MexECON Blog

May Export Rise Confirmed

In a report last week, Mexico's May merchandise trade deficit was revised to a seasonally-adjusted $264.0 million, after a revised deficit of $130.0 million in April.  That marked the country's first back-to-back trade deficits since last autumn.  According to the report, from the official statistics agency INEGI, Mexican exports rose 2.9% in May, easily erasing their 1.0% decline in April.  However, imports jumped 3.3%, accelerating from a rise of 2.3% in the previous month.  On an unadjusted basis, Mexican exports in May were up 25.4% from the same month one year earlier, while imports were up 24.0%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in May, they were up 23.6% year-over-year.  The major manufacturing categories showing the strongest export growth were steel and metals, food and beverages, and industrial machinery and equipment.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they jumped 32.2% year-over-year in May.  On a volume basis, Mexican crude oil exports totaled 1.368 million barrels per day, down 14.0% from May 2010.  On a value basis, however, the average export price of Mexican crude rose to $104.32 per barrel, up 53.8% year-over-year.  Finally, Mexican agriculture exports in May were up 25.6% from one year earlier.  Mexican coffee exports were up 163.3% year-over-year, leading the major categories of farm exports.  Among the other major farm categories posting large gains, cucumber exports were up a strong 49.8% year-over-year, while grape exports were up 48.1%.

Comment:  Even though Mexican exports rebounded in May, they have now fallen on a seasonally-adjusted basis in two of the last four months, which helps explain the return to overall trade deficits.  This softening is consistent with recent evidence that the world economic recovery has hit a potentially long lasting soft patch.  The most likely scenario going forward is that Mexican economic growth will moderate somewhat, but there is an increasing risk that growth could slow more dramatically.

Patrick Fearon, CFA
Vice President, Fund Management

Mexico's Merchandise Trade Balance
Seasonally Adjusted, Million US$
Source:  INEGI
Exports 1105 Revised

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