MexECON Blog

September Export Rise Confirmed

The official statistics agency INEGI confirmed this week that Mexico's September merchandise trade balance swung to a massive deficit of $1.162 billion.  The deficit was the fifth in the last six months, and it was the biggest shortfall since February 2009.  According to the report, Mexican exports rose 0.3% in September, but that reversed only a small part of their revised 3.3% decline in August.  Imports surged 4.4%, after a 4.5% decrease 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 make up the vast majority of Mexico's merchandise exports, and 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:  The failure of Mexican exports to rebound after their pullback in August stands in sharp contrast with the experience in Mexico's domestic economic sectors.  For example, a key report this week showed industrial production rebounded strongly in September after a sharp decline in the midst of the global financial panic during the previous month.  Mexico's year-over-year export growth has now slipped close to 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, Mexican export growth is likely to keep slowing.  It could even turn negative in the coming months.  If the trade sector weakens too much, it would also start to bring down domestic demand.

Patrick Fearon, CFA
Vice President, Fund Management

                     Mexico's Merchandise Exports
                    Seasonally Adjusted, Million US$
                                   Source:  INEGI
Exports 1109 Revised

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