MexECON Blog

December Export Rise Confirmed

In a report last week from INEGI, the official statistics agency, Mexico's December merchandise trade balance was revised to a seasonally-adjusted surplus of $202.7 million, slightly better than the initial estimate.  The November surplus was also revised slightly higher to $262.0 million.  As discussed in this blog at the release of the initial estimate, it was the first time Mexico had two straight months of trade surpluses since mid-1997.  The report showed Mexican exports rose 2.3% in December, after a rise of 3.2% in November.  Imports rose 2.6% in December, after an increase of just 0.3% in November.  On an unadjusted basis, Mexican exports in December were up 16.4% from the same month one year earlier, while imports were up 17.0%.

Manufactured goods make up the vast majority of Mexican exports, and they were up 15.1% year-over-year in December.  Throughout 2010, autos and auto parts had been the main driver of Mexican manufacturing exports, but in December, the auto category was up little more than manufacturing exports in general.  The major manufacturing categories with the strongest export growth were steel and metals, industrial equipment, and foods and beverages.  Petroleum products are the second-most important category of Mexican exports, and they were up 25.6% year-over-year in December.  On a volume basis, Mexican crude oil exports totaled 1.501 million barrels per day, up 16.5% from December 2009.  On a value basis, the average export price for Mexican crude oil rose to $81.46 per barrel, up 16.7% from one year earlier.  Finally, Mexican agriculture exports in December were up 1.5% year-over-year.  Among the agricultural products showing the best gains, foreign sales of fish and shellfish were up 62.5% year-over-year, while foreign sales of avocados were up 41.9%.  Among the agricultural products showing the weakest performances, exports of wheat were down 89.9% and exports of corn were down 74.9%.

Comment:  The strong rise in Mexican exports is by now well appreciated by a wide array of analysts.  What is just starting to get more attention is the risk posed by the strengthening peso.  Several top Mexican officials have downplayed the risk from the "super peso," but at some point, the expensive currency is likely to weigh on the country's foreign trade.  Fortunately, Mexico's domestic demand is starting to reawaken, which should give it some cushion to absorb any peso-induced slowdown in foreign sales.

Patrick Fearon, CFA
Vice President, Fund Management

        Mexican Merchandise Exports
       Seasonally Adjusted, Million US$
                       Source:  INEGI
Exports 1012

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