MexECON Blog

January Exports Rise 28.2 Percent YOY

In an initial estimate, Mexico's January merchandise trade balance showed a seasonally-adjusted surplus of $239.2 million, after revised surpluses of $139.1 million in December and $210.9 million in November.  It was the first time Mexico's exports had exceeded its imports for three straight months since a string of surpluses from February 1995 to June 1997.  According to the report, from the official statistics agency INEGI, Mexican exports rose 3.7% in January, accelerating from a revised increase of 2.5% in December.  Imports rose 3.3% in January, after a 2.8% gain the previous month.  On an unadjusted basis, Mexican exports in January were up 28.2% from the same month one year earlier, while imports were up 25.0%.

Manufactured goods continue to make up the vast majority of Mexico's merchandise exports, and they were up 25.2% year-over-year in January.  In contrast to 2010, when autos and auto parts had been the main driver of Mexican manufacturing exports, the auto category's growth in January was slightly weaker than the non-auto categories.  The major manufacturing categories showing the strongest export growth were food and beverages, steel and metals, and industrial equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they surged 40.6% year-over-year in January.  On a volume basis, Mexican crude oil exports totaled 1.444 million barrels per day, up 22.8% from January 2010.  On a value basis, the average export price for Mexican crude oil rose to $84.57 per barrel, up 17.1% from one year earlier.  Finally, Mexican agriculture exports in January were up a strong 30.2% year-over-year.  Among the agricultural products showing the best gains, foreign sales of onions and garlic were up 89.3% year-over-year, while fish and shellfish were up 66.6% and strawberries were up 58.6%.  Perhaps the most notable decline was in the coffee category.  Foreign sales of Mexican coffee were down 37.1% year-over-year in January, which press reports attribute primarily to cold, rainy weather that damaged crops.

Comment:  Mexico's extraordinary string of seasonally-adjusted trade surpluses shows just how strongly its international trade sector is performing.  Even though the unusual, crop-destroying freezes that struck some of Mexico's key farm states this month will hold down agriculture exports in the coming months, manufacturing exports show every sign of continued good growth.  Moreover, Mexican export growth has become well balanced, which suggests it is less vulnerable to a shock in any one category.  There are now two key near-term risks that could spoil the party.  First, if the peso resumes strengthening, it could price many Mexican exports out of the international market.  Second, political tensions in the Arab world could conceivably drive oil prices up to the point where the U.S. economy slows precipitously, thereby weighing on U.S. demand.

Patrick Fearon, CFA
Vice President, Fund Management

                           Mexico's Merchandise Trade Balance
                                Seasonally Adjusted, Million US$
                                                Source:  INEGI
Trade Balance 1101

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