MexECON Blog

June Exports Rise 21.6 Percent YOY

In an initial estimate, Mexico's June merchandise trade deficit narrowed to a seasonally-adjusted $308.3 million, compared with revised deficits of $340.4 million in May and $146.7 million in April.  That marked the first time the country's trade balance has been in deficit for three straight months since last autumn.  According to the report, from the official statistics agency INEGI, Mexican exports rose 1.0% in June, after a 2.9% increase in May.  Imports grew 0.9%, after a revised 3.5% increase in the previous month.  On an unadjusted basis, Mexican exports in June were up 21.6% from the same month one year earlier, while imports were up 19.6%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in June, they were up just 13.0% year-over-year.  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 were up an astounding 92.2% year-over-year in June.  On a volume basis, Mexican crude oil exports totaled 1.425 million barrels per day, up 28.4% from June 2010.  On a value basis, the average export price of Mexican crude came in at $103.29 per barrel, up 53.2% from one year earlier.  Finally, Mexican agriculture exports in June were up 21.2% year-over-year.  Mexican coffee exports continued to boom in June, with a rise of 137.7% year-over-year.  Among the other major farm categories posting large gains, tomato exports were up 56.9%.

Comment:  Mexico's trade figures are still generally positive, but export growth has been slowing, and import growth has been accelerating.  At least in part, Mexican trade is facing headwinds from the current soft patch in the global economic recovery.  Unfortunately, recent data has shown the country's domestic sector is also feeling some impact.  The Mexican economy is still likely to keep growing in the near term, but the expansion will probably be much more modest than earlier in the economic recovery, and there is an increasing risk that Mexican growth could slow more dramatically.

Patrick Fearon, CFA
Vice President, Fund Management

                           Mexico's Merchandise Trade Balance
                               Seasonally Adjusted, Million US$
                                             Source:  INEGI
Trade Balance 1106

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