MexECON Blog

June Export Rise Confirmed

In a revised estimate issued last week, 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 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:  The final June trade report was unchanged from the initial estimate in all key respects.  The figures are still generally positive, but export growth has been slowing, and import growth has been accelerating.  This modest weakening almost certainly can be traced to faltering economic growth in the world's key developed countries.  Because the global economic slowdown looks set to continue in the near term, Mexican trade could well weaken further in the coming months.  Nevertheless, exports are still likely to keep growing, and some modest momentum in domestic demand could keep the overall economy expanding, though risks are on the downside.

Patrick Fearon, CFA
Vice President, Fund Management

              Mexican Merchandise Exports
             Seasonally Adjusted, Million US$
                          Source:  INEGI
Exports 1106 Revised

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