MexECON Blog

October Exports Jump 13.0 Percent YOY

Mexico's October merchandise trade balance swung to a seasonally-adjusted deficit of $776.5 million, wiping out three straight months of surpluses and marking the biggest shortfall in more than a year.  Revised figures show surpluses of $262.3 million in September, $57.9 million in August, and $302.3 million in July.  According to the report, released today by the official statistics agency INEGI, the value of Mexico's exports fell 0.1% in October, after a decline of 0.5% in September.  Imports rose 3.3%, after a fall of 1.1% in the previous month.  On an unadjusted basis, Mexican exports in October were up 13.0% from the same month one year earlier, while imports were up 16.4%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in October, they were up a strong 16.8% year-over-year.  The major manufactured goods showing the strongest export gains in October were rubber and plastic goods, professional and scientific equipment, industrial equipment, and domestic appliances.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were down 4.1% year-over-year in October.  Within this category, Mexican crude oil exports totaled 1.367 million barrels per day, up 2.1% from October 2011.  The average export price for Mexican crude was $99.59 per barrel, down 1.5% from one year earlier.  Finally, Mexican agriculture exports in October were down 12.1% year-over-year.  Among the agricultural exports posting the weakest performances, Mexican fish and shellfish exports fell 40.6%, while shrimp exports fell 36.0%.  Cattle exports were down 25.7%, and tomato exports were down 15.9%.  Leading the agricultural categories showing growth, cucumber exports were up a whopping 75.7%.

Comment:  After three straight months of trade surpluses, the reversion back to a deficit in October is not too alarming.  The surge in imports last month is also not necessarily a problem, as it appears to continue the recent trend of strong capital goods imports.  In other words, much of the jump in imports was apparently driven by rising investment, which Mexico needs to further increase its competitiveness.  Mexico's trade picture continues to look good, even though the country faces risks ranging from the possibility of another flare up in the European debt crisis to the possibility that U.S. politicians will fail to avoid a "fiscal cliff" of sharp tax hikes and spending cuts programmed for the end of the year.

Patrick Fearon, CFA
Vice President, Fund Management

                                     Mexico's Merchandise Trade Balance
                                           Seasonally Adjusted, Million US$
                                                       Source:  INEGI
Trade Balance 1210

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