MexECON Blog

October Export Rise Confirmed

In a report on Friday, Mexico's October merchandise trade deficit was unrevised at $450.8 million.  The deficit was substantially smaller than the revised September deficit of $1.053 billion, but it was still larger than the August deficit of $115.2 million.  According to the report, from the official statistics agency INEGI, Mexican exports rose 0.3% in October, after a revised 0.2% gain in September.  Imports dropped 1.7%, after a 3.5% increase in the previous month.  On an unadjusted basis, Mexican exports in October were up 13.4% from the same month one year earlier, while imports were up 11.9%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in October, they were up 9.7% year-over-year.  The major manufacturing categories showing the strongest export growth in October were steel and metal products, chemicals, plastics, and industrial equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 32.0% year-over-year in October.  On a volume basis, Mexican crude oil exports totaled 1.375 million barrels per day, down 0.1% from October 2010.  On a value basis, however, the average export price for Mexican crude was $101.27 per barrel, up 35.6% from one year earlier.  Finally, Mexican agriculture exports in October were up 49.1% year-over-year.  Coffee exports were up 473.8% from one year ago, reflecting the continuing strong coffee market.  Among the other agricultural products showing good gains, avocado exports were up 115.9% year-over-year, while tomato exports were up 72.7%.

Comment:  The good news in the October report is that Mexican exports continue to rise in spite of the global economic uncertainty this fall.  Mexico's export performance in October was a virtual mirror image of its performance in September.  This resilience comes on top of other recent reports showing Mexico's domestic demand still has significant momentum.  Finally, with presidential elections coming up in 2012, it is likely that fiscal policy will be loosened soon, and there has been speculation that Banco de México will cut interest rates.  These developments all suggest Mexican economic growth may hold up better than expected as growth abroad slows.  Risks remain weighted to the downside, but the Mexican economy could surprise to the upside.

Patrick Fearon, CFA
Vice President, Fund Management

Mexico's Merchandise Exports
Seasonally Adjusted, Million US$
Source:  INEGI
Exports 1110 Revised

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