MexECON Blog

February Exports Rise 20.9 Percent YOY

In an initial estimate, Mexico's February merchandise trade balance slipped to a seasonally-adjusted deficit of $293.6 million.  It was the first trade deficit after three straight months of surpluses, including a revised surplus of $160.7 million in January.  According to the report, from the official statistics agency INEGI, exports from Mexico fell 0.4% in February, after a 3.6% jump in January.  Imports into Mexico rose 1.2% in February, after a rise of 3.4% during the previous month.  On an unadjusted basis, Mexican exports in February were up 20.9% from the same month one year earlier, while imports were up 22.0%.

Manufactured goods continue to make up the vast majority of Mexico's merchandise exports, and they were up 20.3% year-over-year in February.  The major manufacturing categories showing the strongest export growth were steel and metals, food and beverages, and autos and auto parts.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they rose 22.0% year-over-year in February.  On a volume basis, Mexican crude oil exports totaled 1.234 million barrels per day, unchanged from February 2010.  On a value basis, the average export price of Mexican crude oil rose to $89.30 per barrel, up 27.1% from one year earlier.  Finally, Mexican agriculture exports in February were up 19.1% year-over-year.  Among the agricultural products posting the best gains, foreign sales of onions and garlic were up 98.7% year-over-year, while citrus fruit was up 90.0% and fish and shellfish was up 66.5%.

Comment:  Mexico's three straight months of trade surpluses prior to February marked the first time the country's exports had exceeded its imports for such a period since a string of surpluses from February 1995 to June 1997.  The return to a deficit in February, therefore, should not be too alarming.  Because Mexico relies heavily on imported capital equipment, subassemblies, and raw materials, it usually has a modest trade deficit.  The important thing is that exports are rising again at a very brisk pace.  So far in the current economic recovery, rising exports have helped boost industrial production and stabilized the labor market, which in turn has prompted a budding recovery in consumption spending and the first signs of rebounding investment.  The main risks now are that the strong peso could eventually weigh on foreign sales, political tensions in the Arab world could undermine confidence and put a damper on global demand, and the after effects of the Japanese earthquake could disrupt supply chains globally.

Patrick Fearon, CFA
Vice President, Fund Management

                      Mexico's Merchandise Trade Balance
                          Seasonally Adjusted, Million US$
                                           Source:  INEGI
Trade Balance 1102

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