.7% from the same month one year earlier, while imports were up 18.5%.

Manufactured goods continue to make up the vast majority of Mexico's merchandise exports.  In September, they were up just 9.1% year-over-year.  The major manufacturing categories showing the strongest export growth in September were steel and metal products, chemicals, plastics, and autos and auto parts.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 31.8% year-over-year in September.  On a volume basis, Mexican crude oil exports totaled 1.242 million barrels per day, down 7.1% from September 2010.  On a value basis, however, the average export price for Mexican crude was $100.31 per barrel, up 42.7% from one year earlier.  Finally, Mexican agriculture exports in September were up 50.5% year-over-year.  Among the agricultural products showing the strongest gains, pepper exports were up 136.0% year-over-year, while coffee exports were up 111.7% and tomato exports were up 84.5%.

Comment:  It is disconcerting to see Mexico's trade deficit widen to its worst level in more than two and a half years.  It is particularly worrying that exports showed very little rebound from their sharp decline in August.  The fall in August came in the midst of a generalized panic about slowing growth in the developed countries and extreme volatility in the world's financial markets.  Since then, incoming data from a number of countries has been somewhat more promising, and better reports on manufacturing suggested Mexico might have seen rebounding demand for its products.  Those hopes have now been dashed.  Mexico's year-over-year export growth has slipped into the single digits after gains of 20%, 30%, or more in the earlier stages of the current recovery.  With foreign demand likely to remain in the doldrums for some time, Mexican export growth is likely to keep slowing, and it could even turn negative in the coming months.

Patrick Fearon, CFA
Vice President, Fund Management

                                   Mexico's Merchandise Trade Balance
                                        Seasonally Adjusted, Million US$
                                                       Source:  INEGI
Trade Balance 1109

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