MexECON Blog

January Exports Rise 10.5 Percent YOY

Mexico's January merchandise trade balance swung to a seasonally-adjusted deficit of $468.8 million, after a revised surplus of $189.8 million in December.  It was Mexico's first trade deficit in three months.  According to the report, from the official statistics agency INEGI, Mexican exports fell 1.7% in January, for their first decline since last August.  Imports rose 0.5%.  On an unadjusted basis, Mexican exports in January were up 10.5% from the same month one year earlier, while imports were up 12.3%.

Manufactured goods make up the vast majority of Mexico's merchandise exports, and in January, they were up 11.0% year-over-year.  The major manufactured goods showing the strongest export growth in January were industrial equipment, steel and iron products, and plastics and rubber products.  Crude oil and other petroleum products are the second-most important category of Mexican exports, and they were up 3.6% year-over-year in January.  On a volume basis, Mexican crude oil exports totaled 1.191 million barrels per day, down 17.5% from January 2011.  On a value basis, however, the average export price for Mexican crude was $107.55 per barrel, up 25.1% from one year earlier.  Finally, Mexican agriculture exports in January were up 14.3% year-over-year.  The strong coffee market continues, and the value of Mexican coffee exports was up 123.5% year-over-year.  Other agricultural products posting good export gains included cattle (up 59.5%), frozen shrimp (up 42.9%), and fresh strawberries (up 34.9%). 

Comment:  Mexico has posted several trade surpluses since mid-2010, but it normally has modest deficits.  The swing back to deficit in January therefore should not be a major concern.  Improved competitiveness and higher investment over the last decade has positioned Mexico to keep growing its exports, especially if the peso remains weak and demand from the United States keeps rising.  One thing that does bear watching is the renewed declines in petroleum exports.  Mexican oil fields are aging rapidly, and the state petroleum company has not been able to find many new reserves because of restrictive government policies.  If export volumes continue to fall and global oil prices pull back sharply, Mexico's trade deficits could widen again.

Patrick Fearon, CFA
Vice President, Fund Management

                                    Mexico's Merchandise Trade Balance
                                        Seasonally Adjusted, Million US$
                                                     Source:  INEGI
Trade Balance 1201

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