MexECON Blog

August Exports Rise 17.0 Percent YOY

In an initial estimate, Mexico's August merchandise trade balance swung to a seasonally-adjusted surplus of $71.1 million, compared with a revised deficit of $276.5 million in July.  The surplus in August was the country's first since March.  According to the report, from the official statistics agency INEGI, Mexican exports dropped 3.2% in August, after a flat reading the previous month and modest gains in the two months before that.  Imports plunged 4.3%, after four straight monthly increases.  On an unadjusted basis, Mexican exports in August were up 17.0% from the same month one year earlier, while imports were up 16.9%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in August, they were up 11.7% year-over-year.  The major manufacturing categories showing the strongest export growth in August were steel and metal products, chemicals, and plastics.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 41.4% year-over-year in August.  On a volume basis, Mexican crude oil exports totaled 1.44 million barrels per day, up 6.6% from August 2010.  On a value basis, the average export price for Mexican crude was $98.63 per barrel, up 41.3% from one year earlier.  Finally, Mexican agriculture exports in August were up 52.6% year-over-year.  Rising global demand and recent poor harvests in many countries continue to keep coffee prices near 15-year highs.  As a result, Mexican coffee exports in August were up a whopping 170.7% year-over-year.  Other agricultural products showing strong gains were avocados (up 85.0%), mangoes (up 73.8%), and tomatoes (up 58.7%).

Comment:  In spite of Mexico's swing back to a trade surplus in August, the sharp monthly declines in both exports and imports are a reminder that slowing economic growth abroad could have a significant negative impact on the country's international trade.  As global financial markets plunged and it became clear that the major developed economies could slip back into recession, Mexico's sales and purchases abroad dried up in August.  Mexico's year-over-year export growth in August was one of the weakest in the current economic recovery, and the growth rate could well slip into the single digits or even turn negative in the coming months, in spite of the recent plunge in the value of the peso.

Patrick Fearon, CFA
Vice President, Fund Management

                                Mexico's Merchandise Trade Balance
                                    Seasonally Adjusted, Million US$
                                                   Source:  INEGI
Trade Balance 1108

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