MexECON Blog

September Exports Rise 1.8 Percent YOY

Mexico's September merchandise trade balance showed a seasonally-adjusted surplus of $436.9 million, after revised surpluses of $12.5 million in August and $345.5 million in July.  It was the first time Mexico had three straight months of trade surpluses since late 2010 and early 2011.  According to the report, released today by the official statistics agency INEGI, the value of Mexico's exports fell 0.1% in September, after being unchanged in the previous month.  Imports fell 1.4%, erasing their 1.1% gain the month before.  On an unadjusted basis, Mexican exports in September were up 1.8% from the same month one year earlier, while imports were down 5.1%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in September, they were up 1.0% year-over-year.  The major manufactured goods showing the strongest export gains in September were professional and scientific equipment, food and beverages, and industrial machinery.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 5.4% year-over-year in September.  Within this category, Mexican crude oil exports totaled 1.339 million barrels per day, up 7.8% from September 2011.  The average export price for Mexican crude was $102.78 per barrel, up 2.7% year-over-year.  Finally, Mexican agriculture exports in September were down 3.8% year-over-year.  Among the agricultural exports posting the weakest performances, the value of tomato exports was down 39.0%, while the value of cucumber exports was down 35.2%.  The declining categories were partially offset by some increases.  For example, cattle exports were up 15.6%. 

Comment:  The third straight monthly trade surplus is undoubtedly a positive for Mexico, even though exports were essentially flat and the surplus in September came mostly from declining imports.  Mexican export growth is naturally more modest now, given the extraordinarily strong gains posted from the beginning of the current expansion through early 2012.  As long as the key U.S. market continues to recover, Mexico's exports are likely to remain high.  Moreover, the drop in imports during September came mostly from a decline in the price of gasoline, propane, and butane purchased from abroad, so it does not necessarily point to problems in Mexico's domestic demand.  In fact, recent data confirms that domestic demand remains on an upward trend.  Mexico's trade picture would darken if the European crisis intensifies again, undermining confidence around the globe, or if U.S. politicians fail to avert a sharp fiscal tightening that is programmed into law at the end of 2012.  However, the most likely scenario in the near term is for Mexican trade to remain in rough balance, as rebounding U.S. demand keeps exports rising moderately but the momentum in Mexican domestic demand keeps boosting imports.

Patrick Fearon, CFA
Vice President, Fund Management

                                    Mexico's Merchandise Trade Balance
                                          Seasonally Adjusted, Million US$
                                                     Source:  INEGI
Trade Balance 1209

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