MexECON Blog

April Exports Rise 12.6 Percent YOY

In an initial estimate, Mexico's April merchandise trade balance swung to a seasonally-adjusted deficit of $123.1 million, compared with a revised surplus of $825.0 million in March.  According to the report, from the official statistics agency INEGI, exports from Mexico fell 1.2% in April, retreating from a 4.7% jump in March.   Imports into Mexico rose 2.2%, reversing a decline of 0.1% in the previous month.  On an unadjusted basis, Mexican exports in April were up 12.6% from the same month one year earlier, while imports were up 9.8%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and they were up 7.5% year-over-year in April.  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 jumped 35.1% year-over-year in April.  On a volume basis, Mexican crude oil exports totaled 1.223 million barrels per day, down 6.1% from April 2010.  On a value basis, however, the average export price of Mexican crude oil rose to $109.92 per barrel, up 47.8% year-over-year.  Finally, Mexican agriculture exports in April were up 39.3% from one year earlier.  Because of the extraordinary freezes that destroyed many vegetable crops in early February, some agricultural products posted large declines.  For example, exports of peppers were down 23.5%, while exports of cucumbers were down 8.4%.  At the same time, the freezes also drove prices higher, providing a boon for those with supply to sell (such as Terra Nova's greenhouse operations) and boosting the receipts from some farm categories.  The report showed, for example, that April tomato exports were up 42.7% year-over-year, rivaling the 58.9% gain in coffee exports.

Comment:   At $123.1 million, Mexico's trade deficit in April was quite modest.  It was also only the second seasonally-adjusted deficit in the last five months, confirming that the country's trade performance remains healthy.  Nevertheless, today's report illustrates how the strong trade rebound over the last year is finally showing signs of moderating.  Because the current figures are now being compared with much higher base figures last year, the annual export gains of 20%, 30%, or even 40% or more that were common in the early stages of the recovery are probably now a thing of the past.  With post-recession inventory rebuilding close to being completed in virtually all the key developed countries, and with financial-sector weakness and an excess supply of housing preventing investment from filling its traditional role as a supercharger for economic recovery in the developed countries, it appears that the world economy is on the cusp of a new soft patch.  Fortunately, however, it only appears that Mexican exports will moderate, not fall back.  In addition, domestic demand in Mexico is slowly improving.  In sum, it appears that Mexican economic growth is simply moderating to a more sustainable pace. 

Patrick Fearon, CFA
Vice President, Fund Management

Mexico's Merchandise Trade Balance
Seasonally Adjusted, Million US$
Source:  INEGI
Trade Balance 1104

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